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2015 Research Statement

Robert J. Kauffman School of Information Systems, Singapore Management University

Tel: (65) 6828-0929; Email: rkauffman@smu.edu.sg Last revised: January 8, 2015

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Background Overview. Let me start out by sharing a graphical representation of one way that I

can conceptualize my research interests and contributions over the years. George Box reminded us: ‘All models are wrong, but some are useful.’ So, although not all of my work has been about the business value of IT, this high-level theme is useful for ex-plaining the growth of my research inquiry as a university professor, and to relate it to what I've been doing at Singapore Management University during the past four years.

Problems Addressed. I have tried to address important problems of continuing in-

terest in IS research. The problem of assessing the business value of IT is like that. It’s as central to the successful management of IT in early 2015 as it was when I initially settled on doing a Ph.D. thesis in 1986 on the topic of Measuring the Business Value of

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Information Technologies Which Deliver Financial Services. There have been no fads or follies around the study of this topic: just steady advances on how to understand the creation of value in terms of retrospective, historical performance, and the prospective, normative guidelines that should be followed to create high value in different settings.

Around the time I was working on my Ph.D., I also contributed to a book called Measuring Business Value of Information Technologies (Strassmann et al. 1988), and got a taste of the contrasting thinking and contributions to research of industry and uni-versity leaders. I was struck by how easy it was to get useful input for choosing great problems: making a phone call to an industry “talking head” or consultant, visiting a local company, reading the newspapers and magazines, going through a pile of past re-search, and contacting other well-known authors. I came away from my Ph.D. program thinking that innovation was “at eye level” and not so hard to find or impossible to achieve. Instead, choosing good problems was a key for making strong and fresh con-tributions to information strategy and technology investment knowledge. And that’s pret-ty much the way that things have gone for me.

Theory Advances. Just as important as research problem selection is identifying and developing relevant theory to support the investigation and understanding of set-tings involving information strategy, IT investments, technology-led business models, and customer-facing mechanisms for collecting fine-grained behavioral data. I’ve worked in several different ways, but mostly have avoided spending my time with the existing central theories of the IS discipline. One of the things I remember learning when I was a Ph.D. student was the value of doing new things first and being at the leading-edge in research. So I’ve worked to import new theories and perspectives, and to build new theory for the IS discipline based on informed assessments of what’s relevant. Sometimes, I’ve been too early, and I’ve paid a price with the hold-up of my journal pa-pers for publication, but in the long run this kind of strategy has worked well.

The articles that I have put the most time into have been published in leading jour-nals in IS and other disciplines, and are often cited by interdisciplinary researchers. I recently updated my research citations document, “54 over 54: A Citation Analysis of My Research,” which is appended to this statement. My last seven or eight years of re-search, especially during my latter years at the University of Minnesota and my time at Arizona State University – and from 2011 into 2015 at Singapore Management Universi-ty – have been especially productive in this respect.

Industries Studied. I have also been in a strong position over the years, from my prior industry experience and my university postings in New York, Minneapolis and Sin-gapore, to have had exceptional access to organizations and people who shared data, knowledge of their information strategies, and approaches to managing IT successfully. As a result, my expertise in research now extends from financial services to hospitality services to air travel distribution and the airlines to Internet-based selling to retail tele-coms and digital entertainment. I have gained expertise in the areas of financial inter-mediation and digital intermediation in e-commerce and the roles that technology plays. I have also gained knowledge of procurement in operations management, wireless tele-communications, group-buying and electronic auctions, service design and manage-ment, IT services, and cloud computing. By emphasizing access to real-world organiza-tions for my research, and choosing industries that are at the forefront of technology-led

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transformation, my job as a researcher has become much easier over the years: the problems prompt new thinking, and new thinking leads to inventive ideas about theoreti-cal explanations for things.

I'm currently in another growth phase for research inquiry with the Starhub and Citi-bank LARC projects, as well as the SWIFT-funded research in the area of real-time gross settlement for payments, and other work in mobile payments and financial IS and technology. Still another new direction involves the development of ‘policy analytics’ studies, in which there is a joint emphasis on blended methods from Economics, Mar-keting Science, Social Science and Computer Science for the discovery of new knowledge in specific applied settings.

Methods Applied. I have also been interested in leveraging rigorous methodologies in my research. Modeling and empirical research methods were the foundations of my Ph.D. Program studies. My approach has not been to do the things that people have been doing for ten years already methods-wise though, but instead to find out what new ways there are to conduct research.

With this in mind, I was early as a Ph.D. student to work with a relatively large empir-ical data set collected as primary data from sponsoring financial institutions with com-petitive strategy concerns related to monetizing shared electronic banking network ser-vices. In those days, it was relatively new methods like equilibrium market share models and data envelopment analysis, but later my work encompassed many different meth-ods that I was trained as a management scientist to be able to understand: analytical models, small and large sample statistics, experimental and quasi-experimental de-signs, and so on.

My key strength is as a creative econometrician. It gives me the flexibility for apply-ing different approaches from my study of labor economics, marketing research, finan-cial markets microeconometrics, macroeconomic econometrics, spatial econometrics, count data modeling, biostatistics and medical epidemiology research – not to mention the large literature in IS that uses different approaches in support of experimental re-search designs, establishing causality, and achieving effective policy and strategy knowledge.

Leading Issues. Depicted in the middle space of the graphical illustration of my work is the idea that many of my efforts can be classified under retrospective and pro-spective studies. These have involved issues related to the business value of infor-mation, emerging ITs, IT infrastructure, IT standards, and so on – the gamut of different kinds of IT issues that affect value. When I sketched this figure, I was struck by how many different and creative ways there are to study how IT transforms decision-making, businesses and business processes, industry and economy in fundamental ways. So the keywords that I added around the central ‘IT VALUE’ block reflect the spectrum of dimensions around which my research has contributed useful new knowledge.

My works related to those keywords have come in the leading journals such as MIS Quarterly (software reuse value, real options, network effects), Information Systems Research (information value, real options, information transparency, productivity, mar-ginal returns and ROI), the Journal of Management Information Systems (value-at-risk, decommoditization, risk-adjusted value, market structure-based limits to value), Organi-

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zation Science (value appropriability and value causation), and Decision Support Sys-tems (product transparency, consumer informedness), among others. The contacts among the different published works that I’ve done in these areas include: the use of empirical models, quasi-experimental designs, and empirical regularities analysis for the retrospective value studies; and game theory, real options, dynamic programming, and portfolio management models for the prospective value studies. My approach with the methods has never been to ‘pound the same nail just for the sake of using the hammer.’ Instead, I use tools that are appropriate for the problems at hand.

I would like to offer a second figure to depict my evolution in research through 2014. It covers my evolution from a person who was well-trained for research, to a young re-searcher who gained competency and success in research and writing, to a more ma-ture and persistent senior faculty member who has pushed the boundaries with new problems and solutions, theoretical perspectives, and methods and approaches for the range of problem settings. I'm now accomplished in this work, and have made some in-teresting and important contributions of new knowledge.

Research Areas Next, I will share some observations on my research areas. IT-Led Strategies and Their Impacts at the Firm and Consumer Levels. Re-

search on technology strategy and its business value impacts, and the implications for

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firm performance have been a cornerstone of my work. I have written about many dif-ferent kinds of technology strategy issues, and how IT creates unique opportunities for organizations to transform their position in their marketplace, and support unique capa-bilities to deliver industry-leading products and services to customers.

At the firm level, I have contributed new ways of understanding price leadership and followership strategies in Internet-based sales of books, music and DVDs, and how the role of digital intermediaries affects the conduct of business. Prior to the fall of the dot-coms, my research predicted the large-scale efforts that traditional businesses would make to “re-intermediate” their markets in the face of e-commerce intermediaries. Since then I have studied the changing dynamics of how digital intermediation affects the ca-pacity of sellers and suppliers to develop intimate relationships with their customers for sustainable profitability – in a process that I call “re-disintermediation.”

I predicted there would be numerous instances in which firms that created e-business and e-market innovations would not be able to bring them to the highest level of value due to structural and incentive problems associated with ownership. My re-search also showed that financial risk management systems technology innovations could not be owned by leading banks, since their institutional customers would fear that the banks’ capability to exploit huge amounts of sensitive financial risk management da-ta could lead to the denial of credit or the disadvantageous re-pricing of loans. Similarly, six airlines’ creation of online travel agency intermediaries (e.g., Orbitz, Hotwire, CheapTickets) created impressions with consumers and regulators that their search services for ticketing would be “biased” in a manner that would not favor consumers – a classic prediction of the earlier “electronic markets and hierarchies” theory in IS re-search. The U.S. Department of Justice objected to the oligopoly-like ownership struc-ture, and Orbitz would late go through an IPO, and be sold and resold several times so that the airlines no longer owned it. But this too has created interesting issues for re-search, as my research airline research publications have shown.

I also have been studying issues involving consumer behavior as a result of IT-based market intermediation and its related anomalies. My research on airlines, hotels, e-booksellers, online group-buying auctions and online malls has permitted me to char-acterize how digital intermediation influences e-channel price elasticity of demand and explore its associated effects on firm performance. I have also been able to show why suppliers and sellers are sometimes disadvantaged in competition with other firms be-cause digital intermediaries have come to own their relationships with consumers. Booking cheap airline and hotel tickets via Hotwire or Priceline has been a case in point, but there are other intermediary players that are not well known that have had major impacts on competition (Travelport, Cendant and the global distribution systems of Amadeus, Galileo and Worldspan). There are other instances of this too, from MySimon to Buy.com to Amazon, and so on. Many of these research efforts connect me to people who are interested in consumer behavior, and product and service-related research in Marketing.

The key new theories I’ve been developing include transparency theory, consumer and business partner informedness theory, and IT-enabled decommoditization theory. These are all very recent – the past eight years since 2007. These focus on new ways of thinking about how firms can use information strategically in customer-seller and

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buyer-supplier relationships. Actions associated with the theories affect demand share, price elasticity, product and service profits, and the sustainability of competitive ad-vantage. Earlier, I developed new theories in IS and e-commerce, such as partnering-for-perfection theory, as well as embedded options theory in IT-based strategy. Some others include the theory of rational inattention in e-commerce pricing, and ways to think about centripetal and centrifugal forces in the regional technology innovation process.

Empirical Research with Large Data Sets. Opportunities in empirical IS and e-commerce have grown, requiring new capabilities and methods, fresh views on the phi-losophy of science for empirical research, and expanded and up-to-date analytical tool sets to deal with large data sets. A key area of my expertise is working with large data sets. My first experiences with large data sets related to IS research occurred when I was a doctoral student, and had opportunities to study issues related to the value and operational performance of electronic banking technology. The data sets that I collected then were “large” in IS research terms then (0,000s of data points). They weren’t large in financial markets data terms though. In the 1990s, I became involved with my doctor-al students and faculty colleagues in B2C and B2B studies of Internet-based selling and pricing, e-procurement, e-markets and digital intermediation. The data sets grew in size to match financial market stock price micro-data (to millions and tens of millions of ob-servations). Around 2000, I co-wrote an article on design principles for software agents that automated Internet data collection. It foresaw concerns that researchers have today with scraping data from Internet websites and capturing streaming data from social net-work operations.

My main contributions through this work have come with new theory that extends and specializes past theory perspectives from IS, Marketing, Economics and Strategy to show how much technology has transformed firm capabilities to manipulate and benefit from fine-tuned information strategies. Some of my ‘data analytics’ studies in this area have focused on how airline ticket pricing and channel management involving digital in-termediaries and emerging technologies have influenced airline market shares, con-sumer channel-specific price elasticity of demand, and digital intermediaries effects on airlines’ ability to be effective sellers of their own service. My students, faculty col-leagues and I have won “best research” awards and nominations for various innovations (e.g., ICIS, AMCIS, INFORMS, INFORMS CIST, HICSS, POMS, JAIS, and a field con-tribution to the IS discipline). They include modeling price changes and firm-level infor-mation transparency strategies for products and services in e-commerce settings, pric-ing patterns among traditional and Internet-based book sellers, the effectiveness of websites in e-grocery sales, and the performance of online booking systems for hospi-tality services providers. One notable accomplishment was the publication of an article in the Review of Economics and Statistics, an 'A' journal in the Economics discipline.

I observed in a co-edited 2009 book on empirical advances IS and e-commerce re-search that traditional knowledge that has been taught about the power of laboratory experimental research is increasingly matched by low-cost, high-control, experimental condition-setting massive quasi-experimental research that we are now able to carry out on the Internet. With the capability to capture clickstream, pricing, social network inter-action and other kinds of consumer data, we have the opportunity to seek out ‘digital needles in the Internet data haystack,’ and use them to explore consumer micro-

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behavior under unique conditional requirements and behavior-specific settings. This has created a basis for high-powered research designs that are less intrusive in terms of contaminating effects on consumer behavior. It can also offer unusual micro-level be-havioral and economic insights for a variety of different consumer purchasing, social network participation, social commerce and individual and managerial decision-making settings. A new article that I have written with LARC colleagues at SMU discusses the philosophy of science issues with 'big data' as an agent for change in Computational Social Science. I have been traveling to give keynote speeches and university seminars on this and my other empirical research since shortly after arriving in Singapore about four years ago.

Theory, Models and Methods for IT-Related Managerial Decision-Making. My doctoral dissertation involved multiple studies on the theoretical and empirical analysis of the business value of investment in electronic banking systems in retail banking, and treasury management systems in institutional financial services. During the past 25 years, I have asked and provided theory-based and empirical answers as to why firms are better able under some circumstances than others to appropriate value from there IS and IT investments. Some of my publications have introduced new ideas into the IS and e-commerce literature on IT value and IT investment decision-making. These have built upon decision-making under uncertainty and information economics ideas, as well as real options and portfolio theory from financial economics. They also have permitted me to contribute new perspectives on investment and market entry timing with technol-ogy, vendor management and contract design in IT services, and efficiency bounds on information security solution spending. I continue to do this in interesting new contexts, such as software-as-a-service, mobile payments, and electronic market mechanisms.

My research strategy in this area has been to focus on developing models that can be used as decision support tools in real-world organizations. One project sought to provide decision rules for firms that were interested in the engineering management as-pects of electronics products, where a critical issue was how to model when a firm should cut over from one standard to another in the manufacturing and sales of its next generation product. Another project with a U.S. airline firm sought to provide decision-making guidelines based on modeling and analysis for when a firm should re-configure or re-architect its IT infrastructure and systems or completely re-engineer its processes and rethink its approach to technology support.

A recent example of this is a 2010 article in the IBM Research and Development Journal that explores the use of constraint-based modeling for sequencing the imple-mentation of IT software development projects in a firm’s portfolio to maximize their val-ue. The publication of this paper was less about the peer review process of a specific paper than it was about the four years of effort that my research group made interacting with IBM Research’s staff. I was involved in placing my Ph.D. students with them for summer internships, and understanding the institutional aspects of software develop-ment governance, so we could contribute new thinking to IBM’s practice.

A more recent effort in this area is related to the timing of investments in mobile payments systems in financial services, done with faculty and doctoral program col-leagues at SMU. The research proposes a new modeling perspective that considers the mean reversion property for the stochastic drift of investment cost and benefit flows, to

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enrich managerial knowledge on how real option theory can be used to support deci-sion-making under uncertainty for IT investments. It also applies the modeling approach to two real-world cases – airline firm data warehouses and financial services industry mobile payments – to illustrate the method’s applicability and offer insights to decision-makers so they understand the value of deferral and establishing an effective strategy for investment timing. We also demonstrated the applicability of simulation-based option valuation, known as the ‘Longstaff-Schwartz method,’ to value IT investments. This is useful when the market experiences shocks that affect firm-level and market-level per-ceptions associated with technology investments.

I have pursued this area of research long enough to look back on a couple of dec-ades of work that has involved innovative thinking, theory and modeling progress, and also inventive approaches to establishing evidence for the efficacy of a variety of IT in-vestment and deployment decision-making approaches. During that time, I have sought theory and models to explain the past, interpret present behavior in managerial deci-sion-making and firm actions that we can readily observe, and also to predict how things will come out in the future. This cycle of ‘explanation-interpretation-prediction’ is a strength that characterizes much of my work.

Industry Studies – Financial Services, Travel and Hospitality, Telecommunica-tions, IT Services. There are three insights I’d like to share related to my industry stud-ies. First, there is exceptional power for doing great research based on knowing more about the specific institutional, operational, managerial, technological and industrial set-tings. My research strategy has involved the continuous study over time of industries in which IT has had major impacts or caused fundamental shifts. I have interacted with senior managers and business professionals, attended industry workshops and meet-ings, engaged in consulting projects, and monitored the business, technology and in-dustry press for bellwether signs of coming changes. I encourage my faculty and docto-rial colleagues to consider this approach – as opposed to focusing on just theory and methodology – since it makes publishing in top peer-reviewed journals easier.

Second, the real world is a bearer of extraordinary gifts to business technology re-searchers. Google’s chief economist and University of California, Berkeley, School of Information’s past dean, Hal Varian, has written that the real world provides an impetus for “how to build an economic model in your spare time.” Technology researchers can interact with industry professionals in meetings and over lunch, read industry blogs and news articles, track company announcements, and follow the development of legal bat-tles that emerge in the presence of digital convergence with technologies, product and service areas, companies and industries. They offer an outstanding degree of insight into what is worthwhile doing in research. The insights prompt the most resourceful people to re-focus and re-conceptualize their work in light of the newest developments, while maintaining connections to their ongoing scientific inquiry. This, I know from my work, turns the threads of our research efforts not just into sturdy cloth, but into richly woven and luminous tapestries of new knowledge that the real world can benefit from. More recently, Microsoft's Chief Economist and Stanford Economics professor, Susan Athey, has argued that the real world can be studied through highly innovative and fully-controlled experiments with randomized subject treatments – something that we are try-ing to do in the LARC projects at SMU, and that I have been doing for a longer period of

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time with colleagues at other universities in the U.S., the Netherlands and Singapore. Finally, being a keen observer of business technology developments in industry

doesn’t mean that it’s worthwhile to switch from one topic to the next, and the next, and so on. Instead, it’s important to have a small set of fundamental problems to work on, and then to see where they resurface over time in the complex landscape of technologi-cal change. This approach has given depth of meaning to the breadth of my scientific inquiry around IT value – but it also has supported new directions for my research in-quiry that are valuable in their own right. Selected Publications and Outputs

In the seven-year period from 2008 to 2015, my primary targets for the research publications have been the leading journals in Information Systems, with additional in-terdisciplinary work in other leading research outlets. The research work has been re-lated to the Strategy, Economics, Services Management, Operations Research, Engi-neering Management, Marketing and Accounting disciplines. I published about 120 peer-reviewed articles in conferences and journals during the 2008 to 2015 period, with about 40 peer-reviewed journal articles and 25 peer-reviewed conference papers pub-lished since I joined SMU in 2011. The articles in MIS Quarterly, Review of Economics and Statistics, Information Systems Research, Journal of Management Information Sys-tems, IEEE Transactions on Engineering Management, Technology Forecasting and Social Change, Review of Economics and Statistics, and Decision Support Systems represent some of my best work during these years. Some selected high-quality publi-cations and their outlets are included in these research sub-streams.

Prices and Products, Information Strategy, and Transparency Informedness Theory. I began working in this area in the late 1990s, after observing problems with information manipulation, selective opaqueness and transparency, and emerging tech-nology-based strategies in the fixed income securities markets, the airline and hospitali-ty industry, and other e-commerce and electronic markets contexts. The figure below illustrates some of the ideas that are related to transparency strategy from Granados, Gupta and Kauffman (2010) in Information Systems Research.

I also observed many changes in strategic pricing practices during the dotcom era.

My research has been instrumental in the creation of theories related to consumer and firm informedness, transparency strategy in the presence of digital intermediaries, pric-

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ing dynamics in digitally-intermediated markets, and other price flexibility and price rigid-ity phenomena. The most recent works explore the applied contexts of airline city-pair route pricing, hospitality services pricing, commuter rapid transit, and pricing in Internet-based selling, especially signals such as ‘nine’ price-endings for discounting.

• Li, T., Kauffman, R.J., van Heck, E., Vervest, P., and Dellaert, B. Consumer In-formedness and Firm Information Strategy. Information Systems Research, 25, 2, June 2014, 345-363.

• Granados, N.F., Kauffman, R.J., Lai, H.C., and Lin, H.C. IT-Supported a la Carte Pricing in Air Travel: A Test of the Strategic Decommoditization Hypothesis. De-cision Support Systems, 53, 2, May 2012, 381-384.

• Granados, N., Gupta, A., and Kauffman, R.J. Online and Offline Demand and Price Elasticities: Evidence from the Air Travel Industry, Information Systems Research, 23, 1, March 2012, 164-181.

• Granados, N.F., Kauffman, R.J., Lai, H.S., and Lin, H.C. Decommoditization, Resonance Marketing and IT: An Empirical Study of Air Travel Services Amid Channel Conflict. Journal of Management Information Systems, 28, 2, Fall 2011, 39-74.

• Levy, D., Lee, D., Lee, A., Kauffman, R.J., and Bergen, M. Price Points and Price Rigidity. Review of Economics and Statistics, 93, 4, November 2011, 1417-1431.

• Kauffman, R.J., and Lee, D. A Multi-Level Theory Approach to Understanding Price Rigidity in Internet Retailing. Journal of the Association for Information Sys-tems, 11, 6, 2, June 2010.

• Granados, N., Gupta, A., and Kauffman, R.J. Information Transparency in Busi-ness-to-Consumer Markets: Concepts, Framework and Research Agenda. In-formation Systems Research, 21, 2, June 2010, 207-226.

• Granados, N., Gupta, A., and Kauffman, R.J. Designing Online Selling Mecha-nisms: Transparency Levels and Prices. Decision Support Systems, 45, 4, No-vember 2008, 729-745.

• Granados, N., Kauffman, R.J., and King, B. The Emerging Role of Vertical Search Engines in Travel Distribution: A Newly Vulnerable Electronic Markets Perspective. Journal of Management Information Systems, 25, 2, Fall 2008, 73-95.

ICT and Development. This sub-stream of my research has touched on a variety of issues involving information and communication technology (ICT) and national econom-ic and social development. I was curious about whether technology innovation would continue to be ‘centripetal’ or moving toward a central geographical area, as has been the case with Bangalore and Hyderabad in India, and Silicon Valley and Silicon Alley in the U.S. The other possibility that I explored was whether the rise of cheaper and cheaper global telecommunication and region-to-region connectivity via video and voice would make technology innovation more ‘centrifugal’ by nature, or spun off across many

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different geographical regions unhindered by co-location of organizations in the relevant technology ecosystem for different kinds of innovations.

I have investigated the adoption and diffusion of a variety of technologies, including Internet-based selling, digital wireless telephony, and mobile and electronic payments, among other technology innovations. I have also studied the sustainability of micropay-ments as a means of value exchange among people who are unable to obtain bank ac-counts. Each of these areas provides a somewhat different context for understanding how different kinds of ICTs result in different kinds of impacts in the countries and re-gions where innovation, adoption, diffusion and use occur. An example of a framework that I tested with a past doctoral student, who is now a senior member in the Indian government examined the interconnections among research and development, industry growth and the physical quality of life, as a result of growth in commitment to and in-vestment in ICTs This is depicted in the figure below.

• Techatassanasoontorn, A.A., and Kauffman, R.J. Examining the Growth of Digi-

tal Wireless Phone Technologies: A Take-Off Theory Analysis. Decision Support Systems, 58, February 2014, 53-67.

• Kauffman, R.J., and Riggins, F.J. Information and Communication Technology and the Sustainability of Microfinance. Electronic Commerce Research and Ap-plications, 11, 5, September-October 2012, 450-468.

• Ho, S.C., Kauffman, R.J., and Liang, T.P. The Impact of Internet-Based Selling Technology: A Hybrid Growth Theory Perspective with Cross-Model Inference. Information Technology and Management, 12, 3, December 2011, 409-429.

• Weber, D., and Kauffman, R.J. What Drives ICT Global Adoption? Analysis and Research Directions. Electronic Commerce Research and Applications, 10, 6, November-December 2011, 683-701.

• Kauffman, R.J., and Techatassanasoontorn, A. Understanding Early Diffusion of Wireless Phones. Telecommunications Policy, 33, 8, September 2009, 432-450.

• Kauffman, R.J., and Kumar, A. Impacts of Information and Communication Technologies on Country Development: Accounting for Area Relationships. In-

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ternational Journal of Electronic Commerce, 13, 1, Fall 2008, 11-58.

• Kauffman. R.J., and Kumar, A. Mapping the Multi-Tiered Impacts of the Growth of IT Industries in India: A Combined Scale-and-Scope Externalities Perspective. Journal of Information Technology for Development, 14, 3, Summer 2008, 225-252.

Mechanism Design. Mechanism design in Economics is the study of how to create transaction-making support approaches so that it is possible to support effect exchange of value in different kinds of internal and market-based transactions. In Internet group-buying, I have tried to figure out how to construct incentive-compatible approaches so buyers and sellers both engage in value co-creating actions. For buyers, it’s important for that they have sufficient information about the incentives of other participants to make bids that drive down the price for item sales to a level that reflects greater group demand. I’ve learned in my research that this involves encouraging information sharing, tolerating sub-group collusion, and identifying different ways to present bid-relevant in-formation to encourage greater bidder informedness. I also have studied combinatorial auctions to support electronic procurement, and have explored different issues with re-spect to their performance and value, and how they can be adapted for procurement settings that have different characteristics. A recent article in 2013 proposed a hybrid mechanism involving a combinatorial mechanism supplement with buyer and seller bar-gaining, to address the lack of information that a buyer has related to the true cost of what the seller is supplying.

A grant proposal to the Society for Worldwide Interbank Financial Telecommunica-tion (SWIFT) that was funded in 2014 explores a hybrid mechanism design that com-bines delayed net settlement and real-time gross settlement of payments. The research addresses the increasing need to balance payment risks related to the timing of settle-ment between a payer and a payee, and the need for bank intermediaries to effectively prioritize payment settlement for immediate or delayed handling. The research proposes a central payment queuing system, as shown below, that pools liquidity for settling payments or that holds them up for netting at the end of pre-determined daily or intraday cycle. The mechanism serves to minimize risk in the system for payments.

Payment  orders  arrive  in  banks

RTGS

Payment  clearing

No

Payment  settled  immediately  by  individual  banks

Orders  queued  in  the  Central  Payment  Queuing  System

End  of  netting  cycle?

Yes

Yes

Yes

Queued  orders    are  netted

No

No

Payment  priority

Liquidity  pooling

Payment  settled

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Some of my recent publications on these various topics include:

• Guo, Z., Kauffman, R.J., Lin, M., and Ma, D. Mechanism Design for Near Real-Time Retail Payment and Settlement Systems. In Proc. 47th Hawaii Intl. Conf. Sys. Sci, January 2015, Hawaii, HI, IEEE Comp. Soc. Press, Washington, DC, 2015.

• Huang, H., Xu, H., Kauffman, R.J., and Sun, N. Analyzing Auction and Bargain-ing Mechanism Design in E-Procurement with Quality Verification and Risk Aver-sion. Operations Research Letters, 41, 4, July 2013, 403-409.

• Huang, H., Kauffman, R.J., Xu, H., and Zhao, L. A Hybrid Mechanism for Heter-ogeneous E-Procurement Involving a Combinatorial Auction and Bargaining. Electronic Commerce Research and Applications, 12, 3, May-June 2013, 181-194.

• Li, T., and Kauffman, R.J. Adaptive Learning in Service Operations. Decision Support Systems, 53, 2, May 2012, 306-319.

• Huang, H., Kauffman, R.J., Xu, H., and Zhao, L. Mechanism Design for E-Procurement Auctions: On the Efficacy of Post-Auction Negotiation and Quality Effort Incentives. Electronic Commerce Research and Applications, 10, 6, No-vember-December 2011, 650-672.

• Chen, J., Huang, H., and Kauffman, R.J. A Public Procurement Combinatorial Auction Mechanism with Quality Assignment. Decision Support Systems, 51, 3, June 2011, 480-492.

• Kauffman, R.J., Lai, H.C., and Lin, H.C. Consumer Adoption of Group-Buying Auctions: An Experimental Study. Info. Tech. and Mgmt., 11, 4, December 2010, 191-211.

• Kauffman, R.J., Lai, H.C., and Ho, C.T. Incentive Mechanisms, Fairness and Participation in Group-Buying Auctions. Electronic Commerce Research and Ap-plications, 9, 3, May-June 2010, 249-262.

• Chen, J., Kauffman, R.J., Liu, Y., and Song, X. Segmenting Uncertain Demand in Group-Buying Auctions. Elec. Comm. Res. Appl., 9, 2, March-April 2010, 126-147.

• Chen, J., Chen, X., Kauffman, R.J., and Song, X. Should We Collude? Analyz-ing the Benefits of Bidder Cooperation in Group-Buying Auctions. Electronic Commerce Research and Applications, 8, 4, July-August 2009, 191-202.

• Kauffman, R.J., and Kumar, A. Understanding State and National Growth Co-Movement: A Study of Shared ATM Networks in the United States. Electronic Commerce and Research Applications, 7, 1 Spring 2008, 21-43.

Innovation and Evolution in Technology Ecosystems. The study of technological innovation is primarily pursued by researchers outside the central area of IS and man-agement research. In the late 2000s, colleagues at the University of Minnesota and I developed a new analysis approach that involves components, products and infrastruc-tures as a basis for explaining how technology ecosystems evolve to produce new inno-

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vations. We published a number of articles that provided the basis for the ideas, tests of their application in different technology and market contexts, and some evaluations of the breadth of their applicability.

More recently at SMU, I have worked with faculty and Ph.D. student colleagues to extend the analysis approach to include services in addition to products, and also to consider the effects of stakeholder forces, as well as the influences on innovation via interorganizational competition and collaboration, and regulatory forces. We have also applied the ideas in new contexts, including innovations in mobile payments, and the development of the high-frequency trading (HFT) technology ecosystem, and its tech-nology-based innovations. The figure below illustrates the basic analysis for compo-nents (C), services (S), and infrastructures (I).

Some of the published and in-press articles in this research stream include the fol-

lowing:

• Kauffman, R.J., Liu, J., and Ma, D. Forecasting Innovations in Financial Infor-mation Systems and Technology Ecosystems: The Case of High-Frequency Trading Systems in the Equity Market. Technology Forecasting and Social Change, 2015, in press.

• Goh, K., and Kauffman, R.J. Investments in Internet-Based Innovations in Fi-nancial Services: Strategic Advantage or Strategic Necessity? International Jour-nal of Business Excellence, 2015, in press.

• Li, X., Kauffman, R.J., Zhang, Y. Externalities, Incentives and Strategic Com-plementarities: Understanding Herd Behavior in IT Adoption. Information Sys-tems and E-Business Management, 12, 3, August 2014, 443-464.

• Adomavicius, G., Bockstedt, J., Gupta, A., and Kauffman, R.J. Making Sense of Technology Trends in the Information Technology Landscape. MIS Quarterly, 32, 4, December 2008, 779-809.

• Adomavicius, G., Bockstedt, J., Gupta, A., and Kauffman, R.J. Understanding Evolution in Technology Ecosystems. Communications of the ACM, 51, 10, Oc-tober 2008, 117-122.

IT and Software Services: Adoption, Diffusion, Contracting and Governance. This has been a major area of research focus for me. I have sought to understand how

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the design of mechanisms can balance the financial risk for the vendor and the client in IT services, especially IT outsourcing, software-as-a-service and cloud computing. I have also been interested to characterize how IT services innovations have diffused and been adopted, and how they impact and transform the business economy. This work is also related to other research I have done to gauge the ways that emerging technologies diffuse through component, product, service and infrastructure innova-tions. I have also recently done strategy research that explores how IT services provid-ers allow potential clients to sample their services to establish the extent of the ‘fit costs’ for adoption and the economic benefits of contracting with the vendor. Another aspect of the work I’ve done on how IT services vendors ‘version’ their offerings to create ‘dam-aged services’ and implement new approaches to pricing in the IT services market. This has also led me to characterize how the IT services and cloud computing marketplace has been ‘financified,’ much like the operations of financial markets for securities and equities. The figure below is suggestive of this perspective in terms of clients’ needs.

Another aspect of the research is related to how large organizations are acquiring

software in a way that reflects greater concentration or unification of solutions in their purchases – what has been called ‘the software stack.’ This seems to be driven by ex-ogenous forces that are causing software and infrastructure services providers to in-creasing acquire functionality so they can deliver services in a 'unified software stack.' A final aspect of this work has to do with ownership of IT assets, and software and sys-tems governance, which seeks to bring new managerial insights to long-standing prob-lems of how firms can achieve best practice approaches with systems capabilities de-velopment, acquisition and deployment.

Some of the representative articles include the following.

• Huang, J., Ma, D., and Kauffman, R.J. Pricing Strategy for Cloud Computing: A Damaged Services Perspective. Decision Support Systems, 2015, in press.

• Huang, J., Kauffman, R.J., Ma, D., Shang, R., and Yang, Y. On the Financifica-tion of Cloud Computing: An Agenda for Pricing and Service Delivery Mechanism Design Research. International Journal of Cloud Computing, 2015, in press.

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• Mann, A., Folch, D., Kauffman, R.J., and Anselin, L. Spatial and Temporal Trends in Information Technology Outsourcing. Working paper submitted to a journal in the Geography and Regional Science areas, 2014

• Ma, D., and Kauffman, R.J. Competition between Software-as-a-Service Ven-dors. IEEE Transactions on Engineering Management, 61, 4, 2014, 717-729.

• Huang, J., Shang, R., Yang, Y., and Kauffman, R.J. An Empirical Study of a Hy-brid Pricing Mechanism for Brokered Cloud Services. In Proc. 2013 Workshop on IT and Systems, Milan, Italy, December 2013.

• Kauffman, R.J., and Ma, D. Cost Efficiency Strategies in the Software-as-a-Service Market: Modeling and Related Implementation Issues. In Proceedings of the 2013 Conference on the Economics of Grids, Clouds, Systems and Services, Zaragosa, Spain, September 2013. Also published in Lecture Notes in Computer Science, Springer, New York, NY, October 2013.

• Shang, R., Huang, J., Yang, Y., and Kauffman, R.J. Analyzing the Impact of Cloud Services Brokers on Cloud Computing Markets. In Proceedings of the 2013 Pacific Asia Conference on Information Systems, Jeju, South Korea, June 2013, Association for Information Systems, Atlanta, GA, 2013.

• Shang, R., Huang, J., Yang, Y., and Kauffman, R.J. Exploring Spot Market Us-ers' Willingness-to-Pay for Service-Level Agreements in Cloud Computing. In Proc. 2012 Workshop on E-Business, Orlando, FL, December 2012.

• Kauffman, R.J., and Sougstad, R. Valuation of Benchmark Provisions on IT Ser-vices Contracts. In Proceedings of the 2012 International Conference on Elec-tronic Commerce, Singapore, August 2012, ACM Press, New York, NY, 2012.

• Han, K., Kauffman, R.J., and Nault, B.R. Returns to Information Technology Outsourcing. Information Systems Research, 22, 4, December 2011, 824-840.

• Mann, A., Kauffman, R.J., Han, K., and Nault, B.R. Are There Contagion Effects in IT and Business Process Outsourcing? Decision Support Systems, 51, 4, No-vember 2011, 864-874.

• Benaroch, M., Dai, Q., and Kauffman, R.J. Should We Go Our Own Way? Ana-lyzing Backsourcing Flexibility in IT Service Outsourcing Contracts. Journal of Management Information Systems, 26, 4, Spring 2010, 317-358.

• Bardhan, I., Demirkan, D., Kannan, P.K., Kauffman, R.J., and Sougstad, R. An Interdisciplinary Perspective on Key Issues, Theories and Research Directions for IT Services Management. Journal of Management Information Systems, 26, 4, Spring 2010, 13-64.

• Bardhan, I., Kauffman, R.J., and Naranpanawe, S. IT Project Portfolio Optimiza-tion: A Risk Management Approach to Software Development Governance. IBM Journal of Research and Development, 54, 2, Spring 2010, 1-18.

• Kauffman, R.J., and Tsai, J.Y. The Unified Procurement Strategy for Enterprise Software: A Test of the ‘Move to the Middle’ Hypothesis. Journal of Management

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Information Systems, 26, 2, Fall 2009, 177-204.

• Han, K., Kauffman, R.J., and Nault, B.R. Relative Importance, Specific Invest-ment and Ownership in Interorganizational Systems. Information Technology and Management, 9, 3, September 2008, 181-200.

Research Methods and Research Directions. I would like to conclude this update to my research statement by saying that I continue to enjoy research as a ‘writing pro-cess’ about emerging research methods and identifying future directions for research.

This is reflected in a 100-plus page monograph that I published in 2000 in the Inter-national Journal of Electronic Commerce on research directions for e-commerce. Most recently, I have a new paper under review that discusses how 'big data' analytics meth-ods are creating a paradigm shift to Computation Social Science, diminishing the classi-cal 'three-horned dilemma' of ‘control,’ ‘realism’ and ‘generality’ in Social Science re-search. The figure below illustrates this perspective from an article published with two Research Fellows at LARC.

My published works in the past eight years reflect my research interests as a thought

leadership essayist to discover future directions for research in the areas of: Service Science and service-oriented technology and management; Economics and emerging technological and market solutions; Financial IS and Technology in the area of mobile and innovative new electronic payments; and information privacy from the point of view of Accounting research and practice. Another recent effort has been to assess the ca-pabilities of event history methods, spatial econometrics and count data modeling as emerging areas for business, consumer and social insights data analytics research, and for the study of IS and e-commerce issues.

The related publications in this research stream include: • Chang, M., Kauffman, R.J., and Kwon, Y. Understanding the Paradigm Shift in

Computational Social Science in the Presence of ‘Big Data.’ Decision Support Systems, 63, June 2014, 67-80.

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• Kauffman, R.J., Techatassanasoontorn, A.A., and Wang, B. Event History, Spa-tial Analysis and Count Data Methods for Empirical Research in IS. Information Technology and Management, 13, 3, September 2012, 115-147.

• Kauffman, R.J., Lee, Y.J., Prosch, M., and Steinbart, P. A Survey of Information Privacy from the Accounting Informative Systems Perspective. Journal of Infor-mation Systems, 24, 2, Fall 2011, 47-79.

• Lee, Y.J., Kauffman, R.J., and Sougstad, R. Profit-Maximizing Firm Investments in Customer Information Security. Decision Support Systems, 51, 4, November 2011, 904-920.

• Demirkan, H., Kauffman, R.J., Vayghan, J., Fill, H.G., Karagiannis, D., and Mag-lio, P. Service-Oriented Technology and Management: Perspectives on Re-search and Practice for the Coming Decade. Electronic Commerce Research and Appl., 7, 4, July-August 2008, 356-376.

• Au, Y., and Kauffman, R.J. The Economics of Mobile Payments: Understanding Stakeholder Issues for an Emerging Financial Technology. Electronic Commerce and Research Applications, 7, 2, Summer 2008, 141-164.

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