What value does information technology (IT) create in governments and how does it do so? While business value of IT has been extensively studied in the information systems field, this has not been the case for public value. This is in part due to a lack of theoretical bases for investigating IT value in the public sector. To address this issue, we present a conceptual model on the mechanism by which IT resources contribute to value creation in the publicsector organizations. We propose that the relationship between IT resources and organizational performance in governments is mediated by organizational capabilities and develop a theoretical model that delineates the paths from IT resources to organizational performance, drawing upon public-value management theory. This theory asserts that public managers, on behalf of the public, should actively strive to generate greater public value, as managers in the private sector seek to achieve greater private business value. On the basis of the review of public-value management literature, we suggest that the following five organizational capabilities mediate the relationship between IT resources and public value -public service delivery capability, public engagement capability, co-production capability, resource-building capability, and public-sector innovation capability. We argue that IT resources in public organizations can enable public managers to advance public-value frontiers by cultivating these five organizational capabilities and to overcome conflicts among competing values.

This paper aims at exploring value creation from information technologies in governments. While the majority of studies in the information systems discipline have focused on discovering IT business value in for-profit organizations, the question of whether the performance effect of IT exists in the public sector has not been extensively studied so far in either the information systems or public administration literature. We examine whether IT improves administrative efficiency in U.S. state governments. Utilizing the IT budget data in state governments, the census data on state government expenditures, and a variety of information on public services states provide, we estimate technical cost inefficiency, an inverse proxy for administrative efficiency, with a stochastic frontier model. Our analyses provide evidence for a significantly negative relationship between IT intensity and cost inefficiency. Our results indicate that all others being equal, on

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A growing number of firms are strategically utilizing information technology and the Internet to provide online services to consumers who buy their products. Online services differ from traditional services because they often promote interactivity among users and exhibit positive network effects. While the service increases the value obtained by consumers, network effects are known to intensify price competition and thus may reduce firms' profits. In this paper, we model the competition between two firms that sell a differentiated product when each firm can offer a complementary online service to its customers. We derive the market equilibrium and determine how firms should adjust their strategies to account for network effects. We find that when the service exhibits network effects, a firm's decision whether or not to offer the service depends on both the competitor's decision and the competitor's service quality. When the service does not exhibit network effects, this is not the case. In addition, we show that a firm can benefit from the technological ability to offer the service, and from an increase in the strength of network effects or in the market size of the service, only when the value customers derive from the direct functionalities (those that do not rely on the network) of the service are sufficiently high. As a result, a firm's investment in the direct functionalities of its service increases with the strength of network effects of the service as long as the marginal development cost is not too high. Finally, we show that inefficiencies in terms of the number of firms offering the service as well as the total number of service users may prevail.

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