Economics and Value of Information Systems


IT fashions are IT innovations within a hyped phase. They are on the rise and claimed to be “the next big thing”. Investing in IT fashions bears potential for high returns in case the technology becomes institutionalized and first mover advantages can be realized. Contrary, it bears the risk of investing in a losing technology. By waiting for others to make the first move organizations bypass this risk but accept the chance of being out-innovated. Depending on an emerging technology’s evolution and its characteristics, the extent of risk and return differ for each strategy. Literature regarding risk and return of IT investments does not address these idiosyncrasies adequately. Our aim is to outline risk/return for each strategy and characteristics of emerging technologies that determine its extent. Hence, this conceptual paper brings together IT fashion and IT investment literature to provide a basis for further research on the evaluation of fashionable IT innovations.