Recently we have witnessed a new kind of IT advancement. It is a phenomenon where various types of IT capabilities are centralized into data centers to ensure that such resources are available wherever and whenever they are needed. Cloud computing is the latest version of IT service practice reflecting such new IT trends. Although cloud computing is considered a paradigm shift of IT service design and delivery in IS communities and intrigues large amounts of interest from business entities, few studies have examined this new IT and business phenomenon. To better understand the organizational application of cloud computing, the current study aims to investigate economic payoff from cloud computing investment. Employing the event study methodology, we analyze 183 firm-level announcements regarding cloud computing adoption. The results indicate that cloud computing adoption announcements are associated with positive increases in the market value of the firm. In addition, we identified differences in the effect of cloud computing adoption on market returns according to strategic adoption intention, firm size, and industry sector. These results can be used as useful references for the firm’s decision-making about whether, when, and how to adopt cloud computing to maximize its business value.
Cloud computing, event study, market value of firm, service innovation
ISBN: [978-1-86435-644-1]; Full paper
Son, Insoo; Lee, Dongwon; Lee, Jae-Nam; and Chang, Young-Bong, "Understanding The Impact Of IT Service Innovation On Firm Performance: The Case Of Cloud Computing" (2011). PACIS 2011 Proceedings. 180.