Publication Type

Journal Article

Version

acceptedVersion

Publication Date

3-2025

Abstract

This article provides a new way of thinking about managerial discretion in information technology (IT) investment decisions. We delve into the existence, antecedents, and consequences of sticky IT investment behavior, an understudied managerial deliberate resource commitment decision in response to changes in sales. Guided by downsizing theory, we initially theorize and find that IT investments exhibit stickiness: IT investments move downward less for sales decreases than they move upward for equivalent increases. Then drawing upon agency theory, adjustment costs theory, and managerial expectations theory—which influence managers’ motivation for downsizing—we predict and demonstrate that managers’ empire-building incentives, their avoidance of adjustment costs, and their optimism regarding future sales strengthen their engagement in sticky IT investments. Furthermore, we introduce and operationalize three novel measures of firm-specific IT investment stickiness that reflect slack IT resources during sales downturns, respectively, capturing the influence of empire-building incentives, adjustment costs, and managerial optimism. Built on these measures, we uncover that the degree of stickiness in a firm's IT investments offers additional insights into predicting future performance, growth in future IT labor, and growth in future sales. Overall, our work formulates an integrative conceptual framework for understanding sticky IT investment that incorporates the presence and antecedents of managers’ asymmetric IT investment decisions, as well as the implications of firm-specific sticky IT investment for forecasting future corporate outcomes. We discuss these findings and their practical and theoretical implications in detail.

Keywords

Adjustment costs, business value of IT, downsizing theory, empire building, IT investment, managerial expectations

Discipline

Databases and Information Systems | Technology and Innovation

Research Areas

Data Science and Engineering

Publication

IEEE Transactions on Engineering Management

Volume

72

First Page

1010

Last Page

1026

ISSN

0018-9391

Identifier

10.1109/TEM.2025.3547691

Publisher

Institute of Electrical and Electronics Engineers

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1109/TEM.2025.3585492

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