IT Knowledge Spillovers, Absorptive Capacity, and Productivity: Evidence from Enterprise Software

Abstract

We examine the productivity implications of external knowledge flows obtained through an internet-mediated discussion forum in which IT professionals help one another solve problems related to the implementation and use of enterprise software. We extend elements of the absorptive capacity (ACAP) framework that have not previously been studied in the information systems (IS) literature to a new context. Consistent with prior results from the IS literature, we first show that IT spillovers—acquired through employees’ participation in this forum—only accrue to firms with prior related investments in enterprise software. We then demonstrate boundary conditions for ACAP based on characteristics of external knowledge affecting the ease of learning. Our results show that IT spillovers are not “free”; the ability to derive the value of IT spillovers through informal channels—such as online communities—critically depends on both prior related IT investments by the recipient firm and the novelty of external knowledge. Less intuitively, when knowledge originates from relatively novel or emergent domains, the role of prior related knowledge in absorbing spillovers becomes more important.