Business Commons^™

Information Technology, Revenues, And Profits: Exploring The Role Of Foreign And Domestic Operations, Sunil Mithas, Jonathan W. Whitaker, Ali Tafti

Management Faculty Publications

How does information technology (IT) enable firms to globalize their operations and achieve higher foreign profits? We use archival data for multinational firms publicly-traded in the United States for the years 1999 – 2006, and find indirect evidence for the role of IT to help firms achieve higher foreign profits through revenue growth rather than cost reduction. Our findings suggest that foreign responsiveness plays a more important role in generating foreign profits than does value chain structure. Our exploratory analyses for the effect of IT on domestic revenues and profits suggest some evidence for equalization of returns across foreign and …