Interorganizational IT investments and the value upstream relational capital

Abstract

Purpose

The focus of this article is upstream relational capital, the intangible value of a firm's business relations with its suppliers. The paper aims to propose and test a valuation model of an organization's upstream relational capital that incorporates the leveraging impact of IT investments.

Design/methodology/approach

A survey was carried out of 159 CEOs in the wireless telecommunication industry.

Findings

Evidence suggests that IT and non‐IT factors contribute to explain abnormal return on relational investments.

Research limitations/implications

This exploratory study is based on a single industry and relational capital is valued by CEO using psychometric scales.

Practical implications

This study shows how IT‐related information helps external investors to value a firm's upstream relationship capital and hence assess the impact of interorganizational IT investments on the firm's valuation.

Originality/value

These results militate for more transparency in regard to relational investments and the relational context of the firm in the management discussion section of the annual report.

Citation

Léger, P. (2010), "Interorganizational IT investments and the value upstream relational capital", Journal of Intellectual Capital, Vol. 11 No. 3, pp. 406-428. https://doi.org/10.1108/14691931011064617