Kristina Steffenson McElheran
Assistant Professor of Business Administration (Leave of Absence)
Kristina Steffenson McElheran is the Lumry Family Assistant Professor of Business Administration in Technology and Operations Management at the Harvard Business School. Kristina conducts empirical economics-based research on the interactions between information technology, firm performance, and competitive strategy. Her focus is on understanding the drivers and implications of how firms use information technology to collaborate and compete in the marketplace.
Prior to her academic career, Kristina worked for two start-up technology companies in Silicon Valley. The first, Risk Management Solutions, has become a leading provider of products and services for managing risks associated with natural disasters. The second, Exemplary Software, provided collaborative web-based supply chain management solutions.
Kristina’s PhD (2009) in Managerial Economics and Strategy comes from Northwestern University’s Kellogg School of Management. She also holds a Diploma in Economics (1999) from the London School of Economics, as well as a Master's degree (1994) in International Development Policy and a Bachelor's degree (1993) in Political Science from Stanford University.
Delegation in Multi-Divisional Firms: Determinants of the Organizational Structure of IT Purchasing Authority
Recent contributions to a growing theory literature have focused on the tradeoff between adaptation and coordination in determining delegation within firms. Empirical evidence, however, is limited. Using establishment-level data on decision rights over information technology investments, I find that a high net value of adaptation is strongly associated with delegation, as are local information advantages and firm-wide diversification; in contrast, a high value of within-firm coordination is correlated with centralization. Variation across establishments within firms is widespread: most firms are neither fully centralized nor fully decentralized. Delegation patterns are largely consistent with standard team-theory predictions; however, certain findings, such as a negative correlation between delegation and firm size, call for a consideration of agency costs, as well.
Do Leaders Lead in Business Process Innovation? The Case(s) of E-Business Adoption
This paper investigates how market position influences firm propensity to adopt new process innovations. Using detailed data from the U.S. Census of Manufactures, I study the adoption of frontier e-business practices during the early diffusion of the commercial internet. Consistent with conventional wisdom that leading firms are more likely to adopt incremental process innovations, I find evidence that larger firms in 1999 were far more likely than smaller firms to conduct indirect purchasing over the internet (“e-buying”). However, they were commensurately reticent to adopt e-selling. I argue that the best explanation is that e-selling was more radical an advance than is commonly understood and explore the notion that business process innovations can be disproportionately costly for larger firms if they require changes to core activities that also span the firm boundary.
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Information Technology and Vertical Integration: Evidence from Plant-level Data (with Chris Forman)
We study the relationship between different margins of information technology (IT) use and vertical integration using plant-level data from the U.S. Census of Manufactures. Focusing on the short-run decision of whether to allocate production output to downstream plants within the same firm or to external customers, we find that customer-focused IT, by itself, has surprisingly little impact. In contrast, adoption of upstream supplier-focused IT at a plant is associated with a significant decline in downstream vertical integration. However, the greatest decline in within-firm transfers occurs when supplier- and customer-facing IT are adopted together, suggesting the presence of complementarities in supply chain technology adoption. These results are consistent with the view that, by reducing external coordination costs, IT investments promote a decline in plant-level vertical integration, but only when those investments are made jointly with both suppliers and customers. Our results provide less support for the view that IT investments led to a decline in vertical integration by lowering transactions risks.
The Role of IT in Firm Scope Choice: Diversification or Specialization?
The use of IT can have two, actually opposing, effects on product diversification depending on how technologies are used by the firm. On the one hand, some uses of IT can increase specialization because they allow customers to research and order products remotely, thereby expanding the customer base for a given product. In addition, use of networked technology may reduce the transaction costs associated with outsourcing aspects of production. These effects may allow a seller to more profitably specialize in a given product line. On the other hand, the use of IT can increase product diversification by reducing coordination costs associated with managing diverse product lines in-house. By using certain technologies, firms can improve procurement coordination, expand production oversight, and scale certain administrative business functions, achieving greater economies of scope in production.
Determining which effect will dominate on average is an empirical question. In this paper, we use internal microdata from the Annual Survey of Manufactures and its Computer Network Use Supplement as well as from the Census of Manufactures to measure the use of IT for different business functions (e.g., purchasing, logistics, communications) and to assess the impact of these uses on the degree of product diversification (using 6-digit and 10-digit NAICS product codes) for U.S. manufacturers. Preliminary evidence suggests a strong positive correlation between the use of networked IT and increased diversification. However, there appear to be important differences in how firms use IT – in particular, whether they use it to coordinate internally within the firm or to coordinate with external suppliers and customers. Applying IT to certain internal functions appears to be more associated with specialization.