This article investigates IT investment management processes in the U.S. and Portugal. In Portugal compared to the United States, we find less involvement of operational business users, less formalized processes, more bottom-up generation of ideas, less focus on business metrics other than financial ones, and more highly involved corporate boards. We develop a framework for understanding IT investment that includes five stages: idea generation, business case generation, investment selection, project implementation, and value realization. Several of Hofstede’s factors are used to explain national cultural differences in each of these stages. Cultures with high power distance involve fewer business line employees in idea generation, fewer operational business managers selecting investments, and more centrally managed project implementations. In cultures with high uncertainty avoidance, fewer large scale strategic project ideas are generated and there is a stronger emphasis on financial criteria in information technology investment selection.
It Investment Management And National Culture
What choices do managers make when developing, evaluating, and implementing IT to maximize payoff? To answer this question, we need to open up the “black box” of IT investment management and adopt a process approach (Devaraj & Kohli, 2002; Soh & Markus, 1995). Table 1 presents our process framework that describes the key stages in IT investment management. This model allows us to delineate key management choices that are made, in particular, who is involved and what processes are followed in each stage.