Selecting the most desirable IT portfolio under various risk tolerance levels

Yu Hsiang Huang, Yu Ju Tu, Troy J. Strader, Michael Shaw, Ramanath Subramanyam

Research output: Contribution to journalArticle

Abstract

To better assist decision-makers (e.g., enterprise executives) in selecting the most desirable IT portfolio, this study proposes a new IT Portfolio Efficient Frontier model that incorporates the decision-maker's risk tolerance levels. The proposed model, built on portfolio optimization along with experimental design and simulation data, considers three IT portfolio scenarios: Even distribution-based IT portfolios, uneven distribution-based IT portfolios, and dominant IT portfolios. Our findings show that the IT portfolio efficient frontiers derived from both an even distribution-based IT portfolio and an uneven distribution-based IT portfolio have a relatively positive relationship between IT portfolio risk and return. Our findings also indicate that if IT investments are part of a dominant IT portfolio, an inflection point of the IT portfolio efficient frontier appears under the decision-maker's medium risk tolerance level, and the most desirable IT portfolio is generated when a decision maker's risk tolerance level is medium or higher.

Original languageEnglish (US)
Pages (from-to)1-19
Number of pages19
JournalInformation Resources Management Journal
Volume32
Issue number4
DOIs
StatePublished - Oct 1 2019

Keywords

  • Efficient Frontier
  • Enterprise Executives
  • IT Portfolio Management
  • Risk Tolerance Levels

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management
  • Library and Information Sciences

Fingerprint Dive into the research topics of 'Selecting the most desirable IT portfolio under various risk tolerance levels'. Together they form a unique fingerprint.

  • Cite this