Selecting the most desirable IT portfolio under various risk tolerance levels

Yu Hsiang Huang, Yu Ju Tu, Troy J. Strader, Michael Jeng-Ping 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

Fingerprint

tolerance
decision maker
scenario
simulation
Decision maker
Risk tolerance
Efficient frontier

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

Cite this

Selecting the most desirable IT portfolio under various risk tolerance levels. / Huang, Yu Hsiang; Tu, Yu Ju; Strader, Troy J.; Shaw, Michael Jeng-Ping; Subramanyam, Ramanath.

In: Information Resources Management Journal, Vol. 32, No. 4, 01.10.2019, p. 1-19.

Research output: Contribution to journalArticle

@article{bfdd291d7680489094851840dcf41f70,
title = "Selecting the most desirable IT portfolio under various risk tolerance levels",
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.",
keywords = "Efficient Frontier, Enterprise Executives, IT Portfolio Management, Risk Tolerance Levels",
author = "Huang, {Yu Hsiang} and Tu, {Yu Ju} and Strader, {Troy J.} and Shaw, {Michael Jeng-Ping} and Ramanath Subramanyam",
year = "2019",
month = "10",
day = "1",
doi = "10.4018/IRMJ.2019100101",
language = "English (US)",
volume = "32",
pages = "1--19",
journal = "Information Resources Management Journal",
issn = "1040-1628",
publisher = "IGI Publishing",
number = "4",

}

TY - JOUR

T1 - Selecting the most desirable IT portfolio under various risk tolerance levels

AU - Huang, Yu Hsiang

AU - Tu, Yu Ju

AU - Strader, Troy J.

AU - Shaw, Michael Jeng-Ping

AU - Subramanyam, Ramanath

PY - 2019/10/1

Y1 - 2019/10/1

N2 - 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.

AB - 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.

KW - Efficient Frontier

KW - Enterprise Executives

KW - IT Portfolio Management

KW - Risk Tolerance Levels

UR - http://www.scopus.com/inward/record.url?scp=85071179660&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=85071179660&partnerID=8YFLogxK

U2 - 10.4018/IRMJ.2019100101

DO - 10.4018/IRMJ.2019100101

M3 - Article

AN - SCOPUS:85071179660

VL - 32

SP - 1

EP - 19

JO - Information Resources Management Journal

JF - Information Resources Management Journal

SN - 1040-1628

IS - 4

ER -