Shadow IT and Data Credibility: The Impact of Shadow Systems in an ERP Environment

• In Event: AIS and Firm Value

Abstract

Business trends show that more and more employees are creating shadow IT systems—information technology that is not sanctioned or monitored by the IT department (Hinchcliffe 2013). This paper examines how the use of shadow IT in organizations impacts managerial decision-making. Relying on source credibility theory, we predict and find evidence that managers perceive information produced by a shadow IT system to be less credible than that produced by an ERP system. In addition, we predict and find evidence that information produced from shadow IT systems influences managers’ operational decision making differently than if the information originated from an ERP system. Specifically, participants in our experiment were given the choice of discontinuing one of two product lines and were significantly more likely to discontinue the product based on reports prepared from a shadow IT system than an ERP system—even when the report prepared from the shadow IT system showed more favorable costs. The results of our study should prove informative to those organizations where shadow IT may be in use by employees.

Authors

• Noah Myers, Brigham Young University

• Matthew Starliper, University of Massachusetts Amherst

• Scott L Summers, Brigham Young University

• David A Wood, Brigham Young University