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Vetter, Johannes; Benlian, Alexander ORCID logoORCID: https://orcid.org/0000-0002-7294-3097 and Hess, Thomas ORCID logoORCID: https://orcid.org/0000-0003-3969-7477 (2011): Overconfidence in IT Investment Decisions: Why Knowledge can be a Boon and Bane at the same Time. 32nd International Conference on Information Systems (ICIS 2011), Shanghai, China, 4-7 December 2011. In: ICIS 2011 Proceedings, Red Hook, NY: Curran.

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Despite their strategic relevance in organizations, information technology (IT) investments still result in alarmingly high failure rates. As IT investments are such a delicate high-risk/high-reward matter, it is crucial for organizations to avoid flawed IT investment decision-making. Previous research in consumer and organizational decision-making shows that a decision’s accuracy is often influenced by decision-makers’ overconfidence and that the magnitude of overconfidence strongly depends on decision-makers’ certainty of their knowledge. Drawing on these strands of research, our findings from a field survey (N=166) show that IT managers’ decisions in IT outsourcing are indeed affected by overconfidence. However, an in-depth investigation of three types of knowledge, namely experienced, objective and subjective knowledge, reveals that different types of knowledge can have contrasting effects on overconfidence and thus on the quality of IT outsourcing decisions. Knowledge can be a boon and bane at the same time. Implications for research and practice are discussed.

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