Augustine, Fred K. Jr. with Thomas D. Clark, Jr., "The Use of System Dynamics to Measure the Value of Information in the Business Firm", 1990

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:The primary focus of the research reported in this paper was on the measurement of the value of information in the business firm. It involved development of a system dynamic model of a typical business firm and calibration of the model to an average firm in the can industry in the United States. The model has the five sectors of marketing, finance, production, research and development, and personnel. Data to calibrate the model came primarily from the Industrial Compustat data base. The model was used to test several propositions about the economic value of management information. This topic has been addressed by Morecroft (1977, 1979), Jones (1981) and others. The research extends work by them as well as demonstrating the multidimensional nature of information using the Gorry and Scott-Morton framework of typical information structure. A framework in which to assess information value is developed and discussed.The performance of the firm was assessed using cost, profitability and efficiency measures under various values for the information attributes of accuracy, timeliness, relevance and reliability at the strategic, managerial and operational levels of the firm. Several propositions about information value are offered given the results of the testing.

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  • 1990
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