Abstract
This study explores (1) how much firms invest in and spend on information technology (IT)-enabled business process improvements, such as robotic process automation (RPA), (2) whether the headquarters or the business units should be the decision-making authority for such investments, and (3) how to implement a performance evaluation system. To this end, the study conducts theoretical research on IT investment and spending from the perspectives of individual attributes, organizational management, and the business environment. It uses mathematical model based on the contract theory and focuses on the business risk and IT literacy of the organizational members. The analysis finds that firms need to consider introducing RPA and a performance evaluation system in an integrated manner and according to the nature and its characteristics of the business. Additionally, in certain cases, the headquarters should reserve the right to decide on introduction
RPA and other systems even if it has lower IT literacy than the business units; this becomes more significant as business risks grow.
