New model helps firms choose IT portfolios based on risk tolerance.
The article discusses how firms can choose the best IT portfolio based on their risk tolerance levels. The researchers created a new model called the IT Portfolio Efficient Frontier, which helps decision-makers pick the right IT investments. They found that different types of IT portfolios have different relationships between risk and return. Evenly distributed portfolios and unevenly distributed portfolios show a positive linear relationship between risk and return. On the other hand, dominant IT portfolios have a concave curve relationship. This means that if a firm's IT investments are similar to a dominant portfolio, it's better to be more conservative after a certain point.