Dr.

Prasanna Karhade

Dr. Prasanna Karhade is currently an Assistant Professor in the Department on

Information Systems, Business Statistics and Operations Management at The
Hong Kong University of Science and Technology.

About Dr. Prasanna Karhade

Dr. Prasanna is from Mumbai, India and studied at Sardar Patel College of
Engineering where he earned a Bachelor of Engineering in Computer
Engineering. He earned a Master of Science in Computer Science from
Georgia State University. He worked as a software engineer for about 30
months in Atlanta, Gerogia.
He earned a PhD in Business Administration from the University of Illinois at
Urbana-Champaign.

Research
1) Journal Papers
a) Contractual Provisions to Mitigate Holdup: Evidence from Information
Technology Outsourcing
b) Patterns in Information Systems Portfolio Prioritization: Evidence from
Decision Tree Induction
2) Selected Conference Papers
a) Information Technology And Innovation Outputs: The Missing Link of
Search Evolution
b) Dynamic Adjustment Of Information Technology, Corporate Governance,
And Firm Profitability
c) The Penrose Effect In Resource Investment For Innovation: Evidence
From Information Technology And Human Capital

Journal Papers
a) Contractual Provisions to Mitigate Holdup: Evidence from Information
Technology Outsourcing:
Information Systems Research:

Anjana Susarla, Ramanath Subramanyam, Prasanna Karhade

Abstract: The complexity and scope of outsourced information technology (IT) demands relationship-specific
investments from vendors, which, when combined with contract incompleteness, may result in underinvestment
and inefficient bargaining, referred to as the holdup problem. Using a unique data set of over 100 IT outsourcing
contracts, we examine whether contract extensiveness, i.e., the extent to which firms and vendors can foresee
contingencies when designing contracts for outsourced IT services, can alleviate holdup. While extensively
detailed contracts are likely to include a greater breadth of activities outsourced to a vendor, task complexity
makes it difficult to draft extensive contracts. Furthermore, extensive contracts may still be incomplete with
respect to enforcement. We then examine the role of nonprice contractual provisions, contract duration, and
extendibility terms, which give firms an option to extend the contract to limit the likelihood of holdup. We also
validate the ex post efficiency of contract design choices by examining renewals of contracting agreements.
Keywords: contract duration, extendibility clauses, holdup, underinvestment, information technology outsourcing, incomplete contracts
Cite: Susarla, A., Subramanyam, R., & Karhade, P. (2010). Contractual provisions to mitigate holdup: Evidence from information technology
outsourcing. Information Systems Research, 21(1), 37-55.

Journal Papers
b) Patterns in Information Systems Portfolio Prioritization: Evidence from Decision
Tree Induction:
MIS Quarterly:

Prasanna Karhade, Michael J. Shaw, and Ramanath Subramanyam

Abstract: Questions pertaining to the locus of information systems (IS) governance have been extensively
examined in existing research. However, questions pertaining to the decision rationale applied for Information
Systems portfolio prioritizationwhy are certain initiatives approved, and why are certain others rejectednoted
to be a critical component of IS governance need further investigation. We submit that the Information Systems
strategy of a firm is likely to explain the decision rationale it applies to Information Systems portfolio prioritization
and maintain that it is critical to ensure this decision rationale is in congruence with the firms Information
Systems strategy. By extending prior theoretical work on Information Systems strategy types, we develop
theoretical profiles of the decision rationale applied to Information Systems portfolio prioritization using three
attributes: communicability of decision rationale, consistency in applying decision rationale, and risk
appropriateness of decision rationale. Since the decision rationale applied for Information Systems portfolio
prioritization is often tacit, unknown even to the decision makers themselves, we employ the decision tree
induction methodology to discover this tacit decision rationale. We analyze over 150 Information Systems
portfolio prioritization decisions on a multimillion dollar Information Systems portfolio of a multibusiness, Fortune
50 firm and our findings, which support our propositions, indicate that firms that adopt different Information
Systems strategies rely on systematically different profiles of decision rationale for Information Systems portfolio
prioritization. Implications for IS governance practices are developed.
Keywords: Information Systems strategy, Information Systems portfolio prioritization, IT portfolio management, IS governance, IT governance, decision making,
decision tree induction
Cite: Karhade, P., Shaw, M. J., & Subramanyam, R. (2015). Patterns in Information Systems Portfolio Prioritization: Evidence from Decision Tree Induction. MIS
Quarterly, 39(2).

Selected Conference Papers

a) Information Technology And Innovation Outputs: The Missing Link of Search
Evolution
John Qi Dong, Prasanna Karhade, Arun Rai, Sean Xin Xu
Academy of Management (AoM 2015)

Abstract: Recent literature documents mixed findings on the impact of information technology (IT) investment on
film innovation outputs, calling for deeper exploration of the mechanisms through which IT influences innovation
that can reconcile these mixed findings. Based on the evolutionary theory of the firm, we theorize the impacts of
IT investment on the variation of firm search behavior in spanning various existing boundaries. Specifically, we
explain how and why firms with greater IT investment are more likely to search across technological,
organizational, geographical, and temporal boundaries in recombining knowledge elements, which has
curvilinear impacts on the quantity and quality of innovation outputs. Using a panel data set from multiple
archival sources, we found robust empirical evidence corroborating our theory.
Keywords: information technology investment; search: knowledge recombination; innovation; business value of information
technology; evolutionary theory of the firm

Selected Conference Papers

b) Dynamic Adjustment Of Information Technology, Corporate Governance, And
Firm Profitability
John Qi Dong, Prasanna Karhade, Arun Rai, Sean Xin Xu
European Conference on Information Systems (ECIS 2013)

Abstract: How do managers make their decisions with regard to adjustment and deployment of information
technology (IT) over time? Motivated by this complex dynamics, we draw on behavioral theory of the firm and
theorize a bounded rational process of managerial decision making for IT investment. In particular, we explain
the dynamic adjustment of IT investment by bounded rational managers pursuing of satisfaction. When
performance feedback of prior profitability is below their aspiration, they become unsatisfied and adjust IT
investment to facilitate problemistic search directed toward innovative solutions to performance problems. As a
result, performance problems will be solved and future profitability can be improved. We also deepen our
understanding by theorizing the contingency of above dynamics based on the possibility of agency problems and
the appropriateness of corporate governance mechanisms, which is largely omitted in behavioral theory. We
further draw on agency theory and examine the moderating roles of different corporate governance mechanisms
(i.e., incentive alignment versus monitoring) in the effects of IT investment on problemistic search and rent
generation. By using a recent, large-scale panel data set, we find that managers are indeed bounded rational
and dynamically adjust IT investment over time based on performance feedback. We also find that incentive
alignment outgoes monitoring in directing managerial decision making toward innovating with and generating
rent with IT investment. Novel theoretical and practical implications are discussed.
Keywords: dynamic adjustment of IT investment, dynamics of managerial decision making, IT innovation, corporate governance,
behavioral theory of the firm, agency theory.

Selected Conference Papers

c) The Penrose Effect In Resource Investment For Innovation: Evidence From
Information Technology And Human Capital
John Qi Dong, Jinyu He, Prasanna Karhade
European Conference on Information Systems (ECIS 2013)

Abstract: Resource-based theory views the firm as a bundle of resources administrated and coordinated by
managers. We introduce the theoretical lens of Penrose effect to IS research, which refers to the fact that finite
managerial capacities will suffer if the complexity of resource coordination is high. Therefore, although
investment in knowledge-related assets, such as information technology (IT) and human capital, is associated
with better innovation performance on the one hand, too much capital investment is likely to induce diminishing
return on the investment because of Penrose effect. Accordingly, we take a curvilinear approach and propose
that the relationships between IT/human capital investments and innovation performance are likely to be inverted
U shaped. Furthermore, we suggest that, in addition to bringing resource synergy, resource coordination also
incurs costs, especially when the complexity of coordination among multiple resources is high. Thus, we take a
nonlinear approach to examine the interaction effect of IT and human capital investments on innovation
performance, which may not be always positive as past research often maintained. Longitudinal data from 404
German firms across several recent years confirm inverted U-shaped relationships between IT/human capital
investments and innovation performance. In addition, we find that IT and human capital investments have a
negative interaction effect, suggesting that high level of investment in one capital will lead to increasing
coordination costs and diminishing return on investment in the other.
Keywords: IT capital investment, human capital investment, IT value, IT innovation, Penrose effect, resource based theory, resourcebased view.

Summary of Recent Teaching

Dr. Prasanna Karhade also teaches Strategic Management of Information

Technology. This PG course has been offered in the Master of Science in
Information Systems Management and the Master of Science in Global
Operations programs at HKUST.

Recent Service
Field
WITS 2015, Program Committee Member
CIST 2015, Program Committee Member
ICIS 2015, AE IS Strategy Track
ICIS 2014, AE IS Governance Track

University
HKUST Business School Outreach in India for the HKUST Business School PhD Program.

Dr. Prasanna Karhade (along with Prof. Anirban Mukhopadhyay) visited 9 schools in India and talked
to hundreds of the eager young minds of India about pursuing a career in academia.

Dr. Prasanna Karhades Blog

1) OCIS Best Conference Paper Runner-Up!
2) Seminar on National Energy Policy 2015
3) GloColl 2015
4) AoM 2015 Best Paper Proceedings
5) Academy of Management 2015 Meeting
6) HKUST Business Insights Series

Honors & Awards

Research Grants

IT Assets and Firm Innovation Output: An Empirical Examination, (with Jeevan

Jaisingh, Jinyu He, Arun Rai) Hong Kong Research Grants Council Competitive
Earmarked Research Grant HKUST 641612, 2012-14, HK$215,670, Principal
Investigator.

Awards
OCIS Best Conference Paper Runner-Up, AoM 2015

Dr. Prasanna Karhades Official Website

Website : http://prasannakarhade.com/
Email : karhade@ust.hk