{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,7,31]],"date-time":"2026-07-31T01:15:31Z","timestamp":1785460531464,"version":"3.56.0"},"reference-count":53,"publisher":"Springer Science and Business Media LLC","issue":"6","license":[{"start":{"date-parts":[[2022,1,18]],"date-time":"2022-01-18T00:00:00Z","timestamp":1642464000000},"content-version":"tdm","delay-in-days":0,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0"},{"start":{"date-parts":[[2022,1,18]],"date-time":"2022-01-18T00:00:00Z","timestamp":1642464000000},"content-version":"vor","delay-in-days":0,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0"}],"content-domain":{"domain":["link.springer.com"],"crossmark-restriction":false},"short-container-title":["Inf Syst Front"],"published-print":{"date-parts":[[2022,12]]},"abstract":"<jats:title>Abstract<\/jats:title><jats:p>Why do some firms organize their IT departments as profit centers whereas other firms organize IT as a cost center? These commonly employed organizational structures are characterized by information asymmetry and decision rights afforded to the IT department. The complexity of IT and its ongoing rapid evolution lead to information asymmetry where the IT department has private information about technology and cost, and the consuming departments have private information about demand. Under the cost center organizational structure, the firm sets the quality and number of IT services offered by the IT department. Whereas under a profit center structure, the IT department makes decisions on quality, price and variety of IT services. We find that the quality of IT services under the cost center decreases with greater uncertainty in demand for IT services. We also find that the cost center structure can offer higher quality IT services than the profit center structure, and consumption of IT services can be higher under the profit center structure. The preferred organizational structure does not always provide greater variety of IT services than the alternate structure. The cost center is preferred when the marginal cost of IT services is sufficiently low, or the fixed cost of quality is sufficiently high.<\/jats:p>","DOI":"10.1007\/s10796-021-10214-9","type":"journal-article","created":{"date-parts":[[2022,1,18]],"date-time":"2022-01-18T09:17:50Z","timestamp":1642497470000},"page":"2053-2076","update-policy":"https:\/\/doi.org\/10.1007\/springer_crossmark_policy","source":"Crossref","is-referenced-by-count":7,"title":["Organizational Structure for the IT Department: Profit Center or Cost Center?"],"prefix":"10.1007","volume":"24","author":[{"ORCID":"https:\/\/orcid.org\/0000-0002-0153-566X","authenticated-orcid":false,"given":"Joseph","family":"Vithayathil","sequence":"first","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Vidyanand","family":"Choudhary","sequence":"additional","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"297","published-online":{"date-parts":[[2022,1,18]]},"reference":[{"key":"10214_CR1","unstructured":"Aasi, P\\. (2018). Information technology governance: The role of organizational culture and structure. PhD dissertation, Department of Computer and Systems Sciences, Stockholm University."},{"issue":"4","key":"10214_CR2","doi-asserted-by":"publisher","first-page":"1759","DOI":"10.1162\/qjec.2007.122.4.1759","volume":"122","author":"D Acemoglu","year":"2007","unstructured":"Acemoglu, D., Aghion, P., Lelarge, C., Van Reenen, J., & Zilibotti, F. (2007). Technology, information, and the decentralization of the firm. The Quarterly Journal of Economics, 122(4), 1759\u20131799.","journal-title":"The Quarterly Journal of Economics"},{"issue":"2","key":"10214_CR3","doi-asserted-by":"publisher","first-page":"179","DOI":"10.1007\/s10796-009-9183-y","volume":"14","author":"S Ali","year":"2012","unstructured":"Ali, S., & Green, P. (2012). Effective information technology (IT) governance mechanisms: An IT outsourcing perspective. Information Systems Frontiers, 14(2), 179\u2013193.","journal-title":"Information Systems Frontiers"},{"issue":"1","key":"10214_CR4","first-page":"57","volume":"65","author":"B Allen","year":"1987","unstructured":"Allen, B. (1987). Make information services pay its way. Harvard Business Review, 65(1), 57\u201363.","journal-title":"Harvard Business Review"},{"issue":"1","key":"10214_CR5","doi-asserted-by":"publisher","first-page":"20","DOI":"10.1177\/056943459604000103","volume":"40","author":"G Alperovich","year":"1996","unstructured":"Alperovich, G., & Weksler, I. (1996). A class of utility functions yielding linear demand functions. The American Economist, 40(1), 20\u201323.","journal-title":"The American Economist"},{"issue":"9","key":"10214_CR6","doi-asserted-by":"publisher","first-page":"1179","DOI":"10.1287\/mnsc.44.9.1179","volume":"44","author":"RD Banker","year":"1998","unstructured":"Banker, R. D., Khosla, I., & Sinha, K. K. (1998). Quality and competition. Management Science, 44(9), 1179\u20131192.","journal-title":"Management Science"},{"issue":"4","key":"10214_CR7","doi-asserted-by":"publisher","first-page":"187","DOI":"10.1016\/0378-7206(86)90082-0","volume":"10","author":"F Bergeron","year":"1986","unstructured":"Bergeron, F. (1986). The success of DP charge-back systems from a user\u2019s perception. Information & Management, 10(4), 187\u2013195.","journal-title":"Information & Management"},{"issue":"356","key":"10214_CR8","doi-asserted-by":"publisher","first-page":"791","DOI":"10.1080\/01621459.1976.10480949","volume":"71","author":"GE Box","year":"1976","unstructured":"Box, G. E. (1976). Science and statistics. Journal of the American Statistical Association, 71(356), 791\u2013799.","journal-title":"Journal of the American Statistical Association"},{"issue":"2","key":"10214_CR9","doi-asserted-by":"publisher","first-page":"67","DOI":"10.2753\/MIS0742-1222300203","volume":"30","author":"V Choudhary","year":"2013","unstructured":"Choudhary, V., & Vithayathil, J. (2013). The impact of cloud computing: Should the IT department be organized as a cost center or a profit center? Journal of Management Information Systems, 30(2), 67\u2013100.","journal-title":"Journal of Management Information Systems"},{"issue":"2","key":"10214_CR10","doi-asserted-by":"publisher","first-page":"408","DOI":"10.1006\/redy.2002.0170","volume":"5","author":"A Colecchia","year":"2002","unstructured":"Colecchia, A., & Schreyer, P. (2002). ICT investment and economic growth in the 1990s: Is the United States a unique case?: A comparative study of nine OECD countries. Review of Economic Dynamics, 5(2), 408\u2013442.","journal-title":"Review of Economic Dynamics"},{"issue":"5","key":"10214_CR11","doi-asserted-by":"publisher","first-page":"1079","DOI":"10.1007\/s10796-011-9338-5","volume":"14","author":"BA Cumbie","year":"2012","unstructured":"Cumbie, B. A., & Sankar, C. S. (2012). Choice of governance mechanisms to promote information sharing via boundary objects in the disaster recovery process. Information Systems Frontiers, 14(5), 1079\u20131094.","journal-title":"Information Systems Frontiers"},{"issue":"3","key":"10214_CR12","doi-asserted-by":"publisher","first-page":"421","DOI":"10.1007\/s10796-017-9761-3","volume":"19","author":"D Cumming","year":"2017","unstructured":"Cumming, D., Johan, S., & Schweizer, D. (2017). Information systems, agency problems, and fraud. Information Systems Frontiers, 19(3), 421\u2013424.","journal-title":"Information Systems Frontiers"},{"issue":"4","key":"10214_CR13","doi-asserted-by":"publisher","first-page":"1180","DOI":"10.1080\/07421222.2016.1267533","volume":"33","author":"GS Dawson","year":"2016","unstructured":"Dawson, G. S., Denford, J. S., Williams, C. K., Preston, D., & Desouza, K. C. (2016). An examination of effective IT governance in the public sector using the legal view of agency theory. Journal of Management Information Systems, 33(4), 1180\u20131208.","journal-title":"Journal of Management Information Systems"},{"issue":"4","key":"10214_CR14","doi-asserted-by":"publisher","first-page":"9","DOI":"10.1080\/07421222.2003.11045748","volume":"19","author":"WH Delone","year":"2003","unstructured":"Delone, W. H., & McLean, E. R. (2003). The DeLone and McLean model of information systems success: A ten-year update. Journal of Management Information Systems, 19(4), 9\u201330.","journal-title":"Journal of Management Information Systems"},{"issue":"3","key":"10214_CR15","doi-asserted-by":"publisher","first-page":"301","DOI":"10.1287\/isre.7.3.301","volume":"7","author":"S Dewan","year":"1996","unstructured":"Dewan, S. (1996). Pricing computer services under alternative control structures: Tradeoffs and trends. Information Systems Research, 7(3), 301\u2013307.","journal-title":"Information Systems Research"},{"issue":"12","key":"10214_CR16","doi-asserted-by":"publisher","first-page":"1502","DOI":"10.1287\/mnsc.36.12.1502","volume":"36","author":"S Dewan","year":"1990","unstructured":"Dewan, S., & Mendelson, H. (1990). User delay costs and internal pricing for a service facility. Management Science, 36(12), 1502\u20131517.","journal-title":"Management Science"},{"issue":"1","key":"10214_CR17","doi-asserted-by":"publisher","first-page":"20","DOI":"10.2307\/3003317","volume":"10","author":"A Dixit","year":"1979","unstructured":"Dixit, A. (1979). A model of duopoly suggesting a theory of entry barriers. The Bell Journal of Economics, 10(1), 20\u201332.","journal-title":"The Bell Journal of Economics"},{"issue":"4","key":"10214_CR18","doi-asserted-by":"publisher","first-page":"177","DOI":"10.1016\/S0378-7206(97)00018-9","volume":"32","author":"DH Drury","year":"1997","unstructured":"Drury, D. H. (1997). Chargeback Systems in Client\/server environments. Information & Management, 32(4), 177\u2013186.","journal-title":"Information & Management"},{"key":"10214_CR19","unstructured":"S. Florentine. (2017). 10 IT skills that employers need in 2017. CIO.com, http:\/\/www.cio.com\/article\/3164125\/hiring\/10-it-skills-that-employers-need-in-2017.html#slide1"},{"key":"10214_CR20","unstructured":"Fredrik, L., Rusu, L, Aasi, P. (2015). Organizational Structure in IT Governance: A Case Study of an IT Governance Implementation Project.\" 21st Americas Conference on Information Systems (AMCIS 2015), Puerto Rico, august 13\u201315, 2015. Association for Information Systems."},{"issue":"2","key":"10214_CR21","doi-asserted-by":"publisher","first-page":"329","DOI":"10.2307\/1911239","volume":"53","author":"E Gal-Or","year":"1985","unstructured":"Gal-Or, E. (1985). Information sharing in oligopoly. Econometrica, 53(2), 329\u2013343.","journal-title":"Econometrica"},{"issue":"2","key":"10214_CR22","doi-asserted-by":"publisher","first-page":"186","DOI":"10.1287\/isre.1050.0053","volume":"16","author":"E Gal-Or","year":"2005","unstructured":"Gal-Or, E., & Ghose, A. (2005). The economic incentives for sharing security information. Information Systems Research, 16(2), 186\u2013208.","journal-title":"Information Systems Research"},{"key":"10214_CR23","unstructured":"Gordon, S. (1994). Benchmarking the information systems function. Center for Information Management Studies (CIMS), CIMS working paper series 94\u201308, Babson College."},{"key":"10214_CR24","volume-title":"An agency theory view of the Management of end-User Computing","author":"VC Gurbaxani","year":"1988","unstructured":"Gurbaxani, V. C., & Kemerer, C. F. (1988). An agency theory view of the Management of end-User Computing. Sloan School of Management."},{"key":"10214_CR25","doi-asserted-by":"crossref","unstructured":"Gurbaxani, V., Kemerer, C.F. (1989). An agent-theoretic perspective on the Management of Information Systems. Proceedings of the Twenty-Second Annual Hawaii International Conference on System Sciences, IEEE.","DOI":"10.1109\/HICSS.1989.49234"},{"issue":"7","key":"10214_CR26","doi-asserted-by":"publisher","first-page":"1043","DOI":"10.1287\/mnsc.42.7.1043","volume":"42","author":"J Hann","year":"1996","unstructured":"Hann, J., & Weber, R. (1996). Information systems planning: A model and empirical tests. Management Science, 42(7), 1043\u20131064.","journal-title":"Management Science"},{"key":"10214_CR27","doi-asserted-by":"crossref","unstructured":"Jensen, M. C., Meckling, W. H. (1998). Divisional performance measurement. Foundations of Organizational Strategy, Harvard University Press, Chapter 12.","DOI":"10.2139\/ssrn.94109"},{"issue":"3","key":"10214_CR28","doi-asserted-by":"publisher","first-page":"813","DOI":"10.1080\/07421222.2018.1481639","volume":"35","author":"C Joe-Wong","year":"2018","unstructured":"Joe-Wong, C., & Sen, S. (2018). Harnessing the power of the cloud: Revenue, fairness, and cloud neutrality. Journal of Management Information Systems, 35(3), 813\u2013836.","journal-title":"Journal of Management Information Systems"},{"key":"10214_CR29","unstructured":"Luo, J., Wu, Z., Huang, Z., Wang, L. (2016). Relational IT governance, its antecedents and outcomes: A study on Chinese firms. Thirty seventh international conference on information systems (ICIS), Dublin, 2016."},{"issue":"1","key":"10214_CR30","doi-asserted-by":"publisher","first-page":"91","DOI":"10.1080\/07421222.1991.11517912","volume":"8","author":"SR Magal","year":"1991","unstructured":"Magal, S. R. (1991). A model for evaluating information center success. Journal of Management Information Systems, 8(1), 91\u2013106.","journal-title":"Journal of Management Information Systems"},{"issue":"3","key":"10214_CR31","doi-asserted-by":"publisher","first-page":"312","DOI":"10.1145\/3166.3171","volume":"28","author":"H Mendelson","year":"1985","unstructured":"Mendelson, H. (1985). Pricing computer services: Queueing effects. Communications of the ACM, 28(3), 312\u2013321.","journal-title":"Communications of the ACM"},{"issue":"6","key":"10214_CR32","doi-asserted-by":"publisher","first-page":"538","DOI":"10.1086\/258715","volume":"70","author":"WY Oi","year":"1962","unstructured":"Oi, W. Y. (1962). Labor as a quasi-fixed factor. Journal of Political Economy, 70(6), 538\u2013555.","journal-title":"Journal of Political Economy"},{"key":"10214_CR33","unstructured":"Overby, S. (2004). USAA: I.T. incorporated. CIO.com, http:\/\/www.cio.com\/article\/32260\/USAA_I.T._Incorporated."},{"issue":"4","key":"10214_CR34","doi-asserted-by":"publisher","first-page":"7","DOI":"10.1201\/1078\/44705.21.4.20040901\/84183.2","volume":"21","author":"R Peterson","year":"2004","unstructured":"Peterson, R. (2004). Crafting information technology governance. Information Systems Management, 21(4), 7\u201322.","journal-title":"Information Systems Management"},{"issue":"1","key":"10214_CR35","doi-asserted-by":"publisher","first-page":"87","DOI":"10.1080\/07421222.1989.11517850","volume":"6","author":"RA Pick","year":"1989","unstructured":"Pick, R. A., & Whinston, A. B. (1989). A computer charging mechanism for revealing user preferences within a large organization. Journal of Management Information Systems, 6(1), 87\u2013100.","journal-title":"Journal of Management Information Systems"},{"issue":"10","key":"10214_CR36","first-page":"96","volume":"93","author":"ME Porter","year":"2015","unstructured":"Porter, M. E., & Heppelmann, J. E. (2015). How smart, connected products are transforming companies. Harvard Business Review, 93(10), 96\u2013114.","journal-title":"Harvard Business Review"},{"issue":"2","key":"10214_CR37","doi-asserted-by":"publisher","first-page":"215","DOI":"10.2307\/249752","volume":"23","author":"JW Ross","year":"1999","unstructured":"Ross, J. W., Vitale, M. R., & Beath, C. M. (1999). The untapped potential of IT chargeback. MIS Quarterly, 23(2), 215\u2013237.","journal-title":"MIS Quarterly"},{"issue":"2","key":"10214_CR38","doi-asserted-by":"publisher","first-page":"203","DOI":"10.1177\/0266666917736714","volume":"35","author":"N Sharma","year":"2019","unstructured":"Sharma, N., & Gupta, S. (2019). An investigation of IT-intervention adoption in public distribution system: A stakeholder and agency theory perspective. Information Development, 35(2), 203\u2013219.","journal-title":"Information Development"},{"issue":"4","key":"10214_CR39","doi-asserted-by":"publisher","first-page":"546","DOI":"10.2307\/2555525","volume":"15","author":"N Singh","year":"1984","unstructured":"Singh, N., & Vives, X. (1984). Price and quantity competition in a differentiated duopoly. The Rand Journal of Economics, 15(4), 546\u2013554.","journal-title":"The Rand Journal of Economics"},{"key":"10214_CR40","unstructured":"Stablein, T. P. (2018). Improving strategic IT investment decisions by reducing information asymmetry. Graduate Theses and Dissertations. https:\/\/scholarcommons.usf.edu\/etd\/7577\/"},{"key":"10214_CR41","volume-title":"Information and organizations","author":"AL Stinchcombe","year":"1990","unstructured":"Stinchcombe, A. L. (1990). Information and organizations (Vol. 19). University of California Press."},{"key":"10214_CR42","unstructured":"Techworld. (2004). The rapid rise of chargeback. Techworld, http:\/\/features.techworld.com\/applications\/803\/the-rapid-rise-of-chargeback\/."},{"key":"10214_CR43","volume-title":"The theory of industrial organization","author":"J Tirole","year":"1988","unstructured":"Tirole, J. (1988). The theory of industrial organization. MIT Press."},{"issue":"3","key":"10214_CR44","doi-asserted-by":"publisher","first-page":"593","DOI":"10.1007\/s10796-015-9614-x","volume":"19","author":"AO Tonelli","year":"2017","unstructured":"Tonelli, A. O., de Souza Bermejo, P. H., Dos Santos, P. A., Zuppo, L., & Zambalde, A. L. (2017). IT governance in the public sector: A conceptual model. Information Systems Frontiers, 19(3), 593\u2013610.","journal-title":"Information Systems Frontiers"},{"key":"10214_CR45","volume-title":"Microeconomic analysis","author":"HR Varian","year":"1992","unstructured":"Varian, H. R. (1992). Microeconomic analysis (Vol. 2). Norton."},{"key":"10214_CR46","unstructured":"Vejseli, S., Rossmann, A. (2017). The Impact of IT Governance on Firm Performance A Literature Review. In Pacific Asia Conference on Information Systems (PACIS 2017), p. 41."},{"issue":"2","key":"10214_CR47","doi-asserted-by":"publisher","first-page":"91","DOI":"10.1007\/s10796-006-7973-z","volume":"8","author":"G Versteeg","year":"2006","unstructured":"Versteeg, G., & Bouwman, H. (2006). Business architecture: A new paradigm to relate business strategy to ICT. Information Systems Frontiers, 8(2), 91\u2013102.","journal-title":"Information Systems Frontiers"},{"issue":"1","key":"10214_CR48","doi-asserted-by":"publisher","first-page":"71","DOI":"10.1016\/0022-0531(84)90162-5","volume":"34","author":"X Vives","year":"1984","unstructured":"Vives, X. (1984). Duopoly information equilibrium: Cournot and Bertrand. Journal of Economic Theory, 34(1), 71\u201394.","journal-title":"Journal of Economic Theory"},{"issue":"1","key":"10214_CR49","doi-asserted-by":"publisher","first-page":"24","DOI":"10.1287\/isre.6.1.24","volume":"6","author":"ETG Wang","year":"1995","unstructured":"Wang, E. T. G., & Barron, T. (1995). Controlling information system departments in the presence of cost information asymmetry. Information Systems Research, 6(1), 24\u201350.","journal-title":"Information Systems Research"},{"key":"10214_CR50","unstructured":"Weinzimer, P. (2015). How to Measure and Improve the Business Value of IT Service. http:\/\/www.ittoday.info\/ITPerformanceImprovement\/Articles\/2015-02Weinzimer.html"},{"issue":"6","key":"10214_CR51","doi-asserted-by":"publisher","first-page":"1487","DOI":"10.1007\/s10796-019-09945-7","volume":"22","author":"GC Wiedenh\u00f6ft","year":"2020","unstructured":"Wiedenh\u00f6ft, G. C., Luciano, E. M., & Pereira, G. V. (2020). Information technology governance institutionalization and the behavior of individuals in the context of public organizations. Information Systems Frontiers, 22(6), 1487\u20131504.","journal-title":"Information Systems Frontiers"},{"issue":"2","key":"10214_CR52","doi-asserted-by":"publisher","first-page":"497","DOI":"10.25300\/MISQ\/2015\/39.2.10","volume":"39","author":"SPJ Wu","year":"2015","unstructured":"Wu, S. P. J., Straub, D. W., & Liang, T. P. (2015). How information technology governance mechanisms and strategic alignment influence organizational performance: Insights from a matched survey of business and IT managers. Management Information Systems Quarterly, 39(2), 497\u2013518.","journal-title":"Management Information Systems Quarterly"},{"issue":"1","key":"10214_CR53","doi-asserted-by":"publisher","first-page":"39","DOI":"10.1080\/07421222.1985.11517723","volume":"2","author":"SB Yadav","year":"1985","unstructured":"Yadav, S. B. (1985). Classifying an organization to identify its information requirements: A comprehensive framework. Journal of Management Information Systems, 2(1), 39\u201360.","journal-title":"Journal of Management Information Systems"}],"container-title":["Information Systems Frontiers"],"original-title":[],"language":"en","link":[{"URL":"https:\/\/link.springer.com\/content\/pdf\/10.1007\/s10796-021-10214-9.pdf","content-type":"application\/pdf","content-version":"vor","intended-application":"text-mining"},{"URL":"https:\/\/link.springer.com\/article\/10.1007\/s10796-021-10214-9\/fulltext.html","content-type":"text\/html","content-version":"vor","intended-application":"text-mining"},{"URL":"https:\/\/link.springer.com\/content\/pdf\/10.1007\/s10796-021-10214-9.pdf","content-type":"application\/pdf","content-version":"vor","intended-application":"similarity-checking"}],"deposited":{"date-parts":[[2022,12,16]],"date-time":"2022-12-16T06:09:11Z","timestamp":1671170951000},"score":1,"resource":{"primary":{"URL":"https:\/\/link.springer.com\/10.1007\/s10796-021-10214-9"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2022,1,18]]},"references-count":53,"journal-issue":{"issue":"6","published-print":{"date-parts":[[2022,12]]}},"alternative-id":["10214"],"URL":"https:\/\/doi.org\/10.1007\/s10796-021-10214-9","relation":{},"ISSN":["1387-3326","1572-9419"],"issn-type":[{"value":"1387-3326","type":"print"},{"value":"1572-9419","type":"electronic"}],"subject":[],"published":{"date-parts":[[2022,1,18]]},"assertion":[{"value":"6 October 2021","order":1,"name":"accepted","label":"Accepted","group":{"name":"ArticleHistory","label":"Article History"}},{"value":"18 January 2022","order":2,"name":"first_online","label":"First Online","group":{"name":"ArticleHistory","label":"Article History"}}]}}