A Framework for Assessing the Relationship Between Information Technology Investments and Firm Performance.

Author List: Sircar, Sumit; Turnbow, Joe L.; Bordoloi, Bijoy;
Journal of Management Information Systems, 2000, Volume 16, Issue 4, Page 69-97.
There have been several attempts in the past to assess the impact of information technology on firm performance that have yielded conflicting results. Researchers have been unable to conclude that IT spending by an organization results in increases in key performance indicators. Two major recent studies have attempted to address the issue by putting greater emphasis on the theoretical underpinnings of the solution to the problem, although they chose different theoretical frameworks. The present study extends that work to yield a framework that shows the relationship between firm performance and both IT and corporate investments. The data used to validate the framework exceeds that used in previous analyses in both quality and quantity, thereby permitting appropriate statistical analyses. A large database consisting of over 2,000 observations of 624 firms was constructed, using data provided by the International Data Corporation, Standard & Poor's Compustat, and Moody's. This allowed the authors to pose the following research questions: (a) Can the relationship between sets of investment measures and firm performance be demonstrated (as opposed to individual measures)? (b) How are IT investments related to a firm's market value, market share, sales, and assets? and (c) Is there a difference in the effect of computer capital and noncomputer capital?
Keywords: Information Technology Investment; Information Technology Payoff; Organizational Performance
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#271 0.237 technology investments investment information firm firms profitability value performance impact data higher evidence diversification industry payoff return findings decisions greater
#209 0.231 results study research information studies relationship size variables previous variable examining dependent increases empirical variance accounting independent demonstrate important addition
#114 0.121 performance firm measures metrics value relationship firms results objective relationships firm's organizational traffic measure market study improve accounting measuring aggregate
#115 0.065 quality different servqual service high-quality difference used quantity importance use measure framework impact assurance better include means van dimensions assessing
#143 0.064 value business benefits technology based economic creation related intangible cocreation assessing financial improved key economics assess question created create understanding
#292 0.057 information research literature systems framework review paper theoretical based potential future implications practice discussed current concept propositions findings provided extant
#11 0.053 structural pls measurement modeling equation research formative squares partial using indicators constructs construct statistical models researchers latent analysis results sem
#231 0.052 information management data processing systems corporate article communications organization control distributed department capacity departments major user hardware cost applications expansion