Information Technology Capability and Firm Performance: Contradictory Findings and Their Possible Causes

Author List: Chae, Ho-Chang; Koh, Chang E.;
MIS Quarterly, 2014, Volume 38, Issue 1, Page 305-326.
Several studies support the positive link between information technology capability and firm performance, including Bharadwaj (2000) and Santhanam and Hartono (2003), which appeared in MIS Quarterly. We conducted a study to see if this link is still statistically significant. It is now over a decade since the first study was published, during which several significant developments in the IT industry have taken place. Unlike the 1990s, when proprietary information systems prevailed, the 2000s are characterized by more standardized and homogeneous information systems and with the rapid adoption of ERP and web technologies. Thus, we attempted to reexamine the link between IT capability and firm performance with data from the 2000s. Surprisingly, the results of our current analysis showed no significant link between IT capability and firm performance. Contrary to earlier studies, IT leader firms in our study didn’t show better financial performance than control firms. We discuss several possible causes for the change in findings and present an in-depth comparison in business performance between the two groups—IT leader and control—over a period extending from 1991 to 2007.
Keywords: IT capability; firm performance; IW 500; IT business value
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#93 0.200 performance results study impact research influence effects data higher efficiency effect significantly findings impacts empirical significant suggest outcomes better positive
#59 0.186 capabilities capability firm firms performance resources business information technology firm's resource-based competitive it-enabled view study value infrastructure results organizational model
#145 0.119 differences analysis different similar study findings based significant highly groups popular samples comparison similarities non-is variety reveals imitation versus suggests
#137 0.078 phase study analysis business early large types phases support provided development practice effectively genres associated different sensemaking including form technologies
#179 0.077 technologies technology new findings efficiency deployed common implications engineers conversion change transformational opportunity deployment make making improve powerful choosing enhance
#49 0.068 adoption diffusion technology adopters innovation adopt process information potential innovations influence new characteristics early adopting set compatibility time initial current
#38 0.066 editorial article systems journal information issue introduction research presents editors quarterly author mis isr editor new associate board senior review