Research Note‹Information Technology, Customer Satisfaction, and Profit: Theory and Evidence

Author List: Mithas, Sunil; Krishnan, M. S.; Fornell, Claes;
Information Systems Research, 2016, Volume 27, Issue 1, Page 166-181.
This paper studies the effect of aggregate information technology (IT) investments on customer satisfaction and profits at the firm level. Using data on 109 U.S. firms for the 1994Ð1996 and 1999Ð2006 periods, we find that aggregate IT investments have a positive association with customer satisfaction. However, the strength of the relationship varied across the 1994Ð1996 and 1999Ð2006 periods. Specifically, IT investments had a more positive influence on customer satisfaction for the 1994Ð1996 period than for the 1999Ð2006 period. Conversely, IT investments had a positive effect on profits in the 1999Ð2006 period, but a negative effect in the 1994Ð1996 period. These findings extend prior discourse in the information systems literature on the role of customer satisfaction as a mechanism that explains how IT-enabled benefits are Òpassed on to consumersÓ [Rai A, Patnayakuni R, Patnayakuni N (1997) Technology investment and business performance. Comm. ACM 40(7):90]. Our additional exploratory analyses showing that IT investments had a stronger effect on perceived quality than on perceived value provide an explanation for some of the observed effects of IT on customer satisfaction and profits. Together, these contributions and implications provide new insights to assess returns on IT investments by focusing on customer satisfaction, an important intangible and leading measure of firm performance, stock returns, and stock risk.
Keywords: information technology ; customer satisfaction ; intangibles ; firm performance ; profit ; business value of IT ; customer relationship management
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#271 0.236 technology investments investment information firm firms profitability value performance impact data higher evidence diversification industry payoff return findings decisions greater
#166 0.152 negative positive effect findings results effects blog suggest role blogs posts examined period relationship employees research employee bloggers reveal companies
#288 0.142 customer customers crm relationship study loyalty marketing management profitability service offer retention it-enabled web-based interactions operations sales strategy channels set
#276 0.137 satisfaction information systems study characteristics data results using user related field survey empirical quality hypotheses important success various indicate tested
#285 0.128 effects effect research data studies empirical information literature different interaction analysis implications findings results important set large provide using paper
#176 0.077 e-commerce value returns initiatives market study announcements stock event abnormal companies significant growth positive using methodology investments period time initiative
#143 0.052 value business benefits technology based economic creation related intangible cocreation assessing financial improved key economics assess question created create understanding