The study of the effects of IT investments on firm's performance has been a critical issue for research since the late 1980s. Different financial models have been used to clarify the contribution of IT investments, e.g. options theory. Some researchers rely on market prices, while others measure the effect on financial ratios. This work aims to provide additional insights regarding the influence of IT resources on performance. To do that, a new measure of performance is proposed that goes beyond the well-accepted profit. Several new links between IT literature, organization theory and financial theory are elicited.
TopBackground
Early studies assumed that IT investments would improve productivity (Bresnahan & Tajtenberg, 1996); however, these results were inconclusive (Morrison & Berndt, 1990; Siegel & Griliches, 1991; Loveman, 1994) and new research frameworks were explored (Melville & Kraemer, 2004). Recent research generally report effects on firm value, shareholders’ wealth (Dos Santos et al., 1993; Im et al., 2001), financial measures (Brynjolfsson & Hitt, 1996; Kudyba & Diwan, 2002; Piñeiro, 2006), innovation (Drucker, 1988; Osterman, 1991; Phan, 2003; Gharavi et al., 2004) and risk-mitigation (Otim et al., 2012).
However, these outcomes seem to be contingent (Dos Santos et al., 1992; Im et al., 2001; Dehning & Richardson, 2002). Several mediating factors have been identified: business processes (Dehning & Richardson, 2002; Melville et al., 2004), knowledge (Sambamurthy et al., 2003), experience and IT management skills (Damanpour & Evan, 1984; Neirotti & Paolucci, 2012), organizational capabilities (Nevo & Wade, 2010; Ravinchandran & Lertwongsatien, 2005), dynamic capabilities (Teece et al., 1997; Eisenhardt & Martin, 2000), financial capacity (Harris & Kaatz, 1989), firm’s size and industry (Dos Santos et al., 1993; Im et al., 2001), R&D (Jacobson, 1990; Bharadwaj et al., 1999; Holsapple & Wu, 2011), and real options (Fichman, 2004; Sambamurthy & Bharadwaj, 2003). Time lags and accumulation effects (Kudyba & Diwan, 2002; Cron & Sobol, 1983) are also present.