The Impact of Information Technology Investments on Firm Performance: Research Framework and Directions
This paper explores the relationship between information technology investment and firm performance. Firm performance is multidimensional, measurable by many different gauges. Return on sales is utilized as the measure of firm performance, due to its ability to indicate a firms competitive advantage and resource/competitive flexibility. This study provides a framework for evaluating IT investments based on the expected role of the investment within the organization by allocating IT investment into specific objectives. The objectives included in the study are strategic, tactical, transactional, and threshold. The primary objective of this paper is to provide some new perspectives in explaining how IT can create a sustained competitive advantage for the firm. We present the results of an empirical analysis that tested our conceptual framework and found that IT indirectly effects performance. Organizations are faced with the challenge of deciding when to invest in information technology upgrades. While investing frequently is costly and at times risky, waiting too long can lead to lost competitiveness. This study proposes a decision support model to determine the optimal timing and choice of upgrades. Analysis confirms that even if continuous upgrading is feasible, it is not an optimal strategy when adoption costs are significant. Simulations show that investments in upgrades are best made when the gap between new technology and current technology reaches a critical threshold. A-mong other factors, this threshold is influenced by technology cost, change management cost and opportunity cost. This study examines how a firm can determine this optimal interval between adoptions and thereby its optimal choice of technology. Drawing from the resource-based view, this study proposes that IT-enabled supply chain capabilities are firm-specific. These capabilities can serve as a catalyst in transforming IT-related resources into higher value for a firm. Based on data collected from surveying supply chain and logistics managers in various industries, the findings provide a new perspective in evaluating IT investment in the supply chain process.
IT upgrades Supply Chain Capabilities Information Technology Investment Organizational Performance Productivity Paradox
Yang Lei
School of Business Administration, South China University of Technology, Guangzhou P.R.China, 510640
国际会议
天津
英文
2007-10-20（万方平台首次上网日期，不代表论文的发表时间）