Technology investment and business performance

Revisiting IS business value research: what we already know, what we still need to know, and how we can get there

“…Consequently, it has been widely argued in the literature that better insights into the way IS investments induce superior business performance require a breakdown of IS investments into single IS assets (Weill, 1992;Mahmood & Mann, 1993;Ross et al, 1996;Rai et al, 1997;Bharadwaj, 2000;Sircar et al, 2000;Orlikowski & Iacono, 2001;Melville et al, 2004). We follow this path in this subsection.…”

“…(1) Bharadwaj, 2000, Dehning & Stratopoulos, 2002, Hitt & Brynjolfsson, 1996, Kim et al, 2009, Peslak, 2003, Rai et al, 1997, Santhanam & Hartono, 2003, Stratopoulos & Dehning, 2000, Tam, 1998(2) Hayes et al, 2001, Mahmood & Mann, 2005, Peslak, 2003, Stratopoulos & Dehning, 2000(3) Alpar & Kim, 1990, Beccalli, 2007, Peslak, 2003, Rai et al, 1997, Shin, 2006, Stratopoulos & Dehning, 2000, Tam, 1998 Contextual factors Contextual factors can be divided into firm, industry and economic factors. Barua et al, 1996, Bharadwaj, 2000, Davern & Kauffman, 2000, Dehning & Richardson, 2002, Ko & Osei-Bryson, 2004, Melville et al, 2004, Zhu et al, 2004 Alignment of IS with a firm's core competencies and business planning and close ties between IS investments and upper management are crucial for enhanced firm performance.…”

“…While only very few studies analyse cost ratios (Bharadwaj, 2000;Santhanam & Hartono, 2003) or turnover ratios (Barua et al, 1995;Dehning & Stratopoulos, 2002), many studies address profit ratios: IS investments seem to positively affect 'Return on Sales' (Tam, 1998;Bharadwaj, 2000;Dehning & Stratopoulos, 2002;Santhanam & Hartono, 2003;Zhang, 2005;Kim et al, 2009) and 'operating income to employees' (Bharadwaj, 2000;Santhanam & Hartono, 2003), while the positive impact on 'Return on Assets' (Hitt & Brynjolfsson, 1996;Rai et al, 1997;Tam, 1998;Bharadwaj, 2000;Stratopoulos & Dehning, 2000;Dehning & Stratopoulos, 2002;Peslak, 2003;Santhanam & Hartono, 2003;Kim et al, 2009), 'Return on Investment' (Stratopoulos & Dehning, 2000;Hayes et al, 2001;Peslak, 2003;Mahmood & Mann, 2005) and Return on Equity (ROE) (Alpar & Kim, 1990;Rai et al, 1997;Tam, 1998;Stratopoulos & Dehning, 2000;Peslak, 2003;Shin, 2006;Beccalli, 2007;Dehning et al, 2008) is less clear, and seems to depend largely on lag effects, contextual factors and the level of IS investments compared to total assets.…”

“…While only a few, mostly early studies (Dos Santos et al, 1993;West & Courtney, 1993;Hitt & Brynjolfsson, 1996;Rai et al, 1997;Im et al, 2001) doubt the economic power of IS, the vast majority of research papers on IS business value (e.g. (Dedrick et al, 2003;Dehning et al, 2003Dehning et al, , 2008Peslak, 2003;Santhanam & Hartono, 2003;Swierczek & Shrestha, 2003;Mahmood & Mann, 2005;Zhang, 2005;Shin, 2006;Lin & Shao, 2006a;Aral et al, 2007;Beccalli, 2007;Neirotti & Paolucci, 2007;Wan et al, 2007;Kohli & Grover, 2008;Kim et al, 2009;Ramirez et al, 2010;Han et al, 2011;Kim & Mithas, 2011;Lee et al, 2011)) find empirical evidence and theoretical arguments in favour of both the operational and strategic relevance of IS.…”

Information technology (IT) investment and the role of a firm: an exploratory study

“…Similarly, Li and Ye (1997) found that the impact of IT investments appear to be dependent on the "rm's contextual factors. In a similar vein, Rai, Patnayakuni and Patnayakuni (1997) emphasized that although IT is likely to improve organizational e$ciency, its e!ect on administrative productivity and business performance might depend on the quality of management processes and IT-strategy links (which is related to the role of IT).…”