Analyzing the impact of information technology investments using regression and data mining techniques

Purpose – Many attempts to justify the business value of increased investments in information technology (IT) have shown mixed results. While findings from earlier studies have been conflicting, recent firm level studies indicate that IT investments have a positive impact on productivity. However, whether IT adds value to organizations is an on going debating issue. Thus, thus it is worth of further investigation.Design/methodology/approach – The paper employs multiple techniques – a regression, regression trees, and regression splines – and integrate the responses provided from each technique.Findings – While IT investments have a positive impact on productivity, the impact is conditional and is not uniform but depends on the amounts invested in other related areas, such as non‐IT labor, non‐IT capital, and/or IT investments.Practical implications – The IT impact on productivity can be maximized when investments in other related areas are considered together than when they are considered in isolation. Th...