Information technology capability and firm performance: Role of industry

Abstract Despite several calls for considering industry in the IS value research, few studies investigated the relationship between benefits of IT and industries. This study extends Chae et al. (2014) by investigating how industry influences the relationship between IT capability and business performance. Unexpectedly, it finds that the control group in the industries in which the "transform" IT strategic role dominates showed superior performance than the IT leader. Also, the IT leaders in the "automate" IT strategic industry did not exhibit better business performance than the control firms. We discuss the implications of these findings.

[1]  Kevin J. Stiroh,et al.  Information Technology and the U.S. Productivity Revival: A Review of the Evidence; the Closer One Looks, the More Persuasive It Is , 2002 .

[2]  Robert J. Kauffman,et al.  Returns to Information Technology Outsourcing , 2011 .

[3]  Paul A. Pavlou,et al.  Research Commentary - Seeking the Configurations of Digital Ecodynamics: It Takes Three to Tango , 2010, Inf. Syst. Res..

[4]  Mo Adam Mahmood,et al.  Special Issue: Impacts of Information Technology Investment on Organizational Performance , 2000, J. Manag. Inf. Syst..

[5]  Paul J. Verdin,et al.  IS PERFORMANCE DRIVEN BY INDUSTRY- OR FIRM-SPECIFIC FACTORS? A NEW LOOK AT THE EVIDENCE , 2009 .

[6]  Mike Chiasson,et al.  Taking Industry Seriously in Information Systems Research , 2005, MIS Q..

[7]  Waleed A. Muhanna,et al.  IT capabilities and firm performance: A contingency analysis of the role of industry and IT capability type , 2009, Inf. Manag..

[8]  Sinan Aral,et al.  I.T. Assets, Organizational Capabilities and Firm Performance: Do Resource Allocations and Organizational Differences Explain Performance Variation? , 2007 .

[9]  Paul A. Pavlou,et al.  From IT Leveraging Competence to Competitive Advantage in Turbulent Environments: The Case of New Product Development , 2006, Inf. Syst. Res..

[10]  Alain Pinsonneault,et al.  A Model of Organizational Integration, Implementation Effort, and Performance , 2005, Organ. Sci..

[11]  Shoshana Zuboff,et al.  In the Age of the Smart Machine: The Future of Work and Power , 1989 .

[12]  D. Leonard-Barton.  CORE CAPABILITIES AND CORE RIGIDITIES: A PARADOX IN MANAGING NEW PRODUCT DEVELOPMENT , 1992 .

[13]  Vallabh Sambamurthy,et al.  Efficiency or Innovation: How do Industry Environments Moderate the , 2022 .

[14]  Jeff K. Stratman,et al.  The impact of enterprise systems on corporate performance: A study of ERP, SCM, and CRM system implementations , 2007 .

[15]  Neeraj Mittal,et al.  Research Note - Investments in Information Technology: Indirect Effects and Information Technology Intensity , 2009, Inf. Syst. Res..

[16]  Lorin M. Hitt,et al.  Productivity, Business Profitability, and Consumer Surplus: Three Different Measures of Information Technology Value , 1996, MIS Q..

[17]  Dazhong Wu,et al.  Competitive Environment and the Relationship Between IT and Vertical Integration , 2009, Inf. Syst. Res..

[18]  Kunsoo Han,et al.  Returns to Information Technology Outsourcing , 2011 .

[19]  D. Teece,et al.  DYNAMIC CAPABILITIES AND STRATEGIC MANAGEMENT , 1997 .

[20]  Yolande E. Chan,et al.  IT Capabilities - Quo Vadis? , 2013, ICIS.

[21]  Diana Farrell,et al.  The real new economy. , 2003, Harvard business review.

[22]  Marie-Claude Boudreau,et al.  Addressing Business Agility Challenges with Enterprise Systems , 2009, MIS Q. Executive.

[23]  Emilio Paolucci,et al.  Assessing the importance of industry in the adoption and assimilation of IT: Evidence from Italian enterprises , 2011, Inf. Manag..

[24]  Robert G. Fichman,et al.  Going Beyond the Dominant Paradigm for Information Technology Innovation Research: Emerging Concepts and Methods , 2004, J. Assoc. Inf. Syst..

[25]  David C. Mowery,et al.  Sources of Industrial Leadership , 1999 .

[26]  J. Fleiss,et al.  The measurement of interrater agreement , 2004 .

[27]  V. Sambamurthy,et al.  Information Technology Assimilation in Firms: The Influence of Senior Leadership and IT Infrastructures , 1999, Inf. Syst. Res..

[28]  Janice Lo,et al.  An empirical investigation of the relationship of IS strategy with firm performance , 2011, J. Strateg. Inf. Syst..

[29]  L. Willcocks,et al.  Core IS Capabilities for Exploiting Information Technology , 1998 .

[30]  Cynthia Rettig.  The Trouble With Enterprise Software , 2007 .

[31]  Suzanne D. Pawlowski,et al.  ERP systems as an enabler of sustained business process innovation: A knowledge-based view , 2007, J. Strateg. Inf. Syst..

[32]  Toni M. Somers,et al.  The Congruence between a Firm's Competitive Strategy and Information Technology Leader's Rank and Role , 1996, J. Manag. Inf. Syst..

[33]  Louis Raymond,et al.  Innovation Capability and Performance Of Manufacturing SMEs: The Paradoxical Effect of IT Integration , 2013, J. Organ. Comput. Electron. Commer..

[34]  Yolande E. Chan.  IT Value: The Great Divide Between Qualitative and Quantitative and Individual and Organizational Measures , 2000, J. Manag. Inf. Syst..

[35]  Jos van Hillegersberg,et al.  Change factors requiring agility and implications for IT , 2006, Eur. J. Inf. Syst..

[36]  Ying Lu,et al.  Understanding the Link Between Information Technology Capability and Organizational Agility: An Empirical Examination , 2011, MIS Q..

[37]  A. V. D. Ven,et al.  Using Paradox to Build Management and Organization Theories , 1989 .

[38]  D. B. Montgomery,et al.  First‐mover advantages , 1988 .

[39]  Arun Rai,et al.  Research Commentary - Reframing the Dominant Quests of Information Systems Strategy Research for Complex Adaptive Business Systems , 2010, Inf. Syst. Res..

[40]  Kenneth L. Kraemer,et al.  The productivity impact of information technology across competitive regimes: The role of industry concentration and dynamism , 2007, Decis. Support Syst..

[41]  Vernon J. Richardson,et al.  The Value Relevance of Announcements of Transformational Information Technology Investments , 2003, MIS Q..

[42]  N. Carr.  IT doesn't matter , 2003, IEEE Engineering Management Review.

[43]  Tymofiy Mylovanov,et al.  First-mover disadvantage , 2005 .

[44]  Guido Schryen,et al.  Revisiting IS business value research: what we already know, what we still need to know, and how we can get there , 2013, Eur. J. Inf. Syst..

[45]  Sundar G. Bharadwaj,et al.  Information Technology Effects on Firm Performance as Measured by Tobin's q , 1999 .

[46]  Vijay Gurbaxani,et al.  An Empirical Investigation of Information Technology Returns: The Role of IT and Market Structure as Determinants of Efficiency , 2004, ICIS.

[47]  Kunsoo Han,et al.  Information Technology Spillover and Productivity: The Role of Information Technology Intensity and Competition , 2011, J. Manag. Inf. Syst..

[48]  Erik Brynjolfsson,et al.  The productivity paradox of information technology , 1993, CACM.

[49]  M. Porter,et al.  How Information Gives You Competitive Advantage , 1985 .

[50]  M. Wade,et al.  Review: the resource-based view and information systems research: review, extension, and suggestions for future research , 2004 .

[51]  Yi Wang,et al.  IT capability and organizational performance: the roles of business process agility and environmental factors , 2014, Eur. J. Inf. Syst..

[52]  P. Weill,et al.  Leveraging the New Infrastructure: How Market Leaders Capitalize on Information Technology , 1998 .

[53]  Rajiv Kohli,et al.  Measuring Information Technology Payoff: A Meta - Analysis of Structural Variables in Firm - Level Empirical Research , 2003, Inf. Syst. Res..

[54]  Varun Grover,et al.  Shaping Agility through Digital Options: Reconceptualizing the Role of Information Technology in Contemporary Firms , 2003, MIS Q..

[55]  P. Weill,et al.  Building IT Infrastructure for Strategic Agility , 2002 .

[56]  Bernard J. Jaworski,et al.  Market orientation: Antecedents and consequences , 1993 .

[57]  Blake Ives,et al.  Review: IT-Dependent Strategic Initiatives and Sustained Competitive Advantage: A Review and Synthesis of the Literature , 2005, MIS Q..

[58]  M. Porter,et al.  HOW MUCH DOES INDUSTRY MATTER, REALLY? , 1997 .

[59]  Vernon J. Richardson,et al.  A Meta-Analysis of the Effects of IT Investment on Firm Financial Performance , 2011, J. Inf. Syst..

[60]  Varun Grover,et al.  Business Value of IT: An Essay on Expanding Research Directions to Keep up with the Times , 2008, J. Assoc. Inf. Syst..

[61]  Gregory G. Dess,et al.  Dimensions of Organizational Task Environments. , 1984 .

[62]  Victor R. Prybutok,et al.  Information Technology Capability and Firm Performance: Contradictory Findings and Their Possible Causes , 2014, MIS Q..

[63]  Vernon J. Richardson,et al.  Returns on Investments in Information Technology: A Research Synthesis , 2002, J. Inf. Syst..

[64]  Ravi Seethamraju,et al.  Influence of ERP systems on business process agility , 2013 .

[65]  Kenneth L. Kraemer,et al.  Review: Information Technology and Organizational Performance: An Integrative Model of IT Business Value , 2004, MIS Q..

[66]  Ying Lu,et al.  Proactive or reactive IT leaders? A test of two competing hypotheses of IT innovation and environment alignment , 2010, Eur. J. Inf. Syst..

[67]  Timothy B. Palmer,et al.  Firm, strategic group, and industry influences on performance , 2007 .

[68]  Thomas H. Davenport,et al.  Mission Critical: Realizing the Promise of Enterprise Systems , 2000 .

[69]  Vernon J. Richardson,et al.  Information technology, contextual factors and the volatility of firm performance , 2008, Int. J. Account. Inf. Syst..

[70]  Cynthia Mathis Beath,et al.  Linking Information Technology and Corporate Strategy: an Organizational View , 1986, ICIS.

[71]  E. P. Michael.  Strategy and the Internet. , 2001 .

[72]  B. R. Nault,et al.  Investments in Information Technology: Indirect Effects and Information Technology Intensity , 2006 .

[73]  Harminder Singh,et al.  The Influence of Industry Growth and Firm Market Share on Firm-Level IT Value , 2009, AMCIS.

[74]  Soung Hie Kim,et al.  A Lag Effect of IT Investment on Firm Performance , 2006, Inf. Resour. Manag. J..

[75]  Robert W. Zmud,et al.  Research Commentary: The Organizing Logic for an Enterprise's IT Activities in the Digital Era - A Prognosis of Practice and a Call for Research , 2000, Inf. Syst. Res..

[76]  Paul P. Tallon,et al.  Competing Perspectives on the Link Between Strategic Information Technology Alignment and Organizational Agility: Insights from a Mediation Model , 2011, MIS Q..

[77]  Vijay Gurbaxani,et al.  Information Technology Outsourcing, Knowledge Transfer, and Firm Productivity: An Empirical Analysis , 2012, MIS Q..

[78]  Henry C. Lucas,et al.  The information systems identity crisis , 2005 .

[79]  Petri T. Helo,et al.  Expectation and reality in ERP implementation: consultant and solution provider perspective , 2008, Ind. Manag. Data Syst..

[80]  Vernon J. Richardson,et al.  Examining the Shareholder Wealth Effects of Announcements of Newly Created CIO Positions , 2001, MIS Q..

[81]  Vilmos F. Misangyi,et al.  A new perspective on a fundamental debate: a multilevel approach to industry, corporate, and business unit effects , 2006 .

[82]  Vernon J. Richardson,et al.  The Business Value of IT: A Synthesis and Framework of Archival Research , 2011, J. Inf. Syst..

[83]  Margrethe H. Olson,et al.  The Impact of Information Technology on Organizational Flexibility , 1992 .

[84]  E. Schein.  The role of the CEO in the management of change : the case of information technology , 1975 .

[85]  Anandhi S. Bharadwaj,et al.  A Resource-Based Perspective on Information Technology Capability and Firm Performance: An Empirical Investigation , 2000, MIS Q..

[86]  Wonseok Oh,et al.  Influence of Industry Characteristics on Information Technology Outsourcing , 2011, J. Manag. Inf. Syst..

[87]  W. Orlikowski.  The Duality of Technology: Rethinking the Concept of Technology in Organizations , 2014 .

[88]  Pankaj Ghemawat,et al.  The Risk of Not Investing in a Recession , 2009 .

[89]  Kathleen M. Eisenhardt,et al.  DYNAMIC CAPABILITIES, WHAT ARE THEY? , 2000 .

[90]  Mark Easterby-Smith,et al.  Dynamic capabilities and the role of organizational knowledge: an exploration , 2006, Eur. J. Inf. Syst..

[91]  Kevin Crowston,et al.  Information technology and the transformation of industries: three research perspectives , 2004, J. Strateg. Inf. Syst..