IDEAS home Printed from https://ideas.repec.org/a/ami/journl/v22y2023i4p693-722.html
   My bibliography  Save this article

Information Technology Capability and Firm Performance: A Longitudinal Study

Author

Listed:
  • Daesung Ha

    (Marshall University, USA)

Abstract

Research Question- We investigate the relationship between information technology (IT) capability and firm performance of US firms during 1989-2012. Motivation- We identify the model misspecification and estimation problems in Santhanam and Hartono (2003), Chae et al. (2014), Choi and George (2016), and Rahman and Zhao (2020) and provide new estimation results by using model specifications that better fit the characteristics of the sample data. Idea- We compare the long-term trends of the IT capability-performance relationship between the IT leader and control groups. Data- All data are from InformationWeek (IW) 500 and the Compustat database. Tools- We use a dynamic panel model with the firm-specific effect which incorporates the main assumptions of the resource-based view (RBV) of the firm. Findings- We find a positive association between IT capability and firm performance by using 1,308 IT leader firms chosen from the IW 500 from the period 1989 to 2012. We also find that the IT leader group’s financial performance consistently outperformed that of the control group over the entire sample period. However, during the second half of the 1990s, a period marked by a significant increase in IT proliferation and investment, the financial performance of the IT leader group leveled off. It appears that, contrary to expectations, the returns to the IT leader group’s superior IT capability did not translate into substantial improvements in operational efficiency during that period. We also observe that the financial performance of the control group experienced a much stronger recovery (with a threefold increase in magnitude) compared to the IT leader group during the 2000s. Contribution- This study makes a significant contribution to the existing literature as it presents the first-ever longitudinal study on the IT capability-performance relationship spanning 24 years. Moreover, this study is the first to investigate the existence of any changes in patterns of the IT capability-performance relationship, both across different groups and over time.

Suggested Citation

  • Daesung Ha, 2023. "Information Technology Capability and Firm Performance: A Longitudinal Study," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 22(4), pages 693-722, December.
    • Handle: RePEc:ami:journl:v:22:y:2023:i:4:p:693-722
    as

    Download full text from publisher

    File URL: http://online-cig.ase.ro/RePEc/ami/articles/22_4_5.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Resource-based view; IT capability; firm performance; dynamic panel model;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ami:journl:v:22:y:2023:i:4:p:693-722. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Cristina Tartavulea (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.