The impact of information technology on performance in the not-for-profit sector

The relation between IT usage and performance has been a central question in the AIS literature since the late 1990s. Empirical research has not yet examined whether organizational-level differences in how IT is used are associated with performance, nor whether the lagged performance effects found in for-profit settings carry over to a not-for-profit setting. Spending on information technology (IT) in K-12 schools has grown significantly in the U.S. over the past decade and performance in this sector has significant spillover effects in other sectors. This study examines the effects on performance of a change in how IT is used on a continuum from an automation role to an informating/transforming approach. A sample of over 6300 organizations (schools) having over 700,000 students in grades 3, 8 and 11 is examined. Both short-term (year-over-year) and longer-term (four-year) performance effects are investigated. We find that a change in how IT is used is associated with an increase in performance in two of the three school levels, and that these mean effects are comparable in magnitude to those found for IT spending in for-profit settings. These effects only become positive after four years, and vary across school level. This is the first study to provide large sample evidence of the performance effect of a change in how IT is used at the organizational level. This has significant implications for research investigating the effects of investments in IT on organizational performance and for stakeholders including policy makers, managers, legislators and taxpayers.