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The Institutionalization of IT Budgeting: Empirical Evidence from the Financial Sector

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  • Qing Hu

    (Florida Atlantic University, USA)

  • Jing Quan

    (Salisbury University, USA)

Abstract

Each year, businesses and organizations around the world invest billions of dollars in information technology (IT) related products and services. What are the factors influencing each individual firm’s investment budget decisions? Limited empirical results derived from firm-level data suggest that internal affordability, such as previous IT budget levels, sales, profitability, and size, are significant sources of influence. In this study, we introduce the perspective of external institutional influence for examining corporate IT budgeting processes in addition to the internal affordability perspective. Using firm-level IT and financial data of publicly traded companies in the financial sector, we show that the two most significant sources of influence on corporate IT budgets are the firm’s IT spending level of the previous year (internal) and the IT spending level of the perceived industry leaders (external). We posit that as IT becomes pervasive in all aspects of business operations and all sectors of the economy, IT budgeting processes have been at least partially institutionalized. The implications of this institutionalization are discussed, and future research directions are suggested.

Suggested Citation

  • Qing Hu & Jing Quan, 2006. "The Institutionalization of IT Budgeting: Empirical Evidence from the Financial Sector," Information Resources Management Journal (IRMJ), IGI Global, vol. 19(1), pages 84-97, January.
  • Handle: RePEc:igg:rmj000:v:19:y:2006:i:1:p:84-97
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    Cited by:

    1. Myung Ko, 2010. "IT Innovativeness and Environmental Consciousness on Organizational Performance," Working Papers 0109, College of Business, University of Texas at San Antonio.
    2. Myung Ko, 2010. "IT Innovativeness and Environmental Consciousness on Organizational Performance," Working Papers 0109, College of Business, University of Texas at San Antonio.
    3. Ahmadi, Hossein & Nilashi, Mehrbakhsh & Shahmoradi, Leila & Ibrahim, Othman & Sadoughi, Farahnaz & Alizadeh, Mojtaba & Alizadeh, Azar, 2018. "The moderating effect of hospital size on inter and intra-organizational factors of Hospital Information System adoption," Technological Forecasting and Social Change, Elsevier, vol. 134(C), pages 124-149.

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