An empirical study of relationship between IT investment and firm performance: A resource-based perspective

Abstract

The resource-based view of the enterprises generally attributes superior financial performance to organizational resources and capabilities. Firm-specific IT resources are classified as IT infrastructure, human-IT resources, and IT-enabled intangibles. This paper empirically examines the association between IT investment and firm performance. Results indicate that firms with high levels of IT infrastructure and human-IT resources have a strong positive relationship with IT-enabled intangibles, but not with firm performance. In addition, IT-enabled intangibles are strongly positively correlated with firm performance. The relationships between IT investment and corporate IT capability are also examined. The results suggest that IT investments have begun to show results, indicating that they can make a positive contribution to firm IT infrastructure. However, the various measures of IT investment do not appear to have a positive relationship with human-IT resources, and IT-enabled intangibles. Although IT investment is likely to improve organizational IT infrastructure, but the IT-enabled intangibles is the key factor to effect the business performance, and the human-IT resource is a driving force for the IT-enabled intangibles.