Abstract
Many academicians and practitioners have been acknowledging that information technology (IT) adoption could improve company performance. However, previous research indicates contradictory evidence. These inconsistencies can be attributed to variations among the studies in choosing proxy for IT adoption and due to contingent on other factors. This research aims at analyzing the influence of a contingent factor that is corporate governance (CG) concerning the effectiveness of IT adoption in influencing company performance measured by change in return on assets. Two proxies are used for IT adoption: company expenses on IT and the level of the organization managing IT. Data is collected and analyzed from annual reports of all banks listed in Indonesia Stock Exchange from 2011 to 2013. Multiple linear regression models are employed. This research shows that corporate governance practice could improve the effectiveness of IT adoption in improving company performance. This research implies that better CG practices in providing direction and monitoring on IT can lead to better company performance.
Highlights
Information technology (IT) has been a crucial factor for company’s strategic management to gain a competitive advantage [1]
The data shows that different levels of corporate governance (CG) have different impacts on the influence of information technology (IT) expenditure on Return on Assets (ROA)
This research has shown the existence of moderation effect of CG level on the impact of IT adoption on bank performance
Summary
Information technology (IT) has been a crucial factor for company’s strategic management to gain a competitive advantage [1]. Companies have been racing in investing much of their resources in IT adoption by believing that IT investment can improve company performance or productivity [2][3] in the banking sector, IT adoption is a critical factor for banks performance [4] especially in supporting the bank’s role as an intermediary of financial services. The critical roles of IT in supporting organization to achieve a high level of performance have been attracting much of research attention [5][6][7] .Turel and Bart [8] studied the role of oversight in IT matter by the management team in ensuring organization performance improvement. Tripathy [7] Examined the role of IT in achieving better supply chain management performance of small and medium enterprises. Arora and Arora [9] Showed that IT investment by Indian banks resulted in a positive performance
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