Investigating the effects of information technology investment on the performance of telecommunication companies

Abstract

Information technology (IT) has a significant potential in improving the structure of organisations and the quality of companies' performance. However, the inconsistent relationships between IT investment and the performance of an organisation is the main issue which can result in failing of a successful implementation of IT. In this paper, an econometric model is developed to evaluate the possible effects of IT investment on the productivity of a telecommunication company. The results show a positive contribution of IT capital and labour investments on the company's productivity and financial performance indexes. Findings also approve that the current IT investment has a positive impact on the company's revenue generation even after deducting depreciation expenses. This effect is less than non-IT investments. According to statistical analysis, while there is a strong relation between total factor productivity of the company and its IT capital the relation between labour productivity and the IT capital is moderate.