IT Business Value Research

Abstract

Although corporations in the world, especially those in the United States, have spent generously on information technology (IT) and information systems (IS) in recent decades, empirical studies have yielded disappointingly inconsistent findings on the impact of IT investments on firm performance, and the phenomenon of the IT productivity paradox lingers on to this day. A review of the literature on this subject has pointed out several possible reasons underlying such inconsistencies, including data and methodological problems and limitations of research models. Consequently, a process-oriented research model is proposed to mitigate the shortcomings of prior studies. This model incorporates improvements in business process as an independent construct parallel to the capabilities of IT and enterprise systems. Competitive capabilities are included as an intermediate construct to conceptualize the linkage between the independent constructs and the dependent construct of organizational performance. Theories and empirical evidence are drawn from associated management disciplines such as operations management and from a resource-based view of the firm to illustrate and explain that investment in IT and business processes eventually will contribute to organizational performance through the creation and enhancement of competitive capabilities. Finally, the theoretical and managerial implications of this research model are highlighted.