IT Investments, Intangibles, and Financial Performance, Revisited: A RBV-Based Empirical Analysis

Abstract

Drawing on the resource - based view of the firm (RBV), this study aims at evaluating the relation between current IT resources and capabilities and corporate performance, as measured by the probability of default. We use a novel experimental design to move towards a prospective approach, and make predictions about whether current IT resources and capabilities will affect future financial performance. We provide evidence that the ability of the company to survive as an independent economic unit is modified by IT decentralization, flexibility, and the development of synergistic bundles of IT resources and capabilities, once controlled for dimension, industry, and financial resources. Our findings are compatible with time lags and long-term effects on financial performance previously reported by IT literature. We also provide evidence that the ability to survive is a suitable measure of performance, within the RBV frame.