Relationships of IT Investment Strategy and IT Infrastructure with Business Performance

Abstract

The relationship between Information technology (IT) investment and business performance has long been the subject of debate by academics and practitioners. Despite the fact that firms nowadays have made substantial investments in information technology, studies in IT investment have often found little persuasive evidence that IT investment created strong leverage on the value of the firm. Although capabilities of IT infrastructure services are one of the most critical issues facing IS managers, previous studies with a focus on IT infrastructure services is very limited. We attempt to explore the links between various IT infrastructure service investment strategies, a firm's IT infrastructure services, and business performance. The result shows that organizations taking IT flexibility strategy strongly respond to having a larger, more capable IT infrastructure while those with utility IT investment strategy have a negative relationship with their IT infrastructure services provided. There is a positive relationship between organizational IT infrastructure services capability and business performance. The existence of a non-significant relationship between IT investment and business performance reveals that increasing. IT investments without enhancing IT infrastructure services capability might be responsible for the negative results in business performance despite increased IT expenditure.