The Value of the Structural Power of the Chief Information Officer in Enhancing Forward-Looking Firm Performance*

Abstract

ABSTRACT Drawing on the resource-based view (RBV) of the firm and the top management team (TMT) structural power framework, we investigate the relationship between Chief Information Officer (CIO) structural power and forward-looking firm performance. In addition, we examine the contingency roles of market turbulence, industry IT intensity, and operating efficiency in shaping the above relationship. Using a sample of 7,185 firm-year observations and a panel fixed-effects model, we find that CIO structural power is positively associated with forward-looking firm performance (proxied by Tobin’s q). Further, our results suggest that the benefits of CIO structural power are higher under greater market turbulence, higher industry IT intensity, and greater operating efficiency. Our empirical results imply that the board of directors should consider endowing CIOs with a higher structural power, especially when an organization faces greater volatility in industry sales, competes in a more IT-intensive industry, and operates at a more efficient level. This research contributes to the RBV literature and integrates RBV and structural power frameworks to offer newer insights into the contemporary role of an important TMT member, the CIO.