Understanding the dynamics between organizational IT investment strategy and market performance: A system dynamics approach

Abstract

In recent years, information technology (IT) companies have faced fierce competition across dynamic environments; as such, ways of enhancing organizational performance and obtaining competitive advantage through IT investment have become important issues for academia and businesses. Further, time delays between IT investment transfers and actual market performance make measuring the impact of IT investment on market performance more complex. Based on the perspective of long-term, non-linear, closed-loop causality, this study develops a computerized system dynamics model to analyze the dynamic relationships between organizational IT investment strategy and market performance within information-intensive service industries. The results of this study provide several important implications for IT investment management research and practice. The proposed system dynamics model also provides IT managers with a useful decision support tool for evaluating different IT investment strategies.