Information technology capability‐enabled performance, future performance, and value
| DOI | https://doi.org/10.1108/02635571311324133 |
| Pages | 669-682 |
| Date | 17 May 2013 |
| Published date | 17 May 2013 |
| Author | Chorng‐Shyong Ong,Poyen Chen |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Information technology
capability-enabled performance,
future performance, and value
Chorng-Shyong Ong and Poyen Chen
Department of Information Management,
National Taiwan University, Taipei, Taiwan
Abstract
Purpose – The purpose of this paper is to simultaneously determine the impact of information
technology capabilities on firm performance, future firm performance, and firm value.
Design/methodology/approach – The secondary data for 480 matched-firms are collected from
InformationWeek (which provides the IT capabilities ranking) and the Compustat database (which
provides financial data).
Findings – The results show that IT capabilities positively and significantly influence all three
constructs and that the significance level of firm value is higher than that of firm performance and that
of future firm performance. That is, IT capabilities are more relevant to firm value, which represents
growth opportunities, intangible assets, and innovation, etc.
Practical implications – Basedon these empirical findings that IT contributes more to the long-term
influences than to the short-term influences, firm managers should pay more attention to the strategic
positioning that IT provides for firms rather than only enhancing the operational effectiveness.
Originality/value – This study proposes a complete set of constructs, which includes firm
performance, future firm performance, and firm value, to measure the different effects of information
technology capabilities on firms and to discuss the corresponding managerial implications. Therefore,
these three constructs can be further clarified and considered simultaneously. This has not been
attempted by previous studies.
Keywords Informationtechnology capability,Firm performance, Futurefirm performance, Firmvalue,
Information technology, Companyperformance
Paper type Research paper
1. Introduction
In recent years, IT investment has accounted for more than 50 percent of all of the capital
investments made by US corporations (Laudon and Laudon, 2012). The link between
information technology and firm performance is also of interest to IS researchers and
practitioners (Stoel and Muhanna, 2009). However, early studies focus on the influence
of information technology on performance, as measured by the accounting-based
indicators in the current period. For example, Bharadwaj (2000) examined the
relationship between information technology capabilities and firm performance.
Subsequently, Santhanam and Hartono (2003) further used the sustainability view of
information technology to determine the relationship between information technology
capabilities and future firm performance. In addition, Wang and Alam (2007) and
Muhanna and Stoel (2010) showed that information technology also has an intangib le
The current issue and full text archive of this journal is available at
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This research is financially supported by the National Science Council of the Republic of China
(NSC-101-2410-H-002-004).
Received 10 November 2012
Revised 12 December 2012
9 January 2013
Accepted 11 January 2013
Industrial Management & Data
Systems
Vol. 113 No. 5, 2013
pp. 669-682
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635571311324133
Information
technology
capability
669
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