Information technology investment and innovation performance: does investment paradox exist?
| DOI | https://doi.org/10.1108/JABS-07-2021-0259 |
| Published date | 27 December 2021 |
| Date | 27 December 2021 |
| Pages | 230-244 |
| Subject Matter | Strategy,International business |
| Author | Peinan Ji,Xiangbin Yan,Yan Shi |
Information technology investment and
innovation performance: does investment
paradox exist?
Peinan Ji, Xiangbin Yan and Yan Shi
Abstract
Purpose –The purpose of this study is to deepen the understanding of the effects of information
technology (IT) investmenton firm innovation performance and examiningthe investment paradox effect
in China.
Design/methodology/approach –Using a sample of China’ public firms ITinvestment data between
2010 and 2016,the authors establish a test model of IT investment and innovationperformance.
Findings –The resultindicates that IT investment in firmshave no effect on innovation performancein the
investment period. However, in the full sample and manufacturing sample, the IT investment has a
significant positiveeffect on innovation performance in the post-investment years. In addition,this study
finds that large companies and low-age companies may contribute more to innovation when firm
investmentin IT.
Research limitations/implications –There are several limitationsin this research. First, the authors are
failed to obtain a larger sample about the IT investment information data set in China, so this studywas
compelled to use limited sample data from China, hence, this could lead to errors of too early
generalization. Second, the authors use the number of invention patent applications to represent the
performance of enterprise innovation, which may not show enterprise innovation effectively. Third, the
firms in the sample are all in China Listed Companies, so this may not accurately reflect the entire
environmentof firm innovation performance,and could possibly.
Practical implications –The research confirms that there is a paradox and time lag effect in IT
investment,which enterprises should pay attentionto.
Originality/value –Existing researchconfirms that corporate IT investments can bring newproducts or
services. However, the authors still do not know whether IT investment has improved the company’s
abilityof innovation. This study will fill this gap and the industryeffect and time lag effect of the influence of
IT investmenton innovative performance arealso examined.
Keywords Firm innovation, IT investment, Chinese listed companies,Investment paradox
Paper type Research paper
1. Introduction
The investment and implementation of information technology (IT) have been discussed
extensively all over the world throughout the past decade. According to the 2018 SIM IT
issues and trends study: Reported in dollars, the average 2018 IT budgets increased by
10.3% from US$107m in 2017 to US$118m (n= 521), and the average IT spending as a
percentage of revenue increased by 3.8% in 2008 to 5.9% in 2018. Over the past few
decades, the massive support and investment in information technology of enterprises and
governments is considered to have a huge impact on theglobal economy, which has led to
an economic transition from a manufacturing economy to an information economy in the
world. There is no doubt that, from the present situation, the investment in IT remains a key
investment supported byfirm businesses and government agencies, globally.
Peinan Ji is based at the
School of Management,
Lanzhou University,
Lanzhou, China.
Xiangbin Yan is based at
School of Economics and
Management, University of
Science and Technology
Beijing, Beijing, China.
Yan Shi is based at the
Harbin Institute of
Technology, Harbin, China.
Received 1 July 2021
Revised 14 October 2021
Accepted 9 November 2021
Funding: This work was
supported by the National
Natural Science Foundation of
China under Grant
No.71531013; 71490720.
PAGE 230 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 16 NO. 2 2022, pp. 230-244, ©Emerald Publishing Limited, ISSN 1558-7894 DOI 10.1108/JABS-07-2021-0259
To continue reading
Request your trial