Identifying the importance of investment performance relationship

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Information Technology Assignment Question

Q1. Why are the authors studying information technology strategy and investments to influence firms performance?

Q2. Describe why the authors claim that IT Strategic Emphasis moderates the relationship between IT investments and firm performance.

Q3. Discuss the main findings of the study.

Information Technology Assignment Answer

Q1. Why are the authors studying information technology strategy and investments to influence firms’ performance?

MOTIVATION/OBJECTIVE OF RESEARCH: WHY THIS RESEARCH

The authors have already cited many studies confirming the IT investment-performance relationships in past (Hoadley and Kohli 2014; Kohli et al. 2012), but, no one mentions about the role of IT strategy emphasis. Following reasons support that why IT strategy and IT investments taken together is justifiable.

Studies confirm that this relationship is routed through three different ways, i.e. cost reduction, revenue increase and through both ways. The both ways effect is termed as dual emphasis effect, which is the main focus of the paper. Stiroh (2001) hints that, IT investments & strategy results in the capital formation which highly contributes to productivity gains of labor, but explicit role of strategy is not focused. In this way, identifying the exact path to establish the relationship is a new agenda of research, and no study explains that how IT strategy acts as moderating variable between IT investments and firm performance. Also, with the help of literature, author emphasizes that, IT investment is related to cost reduction and revenue increase but, none has considered all these together to establish linkage with performance. This is a clear research gap.

Another reason to study the IT strategy role is- the increasing emphasis of stakeholders in adoption of IT strategy. As mentioned in the paper, the objective metrics has now more focus on strategic aspects of IT, and less the benefits due to ease of operations. Regarding this, several views and studies confirm for the greater importance to IT strategy for the overall growth of organizations. 

 

In the last, the study also identifies that managerial beliefs and strategic postures as the part of strategic objectives of IT brings changes in the business processes which, ultimately creates value. Hence, the moderating role of IT strategy emphasis is an important construct that can’t be ignored while studying IT investment-performance relationship………………

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