The business value of information technology : an assessment of IT impacts on competitive capabilities of business firms

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The business value of information technology : an assessment of IT impacts on competitive capabilities of business firms

 

Author: Law, Cheuk-hung Chuck
Title: The business value of information technology : an assessment of IT impacts on competitive capabilities of business firms
Degree: D.B.A.
Year: 2004
Subject: Hong Kong Polytechnic University -- Dissertations
Business enterprises -- Data processing -- Evaluation
Information technology -- Evaluation
Department: Graduate School of Business
Pages: xii, 292 leaves : ill. ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b1781051
URI: http://theses.lib.polyu.edu.hk/handle/200/1513
Abstract: Although many corporations across the world, especially in the United States, have spent generously on information technology (IT) and information systems (IS) in recent decades, empirical studies have yielded disappointingly inconsistent findings on the impact of IT investments on firm performance, giving rise to the phenomenon of the IT productivity paradox. A review of the literature on this subject points to several possible reasons underlying these inconsistencies, including problems with data and methodology, and the limitations of research models. Moreover, the traditional 'black box' approach to IT business-value research has been criticised as being weak in theoretical underpinning. Consequently, a research model, based on perceptual data, is formulated here to mitigate the shortcomings of previous studies. This model incorporates the extent of business process improvement as an independent construct that is parallel to the construct of IT infrastructure capabilities. The intermediate construct of competitive capabilities is introduced to enrich the conceptualisation of the link between the independent constructs and the dependent construct of organisational performance. Theories and empirical evidence have been drawn from associated management disciplines such as operations management, and from the resource-based view of firms to illustrate and explain that investment in IT and business processes will eventually contribute to organisational performance through the creation and enhancement of competitive capabilities. Using structural equation modelling techniques and a sample of 243 respondents, this study produces empirical evidence to confirm that IT and business process improvement are interrelated and contribute positively to competitive capabilities, which in turn are positively associated with perceived levels of organisational performance. The direct relationship between the two exogenous constructs and organisational performance is not supported. It is demonstrated that the impact of IT infrastructure capabilities and business process improvement on organisational performance is primarily indirect, and is achieved through intermediate variables. It is also found that context variables such as senior management support of IT and business process improvement, and the status of the IT leader (and the IT function) are related to the achievement of IT infrastructure capabilities and the business process improvement of the companies studied. This study confirms the business value of IT. It also contributes to academic research by developing a standardized instrument for measuring the IT infrastructure capabilities of firms, and providing an example for IT business-value study, using a research model that incorporates competitive capabilities as the intermediate construct. The development of a generic competitive capabilities measurement instrument for diverse business sectors is also of remarkable significance to academic studies concerning the capabilities of firms operating in various industries. The empirical evidence for the impact of IT infrastructure capabilities and business process improvement on competitive capabilities may have profound implications for the investment strategies and priorities of firms in different business sectors. Finally, the findings on the interrelationship between IT and business process improvement, and the positive influence of some context variables on IT and business process improvement projects could also be used by MIS practitioners as a guideline and reminder in IT infrastructure and systems deployment.

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