HOW INFORMATION TECHNOLOGY STRATEGY AND INVESTMENTS INFLUEN…

HOW INFORMATION TECHNOLOGY STRATEGY AND INVESTMENTS INFLUENCE FIRM PERFORMANCE: CONJECTURE AND EMPIRICAL EVIDENCE1.Authors:Mithas, Sunil , Roland T. :MIS Quarterly. Mar2016, Vol. 40 Issue 1, p223-246. 24p. 7 Charts, 4 Graphs. (PDF ATTACHED BELOW ) Please retrieve the article from the link provided this week and make sure to thoroughly read the article. Please from the course syllabus that this document relates to. You will find that this article is about IT strategy and investment. Without using direct citations, which means you cannot use more than a sentence here and there, and they must be cited, please explain what the article is about, why this is relevant, and how this relates to the two or more learning objectives identified from the course syllabus. Please make sure that and not copying and pasting from other articles. If I see this, I will call you on it and deduct points from the assignment.

The article “How Information Technology Strategy and Investments Influence Firm Performance: Conjecture and Empirical Evidence” by Mithas and Roland (2016) explores the relationship between information technology (IT) strategy, IT investments, and firm performance. The authors aim to contribute to the understanding of how firms can effectively utilize IT to achieve a competitive advantage and enhance their performance.

The article begins by discussing the importance of IT strategy and investments in today’s digital age. Mithas and Roland argue that firms need to carefully align their IT strategy, which includes the decisions related to IT infrastructure, applications, and human resources, with their overall business strategy in order to drive value and improve performance. However, they also note that the relationship between IT investments and firm performance is complex and influenced by various factors such as industry characteristics, competitive dynamics, and internal capabilities.

To examine this relationship, the authors conduct a comprehensive analysis using a large dataset of publicly traded firms over a period of seven years. They employ rigorous econometric techniques and control for various factors to isolate the impact of IT strategy and investments on firm performance. The key measure of firm performance used in the study is Tobin’s q, which captures the market value of a firm relative to its book value.

The empirical findings of the study reveal several interesting insights. Firstly, the authors find that both the governance of IT investments and the alignment of IT investments with business priorities positively influence firm performance. This suggests that firms that have strong IT governance processes and clearly link their IT investments to strategic objectives are more likely to achieve higher performance outcomes.

Secondly, the study demonstrates that the effect of IT investments on firm performance is contingent upon the firm’s strategic posture. Specifically, the positive impact of IT investments on performance is enhanced for firms pursuing an innovation-oriented strategy, while it is diminished for firms following a cost leadership strategy. This finding underscores the importance of aligning IT investments with the firm’s strategic intent to maximize the potential benefits.

Importantly, the authors also explore the mediating role of IT capabilities in the relationship between IT strategy/investments and firm performance. They argue that the development of IT capabilities, such as IT infrastructure flexibility and IT skill breadth, enables firms to effectively leverage their IT investments and translate them into tangible performance outcomes.

This article is highly relevant in the context of the course syllabus, as it directly addresses the learning objectives related to understanding the strategic role of IT in organizations and the impact of IT investments on firm performance. It provides valuable insights and empirical evidence to support the concepts and principles covered in the course. Additionally, the findings highlight the importance of aligning IT strategy with business objectives and developing IT capabilities to drive superior performance.