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Differences in IT Effectiveness among Firms: An Empirical Investigation

Authors: Crystal X. Jiang, Tess Han, George J. Titus, Matthew J. Liberatore


Information is a critical asset and an important source for gaining competitive advantage in firms. The effective maintenance of IT becomes an important task. In order to better understand the determinants of IT effectiveness, this study employs the Industrial Organization (I/O) and Resource Based View (RBV) theories and investigates the industry effect and several major firmspecific factors in relation to their impact on firms- IT effectiveness. The data consist of a panel data of ten-year observations of firms whose IT excellence had been recognized by the CIO Magazine. The non-profit organizations were deliberately excluded, as explained later. The results showed that the effectiveness of IT management varied significantly across industries. Industry also moderated the effects of firm demographic factors such as size and age on IT effectiveness. Surprisingly, R & D investment intensity had negative correlation to IT effectiveness. For managers and practitioners, this study offers some insights for evaluation criteria and expectation for IT project success. Finally, the empirical results indicate that the sustainability of IT effectiveness appears to be short in duration.

Keywords: Firm effect, industry effect, IT effectiveness, sustained IT effectiveness.

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