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Abstract
While being an important question for IS research, there are contradictory views on the mediation of firm productivity on the IT-profit relationship. This study builds on prior studies that suggest that this relationship is completely mediated as well as those that suggest that this relationship is completely unmediated. This is studied in conjunction with prior research that posits that industries that make products composed of information are fundamentally different from industries that make physical products when it comes to their IT effects. Building on this, a complex but parsimonious moderated-mediation model is developed that can explain the contradictory mediation hypotheses. This model posits that the IT-profit relationship is completely mediated by productivity for information product industries, but less mediated for physical product industries. Results of PLS tests using a 7-year dataset of firms in both physical product and information product industries support these hypotheses.