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ABSTRACT
The importance of assessing the relationships between information system/information technology (IS/IT) investments and firm performance is well acknowledged. However, similar inquiries are found to be under-represented in emerging markets like India, which motivates this work. Based on secondary data, the study assesses the impact of IS/IT investments made by Indian firms over the last one and half decades on their performance. Results indicate that these investments have a negative impact on firm performance manifested through decline in both operating and equity market performance. This has implications for theory and practice, which are also discussed.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
2. * in the search string is used as a wildcard character to facilitate similar matching.
3. IT in automate industries seeks to replace human labor by automating business processes. IT in informate industries IT enables seeks to empower management and employees. IT in transform industries seeks to redefine business processes and relationships .
4. IS/IT investment here implies the expenses made by the firms under the following headings: computer systems, computer hardware, IT-enabled services and softwares as reported in their audited and published financial statements.
5. CMIE stands for Centre for Monitoring Indian Economy which is one of the most reputed corporate financial data providing services in India. Prowess provides all financial statement related data based on published audited annual reports of the companies. Stock market related data of firms is provided from published data of National stock exchange (NSE) or Bombay Stock exchange (BSE).
6. The rationale for selecting year 2000 as the start date is purely from data availability consideration. When we searched for financial and stock market related data, reasonable quantum of data is found to be present from 1997. As we need to assess the firms’ performance starting from three years before making investment (and upto 5 years post investment year) by our research design, our start date is from year 2000.
7. A balanced data set is a set that contains all elements observed in all time frame. Whereas unbalanced data is a set of data where for certain years, the data category is not observed.