Saudi Cultural Missions Theses & Dissertations
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Item Restricted Does Information Technology Investment Impact a Firm Financial Performance? The Value of Appropriation Pathway(University of Colorado Denver, 2024) Alharbi, Abdulaziz; Gregg, DawnThe IT productivity paradox has long been a topic of considerable interest to information systems scholars. This is because, despite decades of research, the nature of the value appropriation pathway of IT investments remains elusive. In this dissertation, we seek to clarify the nature of the relationship between IT investments and firm performance using two distinct but related analytical approaches. In our first study, we draw upon the contingency model of the resource-based view of the firm to suggest that the nature of the relationship between IT investments and the firm’s financial performance depends upon the co-investment in complementary and non-complementary resources. We identified digital vulnerability as one of the key drawbacks of IT investments. Therefore, we predict that resources such as IT security, which lessen the digital vulnerability that businesses experience as a result of their technological investment, share a complementary relationship with IT investments and, as a result, positively moderate the relationship between IT investments and a firm’s financial performance. Alternatively, resources such as cloud computing, which increase the digital vulnerability that businesses experience as a result of their technological investment, share a non-complementary relationship with IT investments and, as a result, negatively moderate the relationship between IT investments and a firm’s financial performance. Overall, we observe that the performance implications of IT investments are significantly contingent upon the presence or absence of complementary and non-complementary resources. In the second paper, we focus on evaluating the performance implications of cloud computing, a type of IT investment that has been the subject of considerable scholarly and practical attention. Drawing upon the theory of dynamic capabilities, we theorize that because cloud computing is not owned or managed by the firms who subscribe to its services, it can best be categorized as an organizational capability instead of a tangible resource. According to dynamic capabilities, capabilities influence performance by increasing the efficiency of a firm’s resource management activities. Therefore, we predict that the relationship between cloud computing and a firm’s financial performance does not occur directly. Instead, it is fully mediated by increases in a firm’s resource management activities. To further establish the performance pathway of cloud computing, we identify three important contingency factors of the relationship between cloud computing and a firm’s financial performance, cloud computing service models, vertical integration, and firm size. Overall, we find that improvements in a company's resource management efficiency are what drive the performance implications of cloud computing and that the nature of the indirect relationship between cloud computing and a firm’s financial performance depends on important organizational and technological contingency factors. We observe broad support for each of our predictions across each study. Overall, our findings help to reconcile the IT productivity paradox by identifying under what circumstances (study 1) and through what pathway (study 2) IT investments impact a firm’s financial performance5 0