Article1995

Strategic Information Systems and Financial Performance

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Information Technology Governance and Strategy Information Systems Education and Curriculum Development Corporate Governance and Management

Abstract

:Investment in strategic information systems (SIS) is advocated by numerous authors as an important way for firms to seek competitive advantage. Yet there is still little empirical evidence that implementation of SIS results in long-term competitive advantages. This is primarily due to the difficulty of isolating economic benefits attributable to SIS implementation. In this research, thirty-five sample firms identified in the media for successful employment of SIS are analyzed for evidence oflong-term financial success. This analysis is conducted over a thirteen-year period, centered around the year in which firms were identified for employment of SIS to either support growth, control costs, form alliances, differentiate products, or provide innovation of products/processes. Results show that the stock market reacted favorably to announcements that firms were using SIS, and in subsequent years those firms tended to be more productive and more profitable than their industries and than firms in their respective industries. The greatest profitability differences occurred in the years after SIS firms were initially recognized as successfully employing SIS or investing in SIS. Further, a subsample analysis revealed that the positive results were primarily driven by those firms employing SIS to support growth.

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References

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