Information Technology (IT) Value Model using Variance-Based Structural Equation Modeling: Towards IT Value Engineering

Abstract

Information Technology in business is significant. This study tries to trace the relationship between IT value and firm performance. The methodology of the study is analyzing some variables forming the relationship of IT value to firm performance based on the Resource-Based View Theory. The analysis results in IT Value Model using Variance-Based Structural Equation Modeling. Using computer simulation data and a SEM application software, the conceptual models are tested. The testing consists of the outer model, the inner model, and the hypotheses testing. The outer model testing is to examine the relationship between the reflective manifest variables and their construct. Similarly, the inner model and hypotheses are tested to make sure that among the constructs have causality relationships. According to the testing results, the models meet the fit model criteria as required by the Variance-Based SEM. Likewise, the hypotheses can be accepted. Furthermore, the IT value engineering concept can be developed referred to the fit model and linked to business requirements.

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