The Impact of IT Capability on Employee Capability, Customer Value, Customer Satisfaction, and Business Performance
Description: This study empirically examines the impact of IT capability on firms' performance and evaluates whether firms' IT capabilities play a role in improving employee capability, customer value, customer satisfaction, and ultimately business performance. The results were based on comparing the business performance of the IT leader companies with that of control companies of similar size and industry. The IT leader companies were selected from the Information Week 500 list published annually from 2001 to 2004. For a company to be selected as IT leaders, it needed to be listed at least twice during the period. Furthermore, it had to be listed in the American Customer Satisfaction Index (ACSI) so that its customer satisfaction level could be assessed. Standard & Poor's Compustat and the ACSI scores were used to test for changes in business performance. The study found that the IT leaders had a raw material cost measured by cost-of-goods-sold to sales ratio (COGS/S) than the control companies. However, it found no evidence that firms' IT capability affects employee capability, customer value, customer satisfaction, and profit. An important implication from this study is that IT becomes a commodity and an attempt to gain a competitive advantage by overinvesting in IT may be futile.
Date: August 2009
Creator: Chae, Ho-Chang