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A Lag Effect of IT Investment on Firm Performance

A Lag Effect of IT Investment on Firm Performance

Sangho Lee, Soung Hie Kim
Copyright: © 2006 |Volume: 19 |Issue: 1 |Pages: 27
ISSN: 1040-1628|EISSN: 1533-7979|ISSN: 1040-1628|EISBN13: 9781615200139|EISSN: 1533-7979|DOI: 10.4018/irmj.2006010103
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MLA

Lee, Sangho, and Soung Hie Kim. "A Lag Effect of IT Investment on Firm Performance." IRMJ vol.19, no.1 2006: pp.43-69. http://doi.org/10.4018/irmj.2006010103

APA

Lee, S. & Kim, S. H. (2006). A Lag Effect of IT Investment on Firm Performance. Information Resources Management Journal (IRMJ), 19(1), 43-69. http://doi.org/10.4018/irmj.2006010103

Chicago

Lee, Sangho, and Soung Hie Kim. "A Lag Effect of IT Investment on Firm Performance," Information Resources Management Journal (IRMJ) 19, no.1: 43-69. http://doi.org/10.4018/irmj.2006010103

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Abstract

This article discusses the positive effects of IT investment on firm financial performance when a distinct range of characteristics is examined. The relationship between IT investment and firm performance considering the information intensity of the industry is explored using a distributed lag model. Findings indicate both a positive effect and a positive lag effect of IT investment. The effects of IT investment in the high information-intensive industry are significantly larger than in the low information-intensive industry. Furthermore, a lagged effect of IT investment is larger than an immediate effect, regardless of the information intensity of the industry. We conclude that firms in the high information-intensive industry need to be more cognizant of performance factors when investing in IT investment than in the low information-intensive industry. Moreover, it is necessary to consider the time lag between IT investment and firm performance.

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