Abstract

Extant research into the business value of Information Technology (IT) explains that IT resources and complementary organizational resources impact organizational performance. This paper refines this explanation in three ways. We present theoretical arguments that (1) the direction of causality in the creation of IT business value may not be unidirectional, but that a positive feedback loop exists where IT investment in one time period improves organizational performance, which in turn enables additional IT investment in future time periods, (2) organizational resources may be more than merely complements of organizational performance, but may instead be determinants of organizational performance, and (3) the impact of IT capital resources on organizational performance is mediated by IT human resources. We support our arguments with empirical evidence built upon analysis of seven years of panel data gathered from healthcare firms. We find support for each of our eight hypotheses and present this research as a refinement and extension of existing models of IT business value.

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