Abstract

Few studies have attempted to measure the effects of investments in information technology (IT) applications using measures that are familiar to managers. In general, the vast literature suggesting that information technology investments can provide firms with competitive advantages is unsupported by strong empirical evidence. This paper reports on an empirical study of the effects of early adoption of automated teller machine (ATM) technology by banks, on demand deposit market share and employee efficiency. The results suggest that, for some banks, ATM adoption increased employee efficiency and early adoption resulted in market share gains. Efficiency gains were greater for larger banks and banks that grew rapidly, while early adoption resulted in market share gains in states with certain banking regulations. The results support assertions that attributes of the technology, the firm and the industry determine whether competitive advantages result from IT investments.

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