The Profit Impact of IT Investment

Authors

Sam Lubbe, Department of Computer Science and Information Systems, Universiteit Vista University, Welkom Campus, PO Box 1881, Welkom 9460, Republic of South Africa
Gary Parker, Department of Information Systems, Rhodes University, P.O. Box 94, Grahamstown, South Africa
Andrew Hoard, Department of Information Systems, Rhodes University, P.O. Box 94, Grahamstown, South Africa

Document Type

Research Article

Abstract

Two models were used to study the relationships between profitability and the level of information technology (IT) among long-term life insurance companies. The first compared the computerization index (CI) with profitability ratios. The second used the operating expense ratio (profitability measure) and the IT expense ratio to measure the level of IT capital intensity. The results of the present study showed a positive correlation between the CI and the financial ratios and the most profitable firms are more likely to spend a higher proportion of their non-interest operating expenses on IT.

DOI

10.1177/026839629501000106

Recommended Citation

Lubbe, Sam; Parker, Gary; and Hoard, Andrew (1995) "The Profit Impact of IT Investment," Journal of Information Technology: Vol. 10: Iss. 1, Article 6.
DOI: 10.1177/026839629501000106
Available at: https://aisel.aisnet.org/jit/vol10/iss1/6