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Revisiting the Relationship between Information Technology Capability and Firm Performance: Focusing on the Impact of the Adoption of Enterprise Resource Planning Systems
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  • Journal title : The Journal of Information Systems
  • Volume 25, Issue 1,  2016, pp.49-73
  • Publisher : The Korea Association of Information Systems
  • DOI : 10.5859/KAIS.2016.25.1.49
 Title & Authors
Revisiting the Relationship between Information Technology Capability and Firm Performance: Focusing on the Impact of the Adoption of Enterprise Resource Planning Systems
Oh, Sehwan; Baek, Hyunmi; Lee, Saerom;
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 Abstract
Purpose Though many information systems researchers have made various attempts to investigate the relationship between information technology capability and firm performance from diverse perspectives, we have not come to a conclusion yet with some mixed results. In this research, focusing on the adoption of Enterprise Resource Planning (ERP) systems by firms as a proxy measure for information technology capability, we reexamine whether the association is significantly positive. Design/methodology/approach Previous research on this topic had some limitations to the samples and analysis method. Some research focused only on the 1990s or early 2000s, and other studies failed to adequately compare the impact of ERP adoption on firm performance between the treatment group and the control group. In this research, extending previous analysis approaches with the matched sample comparison of IT leaders and the control group, we attempt to apply propensity score matching in combination with difference-in-difference analysis with a sample of Korean firms that adopted ERP systems in the late 2000s. We match ERP adopters and non-adopters with propensity score matching and compare their financial performance with difference-in-difference estimation between the pre- and post-adoption periods. Findings According to our analysis, we find no positive and significant relationship between ERP adoption and firm performance in profit ratios. This research shows that, contrary to the era of proprietary information systems, standardized information systems today have no additional competitive advantages over competitors.
 Keywords
Information technology capability;Firm performance;Enterprise Systems;Enterprise Resource Planning systems;
 Language
English
 Cited by
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