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Title: The Role of IT Investments in Fostering Firm Innovations: An Empirical Study

Authors: Erastus Karanja; Ganesh D. Bhatt

Addresses: Author address listing can be found in the "About the Authors" section at the end of the article.

Abstract: Information Systems scholars and practitioners continue to devote more resources in trying to unravel how Information Technology (IT) investments create business value. Although there is an emerging consensus on the positive role of IT investments in creating business value, there is still a need for research studies that empirically examine the mechanisms or intermediate processes through which these IT investments lead to business value. This study examines the relationship between IT investments and firm innovation - one of the understudied mechanisms or intermediate processes in the IT business value paradigm. An investigation of this link identifies an important underlying mechanism that may explain how IT investments indirectly create business value. Using IT investments and innovation (patents) data, the researchers test hypotheses grounded in the KnowledgeBased View (KBV) theory of the firm. After controlling for firm and industry factors, the empirical results provide support for the effect of IT investments on firm innovation.

Keywords: IT investments; firm innovation; business value; empirical study; knowledge-based view.

DOI: 10.1504/JBM.2014.141223

Journal of Business and Management, 2014 Vol.20 No.2, pp.25 - 50

Published online: 05 Sep 2024 *