Organizations continue to increase their investments in information technology (IT) as a means of achieving higher levels of performance because their executives see these investments as a way to counter the impact of global competition. IT is seen as a means to create business value through: automation - substituting capital for high cost labor thereby improving productivity and reducing cost structures; informatization - reducing cycle times for new product introduction; and transformation - improving business processes in general through redesign using IT capabilities. The continually higher IT costs and the lack of empirical evidence about payoffs have resulted in questions by researchers and senior executives about the final payoffs from IT. Some recent studies have demonstrated a positive return on IT investments, while others have not, and so significant questions remain. There are a large number of organizational variables that mediate the payoff from IT, which are omitted in microeconomic analyses, and that are important to understand for better IT management. Behavioral analyses indicate that organizational performance depends on the choice of a firm's strategy as well as its execution, and that IT contributes primarily to the latter though a set of organization-IT linkages. This research tests an explanatory model of these linkages and assesses the contribution of IT to business value. The research is funded under the Joint NSF/Private Sector Initiative with the cooperating organization, Computer Sciences Corporation Research and Advisory Services.
