Mixed Findings on IT Capability and Firm Performance and their Implications

Empirical testing for the positive association between information technology (IT) capability and firm performance has been a celebrated debate in IS research due to mixed findings; Bharadwaj (2000) and Santhanam and Hartono (2003) confirmed the positive impact of IT capability on firm performance, but Chae et al. (2014) suggested that there is no relationship between the IT capability and performance. Understanding what produces contradictory results is a timely and critical issue because a large body of the business value of IS research has employed IT capability as a key construct. This study examined the relationship by building multiple comparison groups in the same period. As a result, contrary to findings by Chae et al. (2014), this research indicated that IT capability had a significant impact on a firm’s financial performance