Researchers have been interested in

Researchers have been interested in understanding the relationship between IT innovations and economic performance. Early research has examined how IT innovations impact financial performance using accounting-based measure [e.g., 8, 9, 10] and market-based measures [e.g., 11, 12, 13], and how the impact varies with contextual factors such as firm and technology characteristics. Mithas et al. [8] examined more than 400 global firms. They found that IT had a positive impact on profitability, and firms had greater success in achieving higher profitability through IT-enabled revenue growth than through IT-enabled cost reduction. Zhu [10] examined the main effects and the interaction effects of e-commerce and IT on firm performance. They found a positive interaction effect between IT infrastructure and e-commerce capability, suggesting that the complementarity positively contributes to sales per employee, inventory turnover, and cost reduction. Li and Ye [9] found that the impact of IT investments on financial performance was positively associated with greater environmental changes, more proactive company strategy, and closer CEO/CIO ties. As for those short-term event studies, Dos Santos and colleagues [12] discovered that innovative IT investments increased market returns, while noninnovative investments did not. Dardan and colleagues [11] found that e-commerce initiatives increased stock return and volume, and the returns were different in good and bad markets. Hayes and associates [13] found that the market reacted positively to initial enterprise resource planning (ERP) announcements and more positively toward ERP investment news from small and financially healthy firms. More recently, empirical studies also have started to examine the impact of IT investments on risk. Dewan and Ren [14] found that IT investment increases both profitability and risk (i.e., variability of profitability), and that suitable firm boundary strategies of diversification and vertical integration in supply chain can moderate the effects of IT on firm performance in a manner that increases profitability and decreases risk, at the margins.