The paper “ Management of Information Systems - Relationship between IT Investments and Firm Performance” is a meaningful example of an assignment on the management. Why are the authors studying information technology strategy and investments to influence the firm’ s performance? Studies have been done on the impacts of IT investment and strategies that influence the firm performance of which only three strategic plan methods have been elaborated. The IT can either be used to decrease cost by enhancing and improving productivity and effectiveness or increase profits by utilizing maximally the available opportunities through the already existing customers, products and services and channels by establishing new channels, customers and products, and services.
The third IT strategic path is that it can reduce costs and increase revenue at the same time. What the authors want to discuss clearly is the relative degree to which the above mention strategies influence firm performance together. The authors use two complementary measures of firm performance which include both profitability and market value that relate to fundamentals and stock market assessment. The authors want to show and link the prior IT investment with profitability considering the effects of IT strategy using data that have both the IT strategies and IT investments.
The authors want to put an emphasis on moderate relationships between firm performance and IT investments. Their deep discussion is to elaborate and shows that a higher level of IT investments is required for a successful dual IT (Mithas & Rust, 2016,p. 223-245). In addition, the authors provide a crucial insight that IT strategy and IT investment need to be viewed as one but not different from each other and the companies should synchronize their IT strategies and IT investment levels so as to make sure there will be always an improved performance.
In the study, the authors want to provide implications for business companies that are adopting dual strategies so as to increase their turbulent markets. Q2. Describe why the authors claim that IT Strategic Emphasis moderates the relationship between IT investments and firm performance. Regarding the type of firm governing process, type of technology firm uses, type of application the firm square and the type of performance metrics it uses, the firm’ s strategies emphasize always has an effect on the firm’ s choice.
The authors recognize that for any strategy needs to be started and sustained by using appropriate IT systems combination so as to give a positive firm performance result. For a deeper understanding, this means that strategy execution should be viewed as the actualization of a specific configuration of systems(Mithas & Rust, 2016,p. 223-245). The authors argue that for a better firm performance a dual IT emphasis is more preferred than a single emphasis despite various risk experienced in executing the dual emphasis.
The argument is drawn based on the IT literature such as the current literature on ambidexterity that gives an emphasis on power on stretch targets, the accounting literature, and resource-based. Basing on the authors’ arguments a dual emphasis on IT strategy should lead to high firm performance due to various reasons which include greater casual ambiguity, greater social complexity, organization learning, and greater path dependence.