Exploring the Relation between Firm Ownership and IT Capability

As IT spending continuously increased throughout the last years, it nowadays accounts for a significant amount of total corporate spending. Simultaneously, academic research validated the strategic importance and performance benefits derived from a superior IT capability – the ability to successfully deploy organizational IT skills and resources. Furthermore, shareholders pursuing longterm oriented goals are interested in consistent investments to develop organizational capabilities, such as IT capability. Consequentially, the question arises how a firm’s ownership structure is related to its IT capability. This research question is addressed by analyzing secondary data on publicly listed U.S. companies of the last ten years. The results provide support for the hypothesized relation throughout the investigated period and withstand several control and robustness tests. This study contributes to the ongoing research on IT capability by showing that certain types of shareholders promote the development and deployment of IT capability which in turn influences strategic topics. Findings further confirm that decisions on IT investments characterized by long-term benefits must be backed by owners with a corresponding long-term investment horizon.