IT Capability and Firm Performance: Findings from Periods of Economic Downturn

Information technology is crucial in many industries and is seen as a decisive factor of a firm’s performance and financial success. Based on the dynamic capabilities view, this paper aims at extending existing research on organizational IT capability and performance. In particular, this work examines if firms exhibiting superior IT capability outperform their competitors, especially during two phases of economic downturn: the burst of the dotcom-bubble in 2000 and the recent financial crisis in 2008. Applying secondary statistics on different performance measures and proxies of IT capability among publicly traded US companies, we found that firms characterized by superior IT capability outperformed their competitors during both crises in all but one performance indicator. This paper contributes to research by investigating two crisis periods and using up-to-date data to reconcile prior research.