Understanding the Business Value of IT Investments from the Combined Macro/Micro Views

Research aimed at understanding of how Information Technology (IT) investments impact on firm performance has produced incomplete and controversial results over the years. To improve understanding of the business value of IT investments we propose a theoretical framework to conduct and cross-examine a market (macro) view and an organisational (micro) view of IT investment value. This framework guides and informs a multi-method empirical study that is underway. It includes a) an examination of stock market returns on 10,000 IT investment announcements between 1990 and 2009, and b) in-depth case studies of value creation after IT is deployed in selected firms. The research will have three important contributions. First it will produce a comprehensive model of IT business value informed by both the market and the organisation view of the IT business value. Second, it will provide a thorough analysis of the impact IT investments (1990-20090) have had on the market value of firms, first of its kind in Australia. The third contribution from the study will include qualitative case studies of IT value creation in selected firms, providing a more nuanced interpretation that reveals contextual factors such as industry, environment, market conditions, and the like. This paper presents the theoretical model, research design and the first phase of the empirical study of the IT investment value from the market perspective. The study is expected to improve understanding of numerous factors relevant for assessing and predicting the business value of IT investments and thereby assist business and IT managers in making better informed IT investment decisions.