Investment in Information Technology and Organizational Performance

27 Pages Posted: 31 Oct 2008

See all articles by Peter Weill

Peter Weill

Massachusetts Institute of Technology (MIT) - Center for Information Systems Research (CISR)

Margrethe Olson

affiliation not provided to SSRN

Date Written: March 1988

Abstract

Information technology (IT) is essential to many businesses, but there are few guidelines for determiningthe adequate level of investment in IT. The purpose of this paper is to further understanding of themechanism of IT investment. Previous studies on IT investment are briefly presented. The authorsperformed six-mini case studies of large companies in five different industries; these studies addressed thequestions of how firms define IT and how they manage their investment in IT. Our goal was to formulatea model of the relationship between IT investment and organizational performance. We present themodel and pose questions for investigating this important relationship more closely.Findings of interest relate to the definition of IT, the importance of political considerations, the conceptof an industry-based threshold investment, the conversion effectiveness of IT investment, and the conceptof productive capacity. The most important finding relates to the separation of different types of ITinvestment and their logical matching to particular performance measures.

Keywords: Information technology investment, organizational performance, conversion effectiveness, strategy

Suggested Citation

Weill, Peter and Olson, Margrethe, Investment in Information Technology and Organizational Performance (March 1988). NYU Working Paper No. IS-88-22, Available at SSRN: https://ssrn.com/abstract=1289709

Peter Weill (Contact Author)

Massachusetts Institute of Technology (MIT) - Center for Information Systems Research (CISR) ( email )

Sloan School of Management
5 Cambridge Center, NE25-775
Cambridge, MA 02142
United States
617-253-2930 (Phone)
617-253-4424 (Fax)

Margrethe Olson

affiliation not provided to SSRN

No Address Available

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