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Information Technology and Corporate Profitability: A Focus on Operating Efficiency

Author

Listed:
  • Stephan Kudyba

    (New Jersey Institute of Technology, USA)

  • Donald Vitaliano

    (Rensselaer Polytechnic Institute, USA)

Abstract

This work involves an empirical analysis, incorporating firm-level investment in information technology and financial statement information, which provides an accurate measure of operating revenue, in a profitability function over the period from 1995-1997. The results indicate that IT can enhance firm level profitability. Factors such as advanced computer processing, the proliferation of PCs to the consumer and business environment, the development of the Internet, and advanced software applications have significantly augmented previously existing information technology. This new IT has provided infrastructure for advanced information networks which facilitate the flow of value added information to decision makers and enable corporate enterprises to more easily operate in the new global ecomomy. As a result, larger companies can provide a variety of goods and services that more effectively meet consumer preferences in a more efficient, cost-effective manner.

Suggested Citation

  • Stephan Kudyba & Donald Vitaliano, 2003. "Information Technology and Corporate Profitability: A Focus on Operating Efficiency," Information Resources Management Journal (IRMJ), IGI Global, vol. 16(1), pages 1-13, January.
    • Handle: RePEc:igg:rmj000:v:16:y:2003:i:1:p:1-13
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    Cited by:

    1. Xu, Xiaobo & Zhang, Weiyong & Li, Ling, 2016. "The impact of technology type and life cycle on IT productivity variance: A contingency theoretical perspective," International Journal of Information Management, Elsevier, vol. 36(6), pages 1193-1204.
    2. Kobelsky, Kevin & Hunter, Starling & Richardson, Vernon J., 2008. "Information technology, contextual factors and the volatility of firm performance," International Journal of Accounting Information Systems, Elsevier, vol. 9(3), pages 154-174.
    3. Adam Maiga & Anders Nilsson & Fred Jacobs, 2014. "Assessing the impact of budgetary participation on budgetary outcomes: the role of information technology for enhanced communication and activity-based costing," Metrika: International Journal for Theoretical and Applied Statistics, Springer, vol. 25(1), pages 5-32, September.
    4. Maiga, Adam S. & Nilsson, Anders & Jacobs, Fred A., 2014. "Assessing the interaction effect of cost control systems and information technology integration on manufacturing plant financial performance," The British Accounting Review, Elsevier, vol. 46(1), pages 77-90.

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