How IT Awareness Impacts IT Control Weaknesses and Firm Performance

Abstract

With the prevalence of information technology (IT), the value of IT awareness increasingly grows, and IT control becomes a key part of firms' strategies and objectives. Although leadership plays an important role in IT control governance, limited research has studied whether IT awareness is associated with IT control weaknesses (ITCWs) and firm performance simultaneously. Drawing on the agency and resource dependence theory, this paper proposes an integrative model to examine the impact of IT awareness on ITCWs and firm performance. We empirically validate the model using a data set of 310 firms collected from multiple sources including Audit Analytics, Compustat, 10-K filings, and proxy statement. The findings indicate that firms with higher IT awareness are less likely to have ITCWs, and lead to improved firm performance. This paper contributes to information systems (IS) literature by investigating the IT experience and knowledge of the board of directors on both ITCWs and firm performance. This study also provides important practical implications for IT management practices.