Efficiency or Innovation? The Long-Run Payoff of Cloud Computing

Abstract

Considering the mixed arguments and uncertainty about the payoff of cloud computing, this paper empirically studies the long-term cloud computing impact on the financial performance, specifically from the perspective of efficiency and innovation. Taking 253 pairs of listed companies in China as the research sample, propensity score matching and difference in differences techniques combined with OLS regression are conducted to analyze a rolling 5-year panel data. The analysis results show that cloud computing adoption leads to years of financial performance decline followed by an upturn. The downward trend is more pronounced when it is adopted with innovation. This paper contributes to the existing literature by leveraging archival performance data to verify the long-term business value and revealing the value realization difference between efficiency- and innovation-oriented cloud computing adoptions. The findings remind the managers to see the two sides of cloud computing and make rational adoption decisions, especially cloud-based innovation, according to their actual situations.