Performance Impacts of Extent of Information Technology Usage

Abstract

The link between IT investment and firm performance is indirect due to the effect of moderating variables. Employing a sample of 589 manufacturing firms based in the U.S., building on resource- and knowledge-based theories and the marketing literature, we use structural equation modeling to investigate the relationship between firm extent of IT usage, knowledge acquisition from customers and suppliers, competitive advantage and firm financial performance. Our results indicate that firm extent of IT usage positively impacts both knowledge from both customers and suppliers, which positively affect firm competitive advantage that, in turn, positively impacts firm financial performance. Further, our results indicate that both knowledge and competitive advantage play a mediating role between firm extent of IT usage and its financial performance.