Information Technology Effects on Firm Performance As Measured by Tobin's Q
Management Science
Does successful investment in information technology solve the productivity paradox?
Information and Management
Information Systems Research
The Impact of E-Commerce Announcements on the Market Value of Firms
Information Systems Research
Information Systems Research
Real Options and IT Platform Adoption: Implications for Theory and Practice
Information Systems Research
Information Systems Research
Value Implications of Investments in Information Technology
Management Science
Journal of Management Information Systems
Information Systems Research
Information technology investments and firm value
Information and Management
Business intelligence in risk management: Some recent progresses
Information Sciences: an International Journal
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We examine the effect that investments in information technology IT have on downside risk profiles of companies that made public announcements of their investments in technology. Given the limitations of financial and decision theory perspectives on risk, we adopt the strategic management perspective that stresses downside risk as an important alternative measure of firm performance. We examine whether different types of IT investments have a differential impact on firm downside risk. Drawing on the resource-based view of the firm and the real options perspective, we find evidence that IT investments and their timing influence organizational downside risk. Transformational and informational IT investments lead to a reduction in downside risk only if they lead to strategic IT investments in the industry. For competitive necessities such as IT investments that automate business functions, a reduction in downside risk is realized by investing in parity with industry participants. Our study contributes to the literature by offering an alternative perspective on the benefits of IT investments, particularly where no apparent incremental financial results may be evident. It also generates insights on IT investment strategies that may help firms keep up with or stay ahead of the competition.