Asia pacific journal of information systems

The Korea Society of Management Information Systems (한국경영정보학회)
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IT Investment and Financial Performance Volatility: The Moderating Role of Industry Environment and IT Strategy Emphasis

  • Wahyu Agus Winarno (Accounting Department, University of Jember) ;
  • Slamin (Faculty of Computer Science, University of Jember)
  • Received : 2021.09.03
  • Accepted : 2022.07.19
  • Published : 2022.12.31
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Abstract

Industrial revolution 4.0 makes business competition more challenging and will impact the instability of the company's financial performance. Dynamic environmental conditions make it difficult for companies to make predictions in making decisions. Investing in information technology (IT) is one way for companies to maintain financial stability and competitive advantage in dynamic competition. Resource-Based Theory (RBT) explains that information technology (IT) is a resource that can create a competitive advantage for the company. This study aims to examine the moderating role of dynamic industrial environments and IT strategic emphasis on the relationship between a lag effect of IT investment and firm's financial performance volatility. Using the data of companies listed on the Indonesia Stock Exchange (IDX) for five years starting from 2013-2017, the method used to estimate the research model's parameters is the generalized method of moments (GMM) approach. The results show that the industrial environment and the emphasis on IT strategy have a role in moderating and strengthening the relationship between the time lag in IT investment in reducing the firm's financial performance volatility.

Keywords

Acknowledgement

We thank the Editor-in-Chief, the Associate Editor, and the reviewers for their insight and helpful suggestions. We are also grateful to Michael Chandra and Kanzulia for their helpful research assistance.

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