IT innovations in IT industries: Does IT pay off?

Document Type

Conference Proceeding

Publication Date



In the classroom, students tend to ask the question: why do we need to study information technology (IT)? In the real business world, corporate decision-makers constantly ask the question: why do we need to invest in IT? Does it pay off? In this paper, we investigate how the stock market values a firm's IT innovations in order to gain competitive advantage. In other words, we examine the role of IT innovations in the stock market valuation of a firm's expected future cash flows. Our findings indicate that firms that are IT innovators are valued higher than their industry competitors. Clearly, IT innovations seem to pay off in the stock market. In this way, we show that learning IT skill sets in the classroom is important for undertaking IT innovations in the real business world. ©2005 EDSIG.

Publication Name

Proceedings of ISECON

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