Empirical Evidence on the Sustainability of the IT Innovation Capability

Lim, Jee-Hae; Stratopoulos, Theophanis C.; Wirjanto, Tony S.

doi:10.2139/ssrn.1101083

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Empirical Evidence on the Sustainability of the IT Innovation Capability

38 Pages Posted: 4 Mar 2008 Last revised: 16 Jul 2014

See all articles by Jee-Hae Lim

Theophanis C. Stratopoulos

University of Waterloo - School of Accounting and Finance

Tony S. Wirjanto

University of Waterloo - School of Accounting and Finance; University of Waterloo, Department of Statistics & Actuarial Science

Abstract

Approaching IT innovation (ITI) from a strategic management standpoint, this paper sheds light on the issue of the capability of a firm to innovate with IT over time. In this study we argue that ITI is a cumulative and path-dependent capability that is not easily replicated. Companies that have developed ITI capability and attained ITI status among their peers are likely to maintain this status over time, thus demonstrating that ITI is a sustained capability. We tested our proposition with cross-sectional data of large US firms that have attained ITI status from 1997-2004. Exploratory results based on transitional probabilities and econometric analysis based on a dynamic random effect Probit model seem to strongly support our position.

Keywords: IT innovation, Absorptive Capacity, Persistence, Dynamic Random Effect Probit Model

JEL Classification: L1, C1

Suggested Citation: Suggested Citation

Lim, Jee-Hae and Stratopoulos, Theophanis C. and Wirjanto, Tony S., Empirical Evidence on the Sustainability of the IT Innovation Capability. Available at SSRN: https://ssrn.com/abstract=1101083 or http://dx.doi.org/10.2139/ssrn.1101083