Are ICTs Really That Important in Driving Industry Performance?

Are ICTs Really That Important in Driving Industry Performance?

Delvin Grant (DePaul University, Chicago, USA) and Benjamin Yeo (DePaul University, Chicago, USA)
Copyright: © 2019 |Pages: 19
DOI: 10.4018/JGIM.2019070106

Abstract

A decision tree is used to investigate how information and communication technologies (ICTs) and financial factors influence the performance of service and manufacturing industries globally. Industry performance is measured by average fixed asset purchases among firms at the industry level. In addition, industry sectors and geographic regions are included in the predictive model. The results show that financial factors are better predictors of performance than ICT factors. For example, access to bank loans or lines of credit is by far the best predictor among the variables included in the study. Having a website is the only ICT factor among the top five predictors. Geography also plays an important role in predicting industry performance.
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1. Introduction

Industries in developed and developing countries can be dichotomized into two primary categories, manufacturing and service. Most economies often start out as industrial economies based on manufacturing, then transition to post-industrial economies, referred to as service-based economies (Doll & Vonderembse, 1991). Economies, such as the Caribbean, that lack natural resources are often service-based. Its best resources are its people and climate used to develop a tourist-based service economy. Regardless of whether an economy is manufacturing- or service-based, there is a common denominator; the role information and communication technologies (ICTs) play in supporting the economy. ICTs are the information technology (IT) infrastructure components such as computers, software, telephone, data/information networks, data bases, applications, and other IT related technologies that support company operations to satisfy customer demands for goods and services. Irrespective of the type of industry and its stage of development, ICTs play an important role in enabling industry performance and have been referred to as information systems (IS) or IT (Schryen, 2013).

ICTs are catalysts of growth in developed and developing countries (Crowston & Myers, 2004) and support service economies built on ecommerce. This is particularly true in the absence of brick and mortar facilities, such as hotel and travel reservations, online shopping, banking, and entertainment. ICTs enable growth and development, and help to create and maintain competitive advantages for companies, countries, and regions (Koivunen, Hatonen, & Valimaki, 2008). They play a prominent role in manufacturing operations that rely on computer support, such as computer-aided design and manufacturing, databases, computer controls and monitoring, and bill of materials and logistics. Flexible manufacturing utilizes intelligent machines and robots, which fall under the broad definition of ICTs. The impact of ICTs on performance is questionable (Piget & Kossaï, 2013; Sein & Harindranath, 2004) despite positive evidence of their impact on economic growth, and other performance indicators (Bloom, Guzzo, Harding, Milligan, & Zahidi, 2013).

ICT research has fueled debate on the factors that drive performance. An ICT meta-analysis indicates that ICT impact findings are partially explained (Schryen, 2013). Researchers are left to figure out which factors influence performance and which do not. There is evidence on the positive impact of ICTs (Schryen, 2013), but the relationship of ICT performance at the industry level is unclear (Devaraj & Kohli, 2000). One reason is the lack of industry ICT research posited by Crowston and Myers (2004), who challenge the IS research community to do more. In addition, bank-lending policies affect company and country performance (Obamuyi, Edun, & Kayode, 2012). In Nigeria for example, bank-lending rates significantly affect manufacturing output, but a relationship between manufacturing output and economic growth cannot be established (Obamuyi et al., 2012). Lending policies encompass more than bank-lending rates, such as financial factors that may enable performance. Researchers are left with little guidance on how to identify potential financial factors that influence global industry performance.

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