Of firms that have superior it capability in the

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of firms that have superior IT capability in the 2000s are lower than the average profit ratios of all control firms 2.2 SUSTAINABILITY OF IT CAPBILITY & BUSINESS PERFORMANCE • standardised IT makes it easier for firm to counter & outdo competitor’s IT capability making IT- based competitive advantage short-lived some believe: superior IT capability still brings sustainable benefits as learning curve is nontrivial and represents considerable time & effort that competitors must overcome + acquisition of valuable human IT resources and IT-enabled intangibles (knowledge assets) reinforces IT capabilities Hypothesis 1: average profit ratios of firms that have superior IT capability in the 2000s are higher than the average cost ratios of all control firms in the subsequent years
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Zoe Zwiebelmann Maastricht University IM Session 2 Hypothesis 2: average cost ratios of firms that have superior IT capability in the 2000s are lower than the average cost ratios of all control firms in the subsequent years 2.3 FINANCIAL HALO EFFECT Financial halo effect: impact of past financial performance on reputation survey • additional tests are needed to control the impact of prior financial performance ensure that IT capability is only factor that differentiates between IT leaders & control companies Hypothesis 5: average profit ratios of firms that have superior IT capability in 2000s are higher than average profit ratios of all control firms after adjusting for prior financial performance Hypothesis 6: average cost ratios of firms that have superior IT capability in 2000s are lower
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