Performance measurement due to IT adoption

Abstract

Purpose – The purpose of this paper is to provide an analysis on the relationship between information technology (IT) adoption and its usage and firm performance (banking and software firm) in India. Firm performance was measured with the help of three important variables: efficiency, effectiveness and productivity. Each one of the above has been described with a set of pretested questionnaires. Banks in India, in particular are geared for comprehensive banking solutions with extensive branch networks. Result from statistical analysis was validated with that achieved from ANN modeling. Design/methodology/approach – Survey instrument was pilot tested. The pilot survey was administered to 20 randomly selected Indian service firms, whose Standard Industrial Classification codes were 6,021 (nationalized commercial Banks) and 7,371 (software firms). A 50 percent response rate was received. Internal reliability using Cronbach’s α was carried out for the entire set of responses from the pilot study. In addition, qualitative follow up from respondents was done. Unreliable items were deleted and modifications wherever necessary were made. Findings – The research finds two important results with respect to IT adoption and firm performance. The first result is that service firms who implemented IT tools and techniques early achieved more turnover thereby greater market share from innovation/adoption (world-first and, to some extent India-first). These firms are able to better commercialize their service even if their most important innovations/adoptions supported by vendor’s to some extent. The second result is that service firms, which introduce new services, even if the service is already on the national or international front, derived more commercial sales from innovation, thus achieving more firm performance. Therefore, late followers (firm-first) would have higher sales from innovation by introducing services with high original content. Originality/value – Performance is measured due to IT adoption.