The relationship between information technology capability, inventory efficiency, and shareholder wealth: A firm-level empirical analysis

Journal of Operations Management

Volumn 31, Issue 6, 2013, Pages 298-312

  Mishra, Saurabh ^a   Modi, Sachin B ^b   Animesh, Animesh ^a  

^a MCGILL UNIVERSITY   (Canada)

^b UNIVERSITY OF TOLEDO   (United States)

Author keywords

Inventory efficiency; IT capability; Operations IT interface; Stock market returns; Stock market risk

Indexed keywords

COMMERCE; EFFICIENCY; FINANCE; INDUSTRY; SHAREHOLDERS;

CONCEPTUAL MODEL; EMPIRICAL ANALYSIS; FINANCIAL PERFORMANCE; INVENTORY EFFICIENCY; IT CAPABILITIES; MANAGERIAL IMPLICATIONS; STOCK MARKET; STRATEGIC RESOURCE;

INFORMATION TECHNOLOGY;

EID: 84885948171     PISSN: 02726963     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.jom.2013.07.006     Document Type: Article

References (102)

1. A. Ang, R.J. Hodrick, Y. Xing, and X. Zhang The cross-section of volatility and expected returns Journal of Finance 61 1 2006 259 299 (Pubitemid 43425519)
2. H. Bala, and V. Venkatesh Assimilation of interorganizational business process standards Information Systems Research 18 2007 340 362
3. R.D. Banker, I.R. Bardhan, H. Chang, and S. Lin Plant information systems, manufacturing capabilities and plant performance MIS Quarterly 30 2 2006 315 337 (Pubitemid 46050494)
4. B.M. Barber, and J.D. Lyon Detecting long-run abnormal stock returns: the empirical power and specification of test-statistics Journal of Financial Economics 43 3 1997 41 372
5. D. Barnes-Schuster, Y. Bassok, and R. Anupindi Coordination and flexibility in supply contracts with options Manufacturing & Service Operations Management 4 2002 171 207
6. J.B. Barney Firm resources and sustained competitive advantage Journal of Management 17 1991 99 120
7. R.M. Baron, and D.A. Kenny The moderator-mediator variable distinction in social psychological research: conceptual, strategic, and statistical considerations Journal of Personality and Social Psychology 51 6 1986 1173 1182
8. M.E. Barth, D.P. Cram, and K.K. Nelson Accruals and the prediction of future cash flows Accounting Review 76 1 2001 27 56
9. A. Barua, C.H. Kriebel, and T. Mukhopadhyay Information technologies and business value: an analytic and empirical investigation Information Systems Research 6 1 1995 3 23
10. R. Baskerville, S. Pawlowski, and E. McLean Les systèmes ERP et la connaissance organisationnelle: schémas de convergence et de divergence Enterprise resource planning and organizational knowledge: patterns of convergence and divergence Systèmes d'Information et Management 11 4 2006
11. A.S. Bharadwaj A resource-based perspective on information technology capability and firm performance: an empirical investigation The Management Information Systems Quarterly 24 1 2000 169 196
12. A.S. Bharadwaj, S.G. Bharadwaj, and B.R. Konsynski Information technology effects on firm performance as measured by Tobin's Q Management Science 45 6 1999 1008 1024
13. S.G. Bharadwaj, K.R. Tuli, and A. Bonfrer The impact of brand quality on shareholder wealth Journal of Marketing 75 2011 88 104
14. K.K. Boyer, and M.L. Swink Empirical elephants - why multiple methods are essential to quality research in operations and supply chain management Journal of Operations Management 26 2008 337 348
15. R.A. Brealy, S.C. Myers, and F. Allen Principles of Corporate Finance 2008 Irwin/McGraw-Hill New York
16. G. Brown, and N. Kapadia Firm-specific risk and equity market development Journal of Financial Economics 84 3 2007 358 388
17. E. Brynjolfsson, and L.M. Hitt Paradox lost? Firm-level evidence on the returns to information systems spending Management Science 42 4 1996 541 558 (Pubitemid 126577314)
18. E. Brynjolfsson, L.M. Hitt, and S. Yang Intangible assets: computers and organizational capital Brookings Papers on Economic Activity 1 2002 137 181
19. T.A. Byrd, and N.W. Davidson Examining possible antecedents of IT impact on the supply chain and its effect on firm performance Information and Management 41 2 2003 243 255
20. G.P. Cachon, and M.L. Fisher Supply chain inventory management and the value of shared information Management Science 46 2000 1032 1048
21. J. Campbell, M. Lettau, B. Malkiel, and Y. Xu Have individual stocks become more volatile? An empirical exploration of idiosyncratic risk Journal of Finance 56 2001 1 43 (Pubitemid 33581652)
22. M.M. Carhart On persistence in mutual fund performance Journal of Finance 52 1997 57 82
23. R.B. Chase, R.F. Jacobs, and N.J. Aquilano Operations Management for Competitive Advantage 11th ed. 2006 McGraw-Hill Irwin New York
24. D. Chatterjee, C. Pacini, and V. Sambamurthy The shareholder-wealth and trading-volume effects of information-technology infrastructure investments Journal of Management Information Systems 19 2 2002 7 42 (Pubitemid 35312524)
25. M. Chau, and J. Xu Business intelligence in blogs: understanding consumer interaction and communities The Management Information Systems Quarterly 36 4 2012 1189 1216
26. H. Chen, M.Z. Frank, and O.Q. Wu What actually happened to the inventories of American companies between 1981 and 2000? Management Science 51 2005 1015 1031 (Pubitemid 41344637)
27. H. Chen, M.Z. Frank, and O.Q. Wu U.S. retail and wholesale inventory performance from 1981 to 2004 Manufacturing and Service Operations Management 9 4 2007 430 456
28. E.K. Clemons, S.P. Reddi, and M.C. Row The impact of information technology on the organization of economic activity: the move to the middle hypothesis Journal of Management Information Systems 10 2 1993 9 35
29. M.J. Cotteleer, and E. Bendoly Order lead-time improvement following enterprise information technology implementation: an empirical study The Management Information Systems Quarterly 30 3 2006 643 660 (Pubitemid 46051915)
30. P. Danese Collaboration forms, information and communication technologies, and coordination mechanisms in CPFR International Journal of Production Research 44 16 2006 3207 3226 (Pubitemid 43898320)
31. T.H. Davenport Putting the enterprise in the enterprise system Harvard Business Review 76 4 1998 121 131
32. T.H. Davenport Mission Critical: Realizing the Promise of Enterprise Systems 2000 Harvard Business School Press Cambridge, MA
33. B. Dehning, and V.J. Richardson Returns on investment in information technology: a research synthesis Journal of Information Systems 16 1 2002 7 30
34. B. Dehning, V.J. Richardson, and R.W. Zmud The financial performance effects of IT-based supply chain management systems in manufacturing firms Journal of Operations Management 25 2007 806 824 (Pubitemid 46764434)
35. S. Devaraj, and R. Kohli Performance impacts of information technology: is actual usage the missing link? Management Science 49 3 2003 273 289
36. S. Dewan, and F. Ren Risk and return of information technology initiatives: evidence from electronic commerce announcement Information Systems Research 18 4 2007 370 394
37. S. Dewan, C. Shi, and V. Gurbaxani Investigating the risk-return relationship of information technology investment: firm-level empirical analysis Management Science 53 12 2007 1829 1842 (Pubitemid 351159558)
38. Duvall, M., 2007. In Dow Chemical's Adoption of RFID, Many Lessons. Baseline. Available at 〈www.baselinemag.com/c/a/Business-Intelligence/In- Dow-Chemicals-Adoption-of-RFID-Many-Lessons〉.
39. C. Eroglu, and C. Hofer Lean, leaner, or too lean? The inventory-performance link revisited Journal of Operations Management 29 2011 356 369
40. E.F. Fama Efficient capital markets: a review of theory and empirical work Journal of Finance 25 2 1970 383 417
41. E.F. Fama, and K.R. French Common risk factors in the returns on stocks and bonds Journal of Financial Economics 33 1993 3 56
42. E.F. Fama, and K.R. French Multifactor explanations of asset pricing anomalies Journal of Finance 51 1 1996 55 84
43. E. Fama, and J. MacBeth Risk, return, and equilibrium: empirical tests Journal of Political Economy 81 1973 607 636
44. D.F. Feeny, and L.P. Willcocks Core IS capabilities for exploiting information technology Sloan Management Review 39 3 1998 9 21
45. M.T. Frohlich, and R. Westbrook Demand chain management in manufacturing and services: web-based integration, drivers, and performance Journal of Operations Management 20 6 2002 729 745 (Pubitemid 35019109)
46. R.R. Fullerton, C.S. McWatters, and C. Fawson An examination of relationships between JIT and financial performance Journal of Operations Management 21 4 2003 383 404
47. Gartner, 2012. Gartner Says Worldwide IT Spending to Grow 3.7 Percent in 2012. Available at http://www.gartner.com/newsroom/id/1888514.
48. V. Gaur, M.L. Fisher, and A. Raman An econometric analysis of inventory turnover performance in retail services Management Science 51 2 2005 181 194 (Pubitemid 40360161)
49. S. Gavirneni Information flows in capacitated supply chains with fixed ordering costs Management Science 48 5 2002 644 651 (Pubitemid 34648420)
50. C.W.J. Granger Investigating causal relations by econometric models and cross-spectral methods Econometrica 37 3 1969 424 438
51. W.H. Greene Econometric Analysis fifth ed. 2003 Pearson Education Upper Saddle River, NJ
52. S. Greengard Manufacturers are opening up ERP systems to enhance communication with business partners Industry Week 12 August 2001 21
53. T.S. Gruca, and L.L. Rego Customer satisfaction, cash flow, and shareholder value Journal of Marketing 69 2005 115 130 (Pubitemid 41017931)
54. A. Gunasekaran, C. Patel, and R.E. McGaughey A framework for supply chain performance measurement International Journal of Production Economics 87 3 2004 333 347
55. H.S. Heese Inventory record inaccuracy, double marginalization, and RFID adoption Production and Operations Management 16 5 2007 542 553
56. K.B. Hendricks, and V.R. Singhal The effect of supply chain glitches on shareholder value Journal of Operations Management 21 5 2003 501 522
57. K.B. Hendricks, and V.R. Singhal Effect of supply chain disruptions on long-run stock price performance and equity risk of the firm Production and Operations Management 14 1 2005 35 52 (Pubitemid 40763475)
58. K.B. Hendricks, and V.R. Singhal Demand-supply mismatches and stock market reaction: evidence from excess inventory announcements Manufacturing & Service Operations Management 11 3 2009 509 524
59. K.B. Hendricks, V.R. Singhal, and J.K. Stratman The impact of enterprise systems on corporate performance: a study of ERP, SCM, and CRM system implementations Journal of Operations Management 25 2007 65 82 (Pubitemid 44880526)
60. K.B. Hendricks, V.R. Singhal, and R. Zhang The effect of operational slack, diversification, and vertical relatedness on the stock market reaction to supply chain disruptions Journal of Operations Management 27 3 2009 233 246
61. M. Huson, and D. Nanda The impact of just-in-time manufacturing on firm performance in the US Journal of Operations Management 12 3-4 1995 297 310
62. D.E. Kieso, J.J. Weygandt, and T.D. Warfield Intermediate Accounting 2004 John Wiley & Sons Hoboken, NJ
63. R. Kohli, and S. Devaraj Measuring information technology payoff: a meta-analysis of structural variables in firm-level empirical research Information Systems Research 14 2 2003 127 145
64. L. Lang, and R. Stulz Contagion and competitive intra-industry effects on bankruptcy announcements: an empirical analysis Journal of Financial Economics 32 1 1992 45 60
65. H. Lee, P. Padamanabhan, and S. Whang Information distortion in supply chain: the bullwhip effect Management Science 43 4 1997 546 558 (Pubitemid 127569855)
66. M.B. Lieberman, and L. Demeester Inventory reduction and productivity growth: linkages in the Japanese automotive industry Management Science 45 4 1999 466 485
67. J.D. Lyon, B.M. Barber, and C. Tsai Improved methods for tests of long-run abnormal stock returns Journal of Finance 54 1 1999 165 201
68. L. McAlister, R. Srinivasan, and M. Kim Advertising, research and development, and systematic risk of the firm Journal of Marketing 71 2007 35 48
69. N. Melville, K. Kraemer, and V. Gurbaxani Information technology and organizational performance: an integrative model of IT business value The Management Information Systems Quarterly 28 2 2004 283 322
70. S. Mithas, N. Ramasubbu, and V. Sambamurthy How information management capability influences firm performance The Management Information Systems Quarterly 35 1 2011 237 256
71. S. Mithas, A.R. Tafti, I.R. Bardhan, and J.M. Goh Information technology and firm profitability: mechanisms and empirical evidence The Management Information Systems Quarterly 36 1 2012 205 224
72. S.B. Modi, and S. Mishra What drives financial performance-resource efficiency or resource slack? Evidence from U.S. based manufacturing firms from 1991-2006 Journal of Operations Management 29 3 2011 254 273
73. Y. Monden Toyota Production System 1998 Engineering Management Press Norcross, GA
74. B.B. Moritz, A.V. Hill, and K.L. Donohue Individual differences in the newsvendor problem: behavior and cognitive reflection Journal of Operations Management 31 1-2 2013 72 85
75. T. Mukhopadhyay, S. Kekre, and S. Kalathur Business value of information technology: a study of electronic data interchange The Management Information Systems Quarterly 19 2 1995 137 156
76. D.X. Peng, R.G. Schroeder, and R. Shah Linking routines to operations capabilities: a new perspective Journal of Operations Management 26 2008 730 748
77. J. Pontiff, and A. Woodgate Share issuance and cross-sectional returns Journal of Finance 63 2 2008 921 945
78. S.N. Prattipati, and M.O. Mensah Information systems variables and management productivity Information and Management 1 7 1997 33 43 (Pubitemid 127403237)
79. E. Rabinovich, M.E. Dresner, and P.T. Evers Assessing the effects of operational processes and information systems on inventory performance Journal of Operations Management 21 1 2003 63 80 (Pubitemid 35452430)
80. A. Rai, R. Patnayakuni, and N. Patnayakuni Firm performance impacts of digitally enabled supply chain integration capabilities The Management Information Systems Quarterly 30 2 2006 225 246 (Pubitemid 46050490)
81. A. Rappaport Creating Shareholder Value 1986 Free Press New York
82. V. Sambamurthy, A. Bharadwaj, and V. Grover Shaping agility through digital options: reconceptualizing the role of information technology in contemporary firms The Management Information Systems Quarterly 27 2 2003 237 263
83. R. Santhanam, and E. Hartono Issues in linking information technology capability to firm performance The Management Information Systems Quarterly 27 1 2003 125 153
84. R.W. Schmenner, and M.L. Swink On theory in operations management Journal of Operations Management 17 1 1998 97 113 (Pubitemid 128419950)
85. R. Shah, and H. Shin Relationships among information technology, inventory and profitability: an analysis of level invariance using sector level data Journal of Operations Management 25 4 2007 768 784 (Pubitemid 46764438)
86. C. Speier, and V. Venkatesh The hidden minefields in the adoption of sales force automation technologies Journal of Marketing 66 3 2002 98 111
87. S. Srinivasan, and D.M. Hanssens Marketing and firm value Journal of Marketing Research 46 3 2009 293 312
88. R. Srinivasan, and C. Moorman Strategic firm commitments and rewards for customer relationship management in online retailing Journal of Marketing 69 4 2005 193 200 (Pubitemid 41504948)
89. Stedman, C., 2000. Expand ERP Beyond the Back Office. Computerworld, January 3.
90. Sullivan, L., 2005. Global Sourcing Creates Supply-Chain Challenges, InformationWeek, March 21.
91. P.P. Tallon, and A. Pinsonneault Competing perspectives on the link between strategic information technology alignment and organizational agility: insights from a mediation model The Management Information Systems Quarterly 35 2 2011 463 486
92. H. Tanriverdi Information technology relatedness, knowledge management capability, and performance of multibusiness firms The Management Information Systems Quarterly 29 2 2005 311 334 (Pubitemid 46063148)
93. D.J. Teece, G. Pisano, and A. Shuen Dynamic capabilities and strategic management Strategic Management Journal 18 7 1997 509 533 (Pubitemid 127467809)
94. M.J. Tippins, and R.S. Sohi IT competency and firm performance: is organizational learning a missing link? Strategic Management Journal 24 2003 745 761
95. S.K. Vickery, J. Jayaram, C. Droge, and R. Calantone The effects of integrative supply chain strategy on customer service and financial performance: an analysis of direct versus indirect relationships Journal of Operations Management 21 2003 523 539
96. N. Viswanadham The past, present, and future of supply-chain automation IEEE Robotics & Automation Magazine 9 2 2002 48 56
97. M. Wade, and J. Hulland The resource-based view and information systems research: review, extension, and suggestions for future research The Management Information Systems Quarterly 28 1 2004 107 142
98. P. Weill The relationship between investment in information technology and firm performance: a study of the valve manufacturing sector Information Systems Research 3 4 1992 307 333
99. J. Whitaker, S. Mithas, and M.S. Krishnan A field study of RFID deployment and returns expectations Production and Operations Management 16 5 2007 599 612
100. Witton, P. C., 2000. Colgate Rethinks a Supply Chain. Outlook 1, 70-73. Available at 〈www.accenture.com/SiteCollectionDocuments/PDF/colgate2. pdf〉.
101. J.P. Womack, D.T. Jones, and D. Roos The Machine That Changed The World 1990 Rawson Associates HarperCollins, NY
102. J.M. Wooldridge Econometric Analysis of Panel Data 2002 MIT Press Cambridge, MA