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Impact of information technology capability on financial performance during the period of economic downturn: the case of Chinese listed companies

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Abstract

Several earlier studies validate the positive impact of information technology (IT) capability on firm performance during economic expansion in developed countries. Given sustained IT investments and rapid adoption of various IT in developing countries (e.g. China) in the 2000s, there is a need for new research to test whether prior findings still hold true with up-to-date data from a period of economic downturn in developing countries. Thus, this study attempted to reexamine the linkage between IT capability and financial performance during recent financial crisis in 2008, especially in China context. Our results show that during the period of financial crisis, Chinese firms with superior IT capability tend to outperform a sample of control firms on average profit ratios but not on cost ratios, even after adjusting for prior performance. We also find that the profit performance effects of IT capability can be sustained over a long period of economic downturn. This study contributes to research by extending a different context (i.e. China) from developed countries with new data from economic downturn and providing new finding to reconcile prior research.

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Acknowledgements

The authors gratefully thank Professor Hefu Liu in University of Science and Technology of China, anonymous reviewers of the Thirteen Wuhan International Conference on E-Business (WHICEB2014), and the chief editor and reviewers of Electronic Commerce Research for their careful reviews, comments, and suggestions. This research was supported by the National Natural Science Foundation of China under Grant 71101065, 71302140, and 71371013, China Postdoctoral Science Foundation Special Funded Project under Grant 2014T70565, and the Humanity and Social Science Key Foundation of Education Committee of Anhui province (SK2016A0151).

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Authors and Affiliations

  1. School of Business, Anhui University of Technology, Ma’anshan, 243032, People’s Republic of China

    Jinnan Wu

  2. School of Economics and Management, Jiangsu University of Science and Technology, Zhenjiang, 212003, People’s Republic of China

    Nianxin Wang

  3. School of Management, China University of Mining and Technology, Xuzhou, 221116, People’s Republic of China

    Zhining Wang

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  1. Jinnan Wu
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  3. Zhining Wang
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Correspondence to Jinnan Wu.

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Wu, J., Wang, N. & Wang, Z. Impact of information technology capability on financial performance during the period of economic downturn: the case of Chinese listed companies. Electron Commer Res 17, 403–423 (2017). https://doi.org/10.1007/s10660-016-9248-1

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