How does the application of an IT service innovation affect firm performance? A theoretical framework and empirical analysis on e-commerce

Understanding the effects of IT-related innovations on firm performance is crucial for businesses. Extant research has investigated the implications of IT innovations and provided some important findings, but the varied theoretical approaches have produced results that are often ambiguous: thus there is a need to examine the process further. We attempted to provide a systematic, theoretically informed framework for understanding the conditions that may enhance (or hinder) the potential of IT innovations in a sample of firms. Our model included business and IT resources, both internal and external, that may influence the performance of firms which have applied a pervasive IT service innovation: e-commerce. Our empirical test of the model used a research design that takes into account time-lag effects. The model explained more than half of the variance in the performance of IT innovators and offered several explanations for why some firms succeeded in implementing IT service innovations while others did not. Several theoretical and managerial implications result from these findings.