Does IT Reputation Matter? Role of Senior Executives

The objective of this study is to identify factors that help firms develop an IT capability reputation, and to evaluate whether markets value a firm´s ability to develop and sustain IT reputation. Building on the IT strategic leadership and corporate reputation literature, we argue that congruity in the background or hierarchical proximity between CEO and senior IT executive increases the likelihood that the firm will develop an IT reputation, and this congruity or proximity is more important for product differentiating companies. Approaching IT capability reputation from a market standpoint, we theorize that it matters to investors because it reduces information asymmetry. Investors interpret a firm´s sustainable IT reputation as a signal of its superior past IT strategy and future IT investment prospects, thus raising the firm´s market value. Predicted relationships are validated by results from over 1300 large public firms from the period 1997 to 2009.