Information technology, organisational capital and firm performance

Our objective is to examine the mediating effect of organizational capital on the relationship between information technology and firm performance. Using the mediated regression method and a sample of Taiwan's listed firms, an IT intensive context, empirical results provide statistical support for our argument that through organisational capital (OC), IT investments indirectly contribute to firm performance, measured by Tobin's Q. Moreover, we also find that firms with high ratio of OC value change to IT expenditures have better future performance. This supports our argument that management should put attention on how IT investments being complementary with organisational practices to boost a firm's organisational capital and thereby firm performance. As a whole, the results offer insights into how or why IT contributes to firm performance, and thus explain the IT productivity paradox phenomenon.