Understanding the relationship between information systems investment and organisational performance: developing and testing a conceptual model in the Australian financial services sector

Abstract

The research reported in this thesis was an exploratory study that investigated the relationship between Information Systems (IS) investment and organisational performance and which led to the successfd development and testing of a combined process and variance model that sought to explain this complex relationship. The focal industry was the Australian Financial Services Sector (FSS), with samples being drawn from both the credit union industry (largest industry by size in the FSS) and the commercial/retail bank industry (largest industry by volume). The research began with a detailed review of the literature and thus explored the concepts underlying the business value of IS in general and the relationship between IS investment and organisational performance in particular. To fuaher enhance understanding of this literature, a meta-analysis of the business value of IS in general, and IS investment and organisational performance in particular, was undertaken as it was noted that there did not appear to have been any such formal structured meta-analyses to date. The foregoing analyses led to the proposal and development of a conceptual model of the relationship between IS investment and organisational performance that was comprised of four main components, the level of IS investment as represented by the IT portfolio, Organisational performance (both internal and external), Considerations for Strategic Information Systems Planning and Managerial effectiveness. In addition, the conceptual model explicitly considered the effect and impact of Context on the conceptual model. Further, analysis of subsequent results was strongly grounded in the literature and utilised three key theoretical foundations, General Systems Theory, The Resource Based View of IT and Stakeholder theory.Thus, the conceptual model was developed and tested utilising a pluralist approach combining two research methods, a) Case research (model development and testing) and b) survey research (model refinement). The collection (and analysis) of data was achieved in two parts. First, given the complexity of the issues under investigation, a unique case study protocol was successfully developed and applied to a select group of Financial Institutions with the Commercial/retail Banking and Credit Union industries to confirm the components of the original conceptual model. Second, the resultant model(s) were tested via a survey targeted at the wider population of Authorised Deposit-taking Institutions in the Australian Financial Services Sector. The outcomes of this research were many, however the most notable were; 1) the development and testing of the conceptual model which were deemed to contribute to the development of theory within the discipline of Information Systems, 2) the development of a unique case study protocol that was deemed to contribute to IS research in general, 3) the derivation of a set of intermediary variables (Customer service quality, Operational efficiency, Staff and Product delivery) that was found to influence the relationship between IS investment and organisational performance and therefore extended and strengthened the conceptual model, and 4) the meta-analysis that was deemed to contribute to a better understanding of the state of the art with respect to research into this complex phenomenon.