Differential effects of IT investments: Complementarity and effect of GDP level

With the rapid growth of Information Technology (IT) investments, the issue of measuring the business value or impact of IT investments has received increased attention from both academia and practitioners. However, the empirical results of the studies regarding the value of IT investments are inconclusive. This paper uses the knowledge management and resource-based perspective, to examine how the three areas of IT investment-hardware, software, and internal spending affect GDP⁴4In this paper, the country level performance is defined as gross domestic product as in the previous study (Dewan & Kraemer, 1998, 2000). in terms of complementarity and GDP level. The results indicate that software investment is important and contributes to improving the gross domestic products and to maximizing the utilization of the hardware investment. The study also found that the complementarity between the three types of IT has a differential effect on GDP according to GDP level. Further results and implications are discussed.