Performance Impacts of Information Technology: Is Actual Usage the Missing Link?

TLDR

Prior research has linked IT investment to organizational performance, but methodological limitations have hindered identification of the impact of specific technologies. This study argues that actual usage of IT, rather than investment alone, drives performance outcomes. Using a three‑year longitudinal dataset from eight hospitals, the authors analyzed monthly financial and non‑financial performance metrics alongside three distinct measures of technology usage. After controlling for external factors, higher technology usage was significantly associated with increased revenue and quality, confirming that actual usage is a key determinant of IT payoff.

Abstract

The relationship between investment in information technology (IT) and its effect on organizational performance continues to interest academics and practitioners. In many cases, due to the nature of the research design employed, this stream of research has been unable to identify the impact of individual technologies on organizational performance. This study posits that the driver of IT impact is not the investment in the technology, but the actual usage of the technology. This proposition is tested in a longitudinal setting of a healthcare system comprising eight hospitals. Monthly data for a three–year period on various financial and nonfinancial measures of hospital performance and technology usage were analyzed. The data analysis provides evidence for the technology usage–performance link after controlling for various external factors. Technology usage was positively and significantly associated with measures of hospital revenue and quality, and this effect occurred after time lags. The analysis was triangulated using three measures of technology usage. The general support for the principal proposition of this paper that “actual usage” may be a key variable in explaining the impact of technology on performance suggests that omission of this variable may be a missing link in IT payoff analyses.