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Information technology investment and innovation performance: does investment paradox exist?

Peinan Ji (School of Management, Lanzhou University, Lanzhou, China)
Xiangbin Yan (School of Economics and Management, University of Science and Technology Beijing, Beijing, China)
Yan Shi (Harbin Institute of Technology, Harbin, China)

Journal of Asia Business Studies

ISSN: 1558-7894

Article publication date: 27 December 2021

Issue publication date: 23 March 2022




The purpose of this study is to deepen the understanding of the effects of information technology (IT) investment on firm innovation performance and examining the investment paradox effect in China.


Using a sample of China’ public firms IT investment data between 2010 and 2016, the authors establish a test model of IT investment and innovation performance.


The result indicates that IT investment in firms have no effect on innovation performance in the investment period. However, in the full sample and manufacturing sample, the IT investment has a significant positive effect on innovation performance in the post-investment years. In addition, this study finds that large companies and low-age companies may contribute more to innovation when firm investment in IT.

Research limitations/implications

There are several limitations in this research. First, the authors are failed to obtain a larger sample about the IT investment information data set in China, so this study was compelled to use limited sample data from China, hence, this could lead to errors of too early generalization. Second, the authors use the number of invention patent applications to represent the performance of enterprise innovation, which may not show enterprise innovation effectively. Third, the firms in the sample are all in China Listed Companies, so this may not accurately reflect the entire environment of firm innovation performance, and could possibly.

Practical implications

The research confirms that there is a paradox and time lag effect in IT investment, which enterprises should pay attention to.


Existing research confirms that corporate IT investments can bring new products or services. However, the authors still do not know whether IT investment has improved the company’s ability of innovation. This study will fill this gap and the industry effect and time lag effect of the influence of IT investment on innovative performance are also examined.



Funding: This work was supported by the National Natural Science Foundation of China under Grant No.71531013; 71490720.


Ji, P., Yan, X. and Shi, Y. (2022), "Information technology investment and innovation performance: does investment paradox exist?", Journal of Asia Business Studies, Vol. 16 No. 2, pp. 230-244.



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