The impact of Information Technology (IT) on the financial performance of organizations in a developing country
Master Thesis
1994
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University of Cape Town
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Abstract
The effect of IT investment on the risk and risk profile of managers were studied in the IT-using industry in Namibia. IT investment uses certain of an organization's resources. The following models (computerization index (CI), IT expense ratio (ITEX) , IT costs efficiency ratio (ITCE), operating cost efficiency ratio (OPEX), operating leverage, cost-benefit ratio, return on IT assets ratio and profitability performance measurements in terms of six strategic ratios; profit/total assets, profit/turnover, turnover/total assets, gross margin/turnover, profit growth rate and sales growth rate) were used. The study also established the importance of perceived risk in any organization's and managers' daily activities. The study further investigated the close link between calculated organizational risk and IT investment decisions. The results displayed a positive association between the CI and turnover growth. A link was shown between ITEX and OPEX and OPEX and the monetary value of IT, allowing the study to accept these two hypotheses. It was thus concluded that CI and ITEX could be used as a possible measurement of computerization. On the other hand, managerial perceived and calculated organizational risk were not found to be the deciding factors while an IT investment was being made.
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Bibliography: pages 84-90.
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Lubbe, S. 1994. The impact of Information Technology (IT) on the financial performance of organizations in a developing country. University of Cape Town.