Dynamic Adjustment of Information Technology, Corporate Governance, and Firm Profitability
How do managers make their decisions with regard to adjustment and deployment of Information Technology (IT) over time? Motivated by this complex dynamics, the authors draw on behavioral theory of the firm and theorize a bounded rational process of managerial decision making for IT investment. In particular, they explain the dynamic adjustment of IT investment by bounded rational managers' pursuing of satisfaction. When performance feedback of prior profitability is below their aspiration, they become unsatisfied and adjust IT investment to facilitate problemistic search directed toward innovative solutions to performance problems. As a result, performance problems will be solved and future profitability can be improved.