A Longitudinal Study in India on the Effect of Ownership and Management Control on IT Investment

Investment decision making is a complicated process and more so when family influence exists in a firm. To achieve long-term success in current competitive environment, information technology (IT) investment is a key for firms to maintain a competitive advantage. Recent studies show that family influence such as family ownership, family involvement, and the way of management and governance has different impacts on R&D investment, technology adoption, and strategies of a firm. However, little is known about how the level of the family- or foreign- ownerships influence a firm’s IT investment, and how the management type, including family management and professional management, further adjust the interaction of the family- and foreign- ownership. This study aims to answer these questions with four hypotheses. A dataset of 4,655 large Indian publicly traded firms between 2006 and 2018 is used to test our hypotheses. The results show that family ownership is negatively related to IT investment, but foreign ownership has a positive effect on IT investment. Furthermore, family management and professional management controls have a different moderating effect on the ownership and IT investment relationship. The results unravel the puzzle of ownership and management control influence on IT investments and inform granular insights on the differentiating effect in the context of an emerging economy.