{'fraction_non_alphanumeric': 0.031166518254674976, 'fraction_numerical': 0.007123775601068566, 'mean_word_length': 5.209944751381215, 'pattern_counts': {'":': 0, '<': 0, '<?xml version=': 0, '>': 0, 'https://': 0, 'lorem ipsum': 0, 'www.': 0, 'xml': 0}, 'pii_count': 0, 'substrings_counts': 0, 'word_list_counts': {'cursed_substrings.json': 0, 'profanity_word_list.json': 0, 'sexual_word_list.json': 0, 'zh_pornsignals.json': 0}}
IT Capability and a Firm's Ability to Recover from Losses: Evidence from the Economic Downturn of the Early 2000s

ABSTRACT: Prior literature shows that during an economic downturn firms have difficulty sustaining superior performance, and a larger percentage of firms report losses. Motivated by this literature, we explore the role of sustainability of organizational IT capability (ITC) on a firm's performance during an economic downturn. Specifically, we examine how ITC sustainability contributes to a firm's ability to recover from losses. ITC sustainability reflects a firm's ability to resist competitors' attempts to imitate or improve on its ITC. We use ITC sustainability to classify firms as sustainable (Systematic ITC), as non-sustainable (Occasional ITC), and as having no ITC (Non-ITC). Using a sample of large U.S. firms during the economic downturn of the early 2000s, we show that Systematic ITC firms achieve higher levels of firm-specific abnormal earnings and are capable of faster recovery when compared to all competitors (Occasional ITC and Non-ITC firms) and competitors with only Occasional ITC.