The Moderating Effect of Industry Types on IT-Coordination Costs Relationship

This study builds on prior research that examines the IT-coordination costs and firm size relationships using the transaction cost economics perspective. Specifically, this study aims to answer the following research question: Does firm’s industry type—information product industries (IPI) versus physical product industries (PPI) moderately affects the relationships between IT spending, coordination costs, and firm size? To address this research question, this study uses firm-level data from the Information Week and Compustat dataset in the United States, from 2011 to 2013. Further, this study employs the PLS-multigroup analysis (MGA) for both IPI and PPI firms. The overall PLS-MGA path analysis results show that there is a significant difference on the IT impact between the IPI and PPI firms. Indeed, firms in IPI and PPI can utilize the presence of IT pertaining to different information and physical processing activities at large.