Determinants of information technology expenditure: a contingent model

Abstract

In this article, we propose and test a model to explain the determinants of an organization’s IT budget. The research model extends prior research by providing a strong theoretical underpinning for the driving forces of IT budget, incorporating both dynamic and static contingencies internal to the organization, as well as from the external environment. We find that these contingencies are positively related to the IT budget decision. Our findings also demonstrate a moderating, as well as direct effect of the industry strategic role of IT, contributing to previous research, which identifies only a direct effect. Drawing on a comprehensive database and using objective measures for our research, we aim to provide a reference metric for an organization’s IT budget decision