The impact of IT system implementation and upgrade on firm operational and financial performance

The impacts of IT system application on firm performance have been extensively examined in the existing literature, yielding mixed conclusions. This study aims to investigate the effects of specific IT system implementation and its upgrade on traditional non-IT firms’ performance. We focus on the operational performance and financial performance as two dimensions of firm performance. By using a unique longitudinal data set from one of the largest taxi companies in China, we illustrate that there is a positive relationship between system implementation and firm performance. However, the effect of subsequent system upgrades on firm performance is mostly negative, especially for the financial performance. Moreover, we conduct post-hoc tests to compare the short-term and long-term impacts of system implementation. Based on our empirical results, we derive implications and recommendations for future theoretical advancements and IT system application practices.