Information Technology and Corporate Strategy: A View from the Top

Letters to shareholders in 649 annual reports published between 1972 and 1987 were analyzed for CEOs' views about information technology. Significant differences were found across industries—banking, publishing, petroleum, and retailing—in the number of times information technology was mentioned, the types of applications discussed, and the content of the discussion. The results of the industry analysis were in keeping with expectations based on the relative information intensity of the various industries. An analysis of the letters over time suggests that the position of IT in the firm, at least as seen by the CEO, was not much different in 1987 than it had been in 1982, but has expanded considerably from its position in 1972 and 1973. Reassuringly, we also found that the number of IT related phrases in the CEOs' letters to the shareholders was positively correlated with the firm's yearly net profits as a percentage of sales. A lagged analysis on profitability data could not, however, resolve the competing explanations for the correlation between profits and the number of IT-related phrases. These findings contribute new insights concerning strategic information systems and support the use of annual report data in analyzing organizational information technology phenomena.