Hi guys I made a research that evaluates the relation of firms’ financial performance and IT capabilities. These are the final results for a medium set.
I hope this will help.
5. CONCLUSION & DISCUSSION
In this study, IT capabilities of the financial firms are studied as one of the core competencies that is accepted as one of the important capability in the framework of the resource-based view. Its basics definition and characteristics of the core competency are explained as well as its practical usage and benefits in the theoretical framework. After that technical IT capability, managerial IT capability and Human capital support are examined as a sub-dimension of IT capability. Their effects on the financial performance of the financial companies are studied afterward. Therefore, three main hypothesizes put forward, but findings suggest that technical IT capability and managerial IT capability must be approached together. For this reason, main hypothesizes form into integrated (technical and managerial) IT capability and Human Capital Support has a meaningful and positive effect on firms’ financial performance. This study is also of importance based on the fact that the financial performance indicators are taken from Association of Banks of Turkey (ABT).
A 5-point Likert type scaling was used to measure respondents’ agreements with 14 questions ranging from totally disagree to totally agree for testing hypothesizes. 122 answers of respondents used in SPSS 22 to test, prove their reliability and validity and analyze their correlation and regression.
Findings of regression analysis show and support that there is direct and positive effect between Integrated IT capability firms’ capital adequacy ratio. Nevertheless, other financial performance indicators are supported neither Integrated IT capability nor Human Capital Support. However, it will be wrong that if the study has no evidence to IT capability has a positive and meaningful effect on firms’ financial performance, because correlation analysis proves there is a meaningful relationship between all financial measurements except AROE. So that IT capability might be correlated firms’ financial performance.
Regression Model for CAR is supported in hypothesis because Turkey economy has weaknesses when we examine Euler Hermes’ Turkey Economic Report of 2017.3 These weaknesses a group of risks which affect the economy, decrease profitability and purchasing power. Therefore, financial firms’ primary strategy is also decreasing risks by increasing capital adequacy ratio to increase their profits by enhancing their internal systems.
Also, there is Basel framework of BIS that takes precautions for financial crisis’s to protect firms by setting regulations. For this reason, banks should have in place adequate internal policies, processes, systems, and controls to ensure that the appropriate risk weights are assigned to counterparties. Banks must be able to demonstrate to their supervisors that their due diligence analyses are necessary.
Another fact that, the rise of fintech firms (small startups on finance) in finance market, big financial firms’ first approach is investing these fintech firms to control or gain potential customers, even if fintech firms go bankrupt. These investments increase IT capability and know-how for an extended period of time on IT.
In addition to when firms are consuming their resources for reputation and social media. Because they definitely realized the power of social media and it’s a part of their marketing. For example, for banks developing a new way of withdrawing or depositing money without using debit or credit cards won’t make a difference when we examine profit margins. But it’s useful, and fastest way for the customer and all the banks do not have this kind of technologies and improvements. So that Banks are also focusing innovative and reputable ways in the market.
5.1 LIMITATIONS
One of the limitations of this study was that there were not only banks in the research also insurance companies were involved. Insurance companies’ regulations and banks regulations are different as well as their customer profiles. The important fact that new regulation enforces customers to be included in the individual pension system. So that Insurance companies’ have been increased their financial metrics last two years more than ever.
Euler-Hermes Turkey Economic Report 2017. http://www.eulerhermes.com/economicresearch/blog/EconomicPublications/turkey-country-report-jun17.pdf. [accessed 01.03.2018].
Despite the fact that the number of IT personnel participants of the survey were 72,1 percent, a limitation was that the number of respondents who were not IT personnel was not qualified enough to make a reliable comparison to identify the act of the technical IT capability of the firm.
The sample of this study was put together with the responses of 122 suitable contributors. The survey was sent to a group of people from have been working financial firms in Turkey but only 122 responses were being collected. Therefore, for future studies, researchers can try to reach a broader sample size to make the data more reliable.
5.2 MANAGERIAL IMPLICATIONS
This study suggest that technical IT capability and managerial IT capability must be approached together and they have a meaningful and positive effect on financial firms’ capital adequacy ratio. One of the managerial implications from the results and discussion is the need for the organization to provide employees with better leadership and technical education. The managers play a vital role in enhancing technical knowledge within an employee and they should care about the employees’ well-being by providing appropriate feedback to the employees’ input and suggesting them some ideas to progress in their career by using the opportunities within the organization.
The managers need to help in creating an environment where the employees become engaged emotionally and cognitively with the team. This engagement helps to create strong bond with the team, so that successful and well-documented projects can be achieved easily. Pairing employees with experienced ones for the knowledge transfer also effects both teammates. In addition to this, the employees feel more engaged if the organization provides them with the new learning and training opportunities to notice their talents. For this to happen, the organization needs to provide enough resources for the job so that the employees would be able to meet the targeted deadlines and accomplish their organizational and personal objectives effectively and efficiently.
5.3 FUTURE RESEARCH
It is an inevitable fact that in order to gain a sustainable competitive advantage in the global market today, IT has a critical mission to use, enhance, and provide information. This will lead to understanding firms’ IT strategic plan. Because firms can use IT capability to the transformation of their resources, enhance their ability or even nonprofitable and more reputable purposes. Thus, firm size, digitalization and the operational area in finance sector matter for more precise results of the study.
We are working and living in a time of unparalleled technology innovation and invention. This technology revolution is ongoing by a series of exponential technological advances which will affect the financial firms and ways they use. IT investments have become increasingly important in making strategic decisions for the business. It is hoped that findings of this study will provide the better understanding of effects of IT capability to firm performance.
THE-END
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Emre Zorlu 