Do Powerful Technology Leaders Make a Difference in Firm Performance?

Technology is taking an increasingly prominent role in firm strategy and investments, yet there is a high degree of variability of returns in technology based expenditures. Fragmented technology investments can lead to reduced firm flexibility and higher operating costs over time. Coordinated technology planning and effective IT governance can manage tradeoffs between short term and long term benefits. Given that costs and benefits of IT are evaluated by the upper echelons of management, this study examines how does the inclusion of a technology leader (e.g., CIO or CTO) in the top management team influences firm performance. This paper uses upper echelon theory to examine the influence of a powerful technology officer on technology investments and subsequent performance. This paper finds that firms with a powerful senior technical leader perform better on forward oriented dimensions of value such as sales growth and Tobin´s q compared to firm without this executive.