Complementarity Between Investment in Information Technology (IT) and IT Human Resources: Implications for Different Types of Firm Innovation

It is well acknowledged in the information systems (IS) literature that information technology (IT) plays an important role in firm innovation. A small but growing body of empirical evidence points to the importance of IT employees as an important complementary resource, particularly for IT-related innovation. However, there is an open question as to whether investment in such resources is complementary across a range of innovation types. This research note aims to provide theoretical and empirical clarity by emphasizing the complementary nature of firm investment in IT and in IT human resources (HR) in affecting firm innovation performance across four types of innovation: incremental, radical, non-IT related and IT related. Drawing on the theory of complementarities and theorizing about the operand and operant nature of resources, we argue that firm investment in IT HR enables firms to gain additional innovation value from their IT investments and vice versa. Using a sample involving 36,812 firm-year observations, we find that firms with robust investments in IT and in IT human resources produce more patents with greater value. Furthermore, we find that such firms produce more patents that emphasize new knowledge and those that build on existing knowledge. Finally, we find that this complementarity promotes IT-related and non-IT-related innovation. A series of analyses demonstrate the robustness of these results. We discuss implications for theory and practice.