In response to the concern regarding IS development and initiatives, this study emphasizes the importance of the context where IS applications are applied. We focus on the organizational context as a principal aspect of this environment and evaluate firm specific characteristics by using Organizational Intelligence Quotient (OIQ). We investigate the impact of OIQ on IT investment and labor productivity. The model is tested on small and medium Japanese enterprises from manufacturing sector. The evidence shows a positive association of OIQ with IT investment and labor productivity. We found that firms with higher levels of OIQ invest more in IT, as well as obtain higher levels of productivity than lower OIQ firms.
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