Use of data envelopment analysis in assessing information technology impact on firm performance

The purpose of this paper is to consider the effect of Information Technology on the performance of a firm. We use Data Envelopment Analysis (DEA) to study this problem. In the paper, we outline DEA and address its advantages over parametric approaches. We then develop a methodology to identify the efficiency of IT utilization and the importance of IT-related activities and their effect on firm performance, within the DEA framework. Our methodology also evaluates the marginal benefits of IT. We provide an application of our methodology through an illustration.