Chang-Soo Kim
Chung-Ang University
Lewis F. Davidson
Florida International University
Abstract: This research investigates the fitness of IT level with management strategy for improving three performance measures; market share, cost, and profitability. Regression models are used to test hypotheses regarding impacts of: (1) strategic fit between IT levels and types of market focus, and (2) interaction between IT level and banking strategy, on the three performance measures. The evidence suggests two important strategic implications. First, if banks effectively match IT level to market focus (nationwide versus regional) and retail/wholesale banking strategy, they are likely to reduce payroll expenses and increase market share as well as profitability. Second, changes in the cost structure may occur with the substitution of fixed technology expenses for variable payroll expenses. Key Words: IT investments, retail/wholesale banking, market focus strategy, bank¡¯s business performance
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