Revisiting Corporate Governance in the Digital Age: The Influence of IT-Enabled Services on Decision Quality

Abstract

This study examines the relationship between expenditure on IT-enabled services (ITES) and the quality of decision-making within corporate governance frameworks. In doing so, it uses financial performance indicators—specifically Return on Assets (ROA) and Return on Investment (ROI)—as proxies to assess decision quality. The objective is to better understand whether increased investment in technology meaningfully enhances governance outcomes at the organizational level.

With firms allocating growing financial resources to digital infrastructure and IT services, it becomes important to evaluate whether such investments translate into more effective decision-making, particularly at the board level. To explore this, the study adopts a quantitative, empirical approach using firm-level data drawn from IT companies in India. The dataset has been compiled from the ProwessIQ database, ensuring reliability and consistency in financial reporting.

The analysis employs multiple regression techniques to examine the impact of ITES expenditure—measured as capital expenditure relative to total assets—on ROA and ROI. The findings indicate that ITES spending does not have a statistically significant effect on these performance indicators. The results show weak relationships, accompanied by low explanatory power, suggesting that higher levels of ITES investment do not necessarily lead to improved decision quality as reflected in financial outcomes.

These findings question the commonly held assumption that greater technology expenditure automatically enhances governance effectiveness. Instead, they point towards a more complex and context-dependent relationship, where factors such as organizational culture, the expertise of board members, and the strategic alignment of technology investments may play a critical role.

The study underscores the need for a more nuanced understanding of how ITES investments are embedded within governance processes. It also opens up directions for future research, including the use of non-financial measures of decision quality, cross-industry comparisons, and the examination of emerging technologies such as artificial intelligence and blockchain in shaping governance practices.

Keywords: Decision Quality, Corporate Governance, IT-Enabled Services, Financial Performance, Empirical Analysis