The Effects of ICT Investment on Malaysian Technology-Based Firm Performance

This study examines the effects of ICT investment on the performance of Malaysian technology-based firms. While ICT is widely recognized as a driver of competitiveness and productivity, its benefits are often debated due to the persistence of the ICT productivity paradox. Using data from firms listed in the Malaysian technology sector, this study analyzes the impact of ICT spending on firm performance indicators, including return on assets (ROA), return on equity (ROE), and Tobin’s Q (TQ). Both Pooled OLS and Panel Fixed Effects models were employed to test the hypotheses. The results reveal that current-year ICT spending negatively affects accounting-based measures of performance (ROA and ROE), but shows a positive and significant relationship with market-based performance (TQ) in lagged periods. These findings suggest that ICT investments may require time to yield measurable benefits, particularly through intangible assets such as software, patents, and innovation-related resources that enhance long-term market value. The study further applies Resource Dependence Theory to explain how ICT serves as a strategic resource for firm survival and growth. By highlighting both the risks and opportunities of ICT investments, this research provides new insights for managers, policymakers, and investors on how ICT spending can be better aligned with long-term firm performance in Malaysia’s evolving technology landscape.