The Impact of Customer-Related it Investments on Customer Satisfaction and Shareholder Returns

We follow the seminal work of Hitt and Brynjolfsson (33) by doing a simultaneous customer satisfaction and financial valuation of a technology investment to address the question of whether a technology implemented with the sole goal of improving customer experience will ultimately improve the profitability of the company. Specifically, we analyze the customer-related IT investment's contribution to society through consumer satisfaction as well as the financial impact on stockholders through abnormal stock returns. The abnormal stock returns are analyzed using a combination of parametric, semi-parametric, and non-parametric event study analysis, and are tested for generalizability to the broader market through consistency of findings with the S&P 500 and S&P MidCap 400. This study uses the firms of the University of Michigan American Customer Satisfaction Index for the time period of January 1996 – December 2001, and does find that an investment in customer-related IT both improves customer satisfaction an...