Balancing digital transformation and financial performance: An empirical study of IT investments in the education sector

Authors

  • Ashutosh Parhi Ph.D. Scholar, School of Management, KIIT Deemed to be University, India Email: ashutoshparhi200@gmail.com
  • Saroj Kumar Routray Associate Professor, School of Management, KIIT Deemed to be University, India Email: saroj@ksom.ac.in

Keywords:

IT/software investment, firm performance, education sector, multivariate regression, financial characteristics, Newey-West estimation

Abstract

This study examines the impact of IT/software expenditure on financial performance within the education sector, where digital transformation is increasingly central to institutional sustainability. Utilizing panel data comprising 155 firm-year observations from academic institutions over the period 2020–2024, the analysis employs a multivariate regression framework estimated via Ordinary Least Squares (OLS) with Newey-West heteroskedasticity- and autocorrelation-consistent standard errors to address potential econometric concerns. The empirical results reveal a significant negative association between IT/software investment and financial outcome, indicating that technology investments may impose short-term financial pressures due to substantial upfront costs, implementation challenges, and delayed realization of efficiency gains. In addition, firm size and liquidity exert significant positive effects on performance, while leverage demonstrates a strong negative influence, underscoring the importance of firm-level financial characteristics in shaping institutional outcomes. The findings suggest that while IT/software adoption is critical for long-term competitiveness and academic innovation, its successful financial translation depends on strategic alignment, financial capacity, and robust governance. This research contributes to the expanding literature on IT investment and financial outcomes in higher education and offers practical implications for institutional leaders and policymakers in developing sustainable digital transformation strategies.

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Published

2025-10-16

How to Cite

Parhi, A., & Routray, S. K. (2025). Balancing digital transformation and financial performance: An empirical study of IT investments in the education sector. International Journal of Economic Perspectives, 19(10), 120–135. Retrieved from http://ijeponline.org/index.php/journal/article/view/1102

Issue

Vol. 19 No. 10 (2025)

Section

Peer Review Articles
Copyright & Licensing

Copyright (c) 2025 Ashutosh Parhi, Jyotirmayee Sahoo, Rajani Agrawalla, Kalee Prasanna Pattanayak

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