Relevant Research
Research with co-author Benina Lopez, featured in Forbes Insights, explored investments in technology by 100 of the world’s largest companies during the 2008 recession. Analysis of the corporations’ capital and operating expenditures in technology from 2007 to 2009, and the resulting returns in the years of economic recovery until 2015, showed that companies that invested more in the sector during the recession achieved a higher level of performance afterward. In fact, companies that invested above the mean enjoyed a 6.23 percent compound gain in returns, whereas those under the mean experienced gains of only 3.88 percent.
Overcoming Uncertainty
The current uncertain economic climate affects corporate decisions, especially concerning potential investments. CFOs are likely not eager to open funds for new sources of expenses. However, financial decision-makers should reconsider and work closely with CIOs on strategies that invest heavily on equipment and innovations. The investments will likely pay off when the economy again sees an upswing.
Focus on the Healthcare Industry
Companies in healthcare, presently severely impacted, may want to take notice. During the 2008 recession, the healthcare industry invested most heavily in technology and saw the most subsequent gains. Today’s economic uncertainty may provide the opportunity for a similar outcome.
Overall, the conversation about investing in technology among boards of directors and top management teams may pay off in dividends at the end of the current downturn.
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