Abstract: The complexity involving relationship between IT investment and firm performance is discussed from the perspective of IT management. Based on the theory of enterprise competence, the deep-seated mechanism of firm performance arising from IT investment is analyzed and then hypothesises on the relationship between IT investment and firm performance are introduced. Two paired samples from Chinese listed companies are used to test the assumptions. Results from nonparametric tests show that all of the profit ratios, such as ROA,ROS,OIA,OIS, and OIE in the research time window were significantly higher for the IT leaders when compared with the control sample of firms，while cost ratios, such as TOES and COGSS were significantly lower for the IT leaders sample. This shows that the transformation from IT investment to firm performance is a process that IT effectively supports and matches with other organizational resources and capabilities, that is, a process that IT bulids its capability.