On the premise of the process model and the resource-based view, the study uses government regulation policies, as well as e-government actions, as an environmental resource to investigate the impacts on firms' IT usage. By analysing the survey data from 1,540 firms across 14 industries in Shanghai, the study contributes several insights to the IT usage and e-business practice of Chinese firms. First of all, this study sheds light on the value creation process of firms' informatization in Shanghai and validates the route from IT investment to value realization. Second, the findings suggest that e-government actions influence firms' IT infrastructure development, while government promotion and regulation policies influence a firm's IT management decision. However, there is no evidence showing the government impact on firms' IT usage level. Third, the study finds that e-government approaches and government promotion policies have significant impact on manufacturing firms.