Mechanism Of It Capabilities On Firm Performance Study

Over the past 20 years, tremendous changes have happened in fields of manufacturing industry's market and marketing channel. The product life cycle is shorter, and consumers' demands are more individualistic and diversified. Manufacturing firms have to cooperate with their competitors and other firms in order to survive from fierce competition. Moreover, some large dealers grow up rapidly in recent 10 years, which has changed the traditional marketing patterns. In above contexts, several new business models appear, such as Agile Manufacturing, Vendor-managed Inventories, and so on. In these new business models, manufacturing firms must try to meet needs of markets. They have to develop more new products with lower costs to keep sustainable development. In order to realize above goals, manufacturing firms have to adopt advanced information technologies, and make full use of them. However, many manufacturing firms use IT poorly, and they can't benefit from IT use except some advanced firms. Under above background, it's very necessary in practice to study how manufacturing firms improve firm performance by using IT.Resource-based view theories provide scholars in IT field with a new perspective. Some scholars identify several IT resources and capabilities which can be used to create competitive advantages, and argue that IT capabilities can improve firm performance. Some empirical researches examine the positive relationship between IT capabilities and firm performance. However, the influencing mechanism of IT capabilities on firm performance is fuzzy. Wade & Hulland (2004) argue that IT capabilities can't affect firm performance directly, and there is a complex chain of resources and capabilities between IT capabilities and firm performance. Some scholars try to discover the influencing mechanism of IT capabilities on firm performance from several perspectives, but these researches are rare and emeraging. Although some scholars study how big dealers create competitive advantages by using IT capabilities, few scholars study those peripheral manufacturing firms.Under abovementioned theoretical and practical background, the core research question is propsed: What is the influencing mechanism of IT capabilities on firm performance? Furthermore, the mechanism of improving IT capabilities is discussed.According to above research questions, two studies are done in this dissertation.(1) Core Research Question: The Influecing Mechanism of IT Capabilities on Firm PerformanceFocused on the influencing mechanism of IT capabilities on firm performance, an exploratory multi-case study is done. After case design and selection, data collection, data analysis, and result statement and discussion, the initiative conceptual model is proposed. In this model, IT capabilities have a positive impact on organizational decision-making, and organizational decision-making has a positive impact on firm performance. That is, organizational decision-making have a mediating effect on the relationship between IT capabilities and firm performance.Then, relative literatures about relationships among IT capabilities, organizational decision-making, and firm performance are unfolded. According to patterns of IT use and the category of organizational capabilities, we divide IT capabilities into IT capability for Exploitation and IT capability for Exploration. Organizational decision-making is divided into operational decision-making and managerial decision-making. Thus, this dissertation tries to study organizational decision-making's mediating effect on the relationship between IT capabilities and firm performance. What's more, interorganizational relationship is introduced to discuss its moderating effects on the relationship between IT capabilities and organizational decision-making. Therefore, relative hypothesises are proposed, and the final conceptual model is formulated by extending above initiative model. In order to test above hypothesises and the final conceptual model, we deliver questionnaire sheets to manufacturing firms, and 178 valid questionnaire sheets are accepted. Using descriptive analysis, assessment of reliability and validity, correlate analysis, and multivariable regression analysis, valid data is input to test relative hypothesises one by one. The empirical results supports most of hypothesises. At last, the results are discussed deeply.(2) Additional Discussion: The Mechanism of Improving IT CapabilitiesIn order to develop IT capabilities, an organization have to do a long-term and complex work, which will relate to organizational routines, unique resources, and the internal and external environments. IT capabilities can't be bought in the factor market, and can't be gained immediately by investing IT assets. Managers' support and users' participation are necessary when developing IT capabilities. There are many factors influencing IT capabilities, such as IT resources, organizational routines, outside environments, and organizational learning. Furthermore, the influencing mechanism of IT resources on IT capabilities will be studied in this dissertation. According to resource-based view theories, capabilities are different from resources. However, the relationship between IT resources and IT capabilities is still unclear. In this study, IT resources are divided into IT infrastructure, IT human capital, and IT relationship quality. Then, the relationships between these 3 kinds of IT resources and 2 kinds of IT capabilities are studied, and 6 hypothesises are proposed. The data from 178 manufacturing firms is used to test above hypothesises one by one. The empirical results shows that most of hypothesises are supported.Theorical ContributionsAfter analysis and discussion, 3 theorical contributions are made in this dissertation.(1) According to patterns of IT use and the category of organizational capabilities, this dissertation divides IT capabilities into IT capabilities for exploitation and IT capabilities for exploration, and shows their definitions, objective, and characters, which enrich the research of IT capabilities.From the perspective of building competitive advantage, few scholars identify several kinds of IT core capabilities. However, these categories can't explain the patterns of IT use, and the relationship between organizational motivation and performance. Moreover, these categories have few values for organizational managers because of too various categories. According to patterns of IT use and the category of organizational capabilities, this dissertation divides IT capabilities into IT capabilities for exploitation and IT capabilities for exploration.IT capabilities for exploitation are capabilities of executing structured processes by using IT. Goals of exploitation are to improve operational efficienty. By improving, applying, and incrementally refining firm capabilities, IT capabilities can provide a firm with clearly defined benefits. IT capabilities for exploration are capabilities of executing unstructured processes by using IT. Goals of exploration are to create new capabilities and put forward novel solutions by pursuiting new possibilities. As usual, IT capabilities for exploration are uncertain, and their benefits can't be evaluated in advance. During the course of IT use, both exploitation and exploration are necessary. Thus, it's important to keep the balance between exploitation and exploration. On the one hand, an organizationa should keep current profits to live by using IT capabilities for exploitation. On the other hand, an organization should try to develop by using IT capabilities for exploration.(2) This dissertation explains the influencing mechanism of IT capabilities on firm performance by case study and theorical analysis. Organizational decision-making has significant mediating effects on the relationship between IT capabilities and firm performance. That is, IT capabilities influence firm performce by influencing organizational decision-making.Early scholars argue that IT capabilities can improve firm performance, and some of them examine the positive relationship between IT capabilities and firm performance. However, they don't discover the influencing mechanism of IT capabilities on firm performance. Some scholars realize this shortage, and try to discover the influencing mechanism of IT capabilities on firm performance from several perspectives, but these researches are rare and emeraging.In this dissertation, organizational decision-making is introduced into explaining the influencing mechanism of IT capabilities on firm performance. Empirical results show that organizational decision-making has significant mediating effects on the relationship between IT capabilities and firm performance. Operationl decision-making has significant mediating effects on the relationship between IT capabilities for exploitation and firm performance, and managerial decision-making has significant mediating effects on the relationship between IT capabilities for exploration and firm performance. IT capabilities for exploitation can improve operational decision-making, and good operational decision-making can help an organization to reduce transaction cost and logistics cost, and enhance customer satisfaction. On the other hand, IT capabilities for exploration can help to identify strategic opportunity, facilitate sharing information and developing knowledge. IT capabilities can improve managerial decision-making by providing decision-makers with more optional schemes. Good managerial decisioin making can help to improve products' quality, develop new products to meet needs of markets, exploit new market, and create more value and profits in the end.(3) The factors of influencing IT capabilities are analyzed, and the influencing mechanism of IT resources on IT capabilities is studied deeply, which will help manufacturing firms to develop IT capabilities.It's a long-term and complex process for manufacturing firms to develop IT capabilities. There are many factors influencing IT capabilities, including IT resources, organizational routines, outside environments, and organizational learning. Furthermore, this dissertation tries to study the influencing mechanism that IT resources on IT capabilities. On basis of relative research, IT resources are divided into IT infrastructure, IT human capital, and IT relationship quality in this dissertation. The empirical results show that IT infrastructure, IT human capital, and IT relationship quality have positive effects on IT capabilities for exploitation. IT human capital and IT relationship quality have positive effects on IT capabilities for exploration. When develop IT capabilities, several kinds of IT resources are needed. In order to develop IT capabilities, manufacturing firms should improve personal skills by increasing staff training, and make full use of internal and external relationships.