Effect Of IT Investment On R&D Business Process Performance: A Process-Oriented Approach

Recent years,a larger number of Chinese manufacturing plants pour money into information technology(IT) project(e.g.,ERP,CRM,CAD,PDM) in pursuit of better performance,the impact of this technology,however,is not that obvious.Business and IT executives continue to struggle with a host of complex issues involved in determining payoffs from IT investments.The main purpose of this paper is to develop the theoretical links and empirically examine the association between IT and firm performance,and our study to answer management's questions:How should IT resources of the firm be organized and managed to enhance the process performance? Why and how could IT investment impact on process or firm performance?The approach is consistent with the process perspective to the question of IT business value,suggesting that enterprise level impact of IT can be measured only through their intermediate(i.e.,process) level contributions,but we extend this approach.A basic premise of this paper is that the knowledge management(KM) capability could be a critical mediator between IT capability and process performance.In contrast to past studies that have implicitly assumed that information technology could have direct effects on firm performance,this study draws from the resource complementarity arguments and posits that it is the targeted use of information technology resources that is likely to be rent-yielding.A basic premise is that a business process's performance can be explained by how effective the firm is in using specific information technology to support and enhance knowledge management capability.We develop the theoretical underpinning of this premise and propose a model that inter-relates IT resources,IT capability,KM capability,process and firm performance.The model is empirically tested using data collected from 152 firms in China.The results indicate that an organization's KM capability is dependent on IT capabilities,which,in turn,are dependent on the nature of human,IT infrastructure,and relationship resources. Survey results also suggest that variation in business process performance is explained by KM capability,and provides strong support for the research model.This study contributes to the IT literature by introducing KM capability as a critical mediator between IT capabilities and process performance,it goes beyond the singular focus on IT investments and empirically examines the differential effects of IT resources, IT capabilities and KM capabilities on relative process performance,this study improves our understanding of the true business value of IT.This study has also limitations.On the one hand,we did not include control variables in this study.In fact,firm size might influence process performance.On another hand,the empirical analysis was conducted in the context of one specific process in the manufacturing industry;thus,the generalizability of the results may be limited.The study raises a number of other important questions as well for future research.For example,how is it that some firms are able to develop KM capability,while other firms are apparently unable to develop this capability? Additional research is needed to explore how KM capability can be developed and nurtured.In addition,we also believe that role IT in organizational knowledge management ought to receive considerable scholarly attention and become a focal point of inquiry.