Effects Of IT Capabilities On Firm Performance

The relationship between information technology (IT) and firm performance has been a topic of interest to practitioners and academicians. Many scholars tried to use resource-based view (RBV) theory to analysis this problem and achieved some success, but such studies have also been some potential shortages. Firstly, the studies based on RBV are mostly static, without considering the situational differences and ignoring the issue that how firm competitive advantage and advantage resources vary with the environmental change. Secondly, RBV focuses on the self-attribute of the resources and capabilities, unable to reveal the influence mechanism of IT capabilities on firm performance. With the economic globalization and increasingly competition, the environmental complexity and uncertainty is ever growing, so the core competencies separately formed by static resources has been very difficult for sustained competitive advantage, and firm must give full consideration to how resources and capabilities accumulate and dynamic evolute over time. Therefore, this paper introduces dynamic capability theory, and tries to examine the mechanism of firm performance influenced by IT capabilities from dynamic capability perspective.To this end, three research questions are put forward as following:Question 1: How to define and classify IT capabilities from dynamic capability perspective?Question 2: How IT dynamic capabilities impact on firm performance through operational processes? And as a modulator, how IT-BP (information technology and business process) integration affects the relationship between IT dynamic capabilities and operational flexibility and operational efficiency?Question 3: How IT dynamic capabilities impact on firm performance through decision making processes?To study these issues, this paper established a research model and gave corresponding hypotheses. Then we collected 143 questionnaires, and applied structural equation model and PLS software to empirically examined these hypotheses.The important results include that (1) IT resources, IT capabilities for exploration and IT capabilities upgrading impact firm performance by improving operational flexibility; (2) IT capabilities for exploration and IT capabilities upgrading influence real-time decision effectiveness through real-time information and information sharing, then affect firm performance; IT tangible resources and IT capabilities for exploitation influence real-time decision effectiveness through real-time information, then affect firm performance; IT intangible resources influence real-time decision effectiveness through information sharing, then affect firm performance; (3) The degree of IT-BP integration can significantly moderate the relationship between IT capabilities and operational flexibility.