Impact of IT Governance and IT Capability on Firm Performance

Based on resource-based and strategic choice theory, this research empirically validates that IT governance is an important antecedent of IT capability, which in turn results in improved firm performance. This article contributes to the IS literature by proposing a comprehensive measure of IT governance based on secondary data, and simultaneously examining the impact of IT governance and IT capability on firm performance.     

Drivers and export performance impacts of IT capability in ‘born‐global’ firms: a cross‐national study

Past research focusing on large firms has argued that information technology (IT) capability enhances firm performance. However, these studies have seldom explored why firms develop IT capability, and have also left a void the understanding of the role of IT capability in Small‐ and medium‐sized enterprises (SMEs). This study attempts to fill that void by examining the effect of relevant environmental and firm‐level factors on IT capability, and the effect of IT capability on the export performance of Chinese and US born‐global firms, a special breed of export‐focused SMEs. Results indicate that environmental factors such as information intensity, and firm‐level factors such as international entrepreneurial orientation, prompt born‐global firms to develop IT capability. Further, our results also strongly emphasise the positive role that IT capability plays on the performance of born‐global firms. Finally, a comparative analysis of the Chinese and US born‐global firms revealed a lack of a cross‐cultural difference in the factors leading these firms to develop IT capability, therefore supporting the ‘convergence’ perspective in cross‐cultural research.     

Exploring the relationships between IT competence,innovation capacity and organizational agility

Business environments today are characterized as being very dynamic and hyper competitive. Organizations in these environments have to be agile in order to adapt their strategies and actions to be successful. While it is recognized that information technology can enable firms to be agile, there is a limited understanding of the mechanisms through and the contexts in which Information Technology (IT) enhances agility. This study examines two key antecedents of organizational agility, namely the IT competence of a firm and its innovation capacity and, examine their independent and joint effects on agility. We test our model using data collected from large firms in the US. The results provide strong support for our model. We found that firms with superior IS capabilities coupled with an aggressive IT investment orientation create digital platforms that enable them to be agile. We also found that the innovation capacity of the firm has a positive relationship with organizational agility and that firms with higher innovation capacity are better able to leverage their digital platforms to enhance agility. Our results indicate that organizational agility has a strong positive impact of firm performance. We interpret and discuss these results and their theoretical and practical implications.     

IT capabilities and firm performance: A contingency analysis of the role of industry and IT capability type

Previous empirical studies examining the relationship between IT capability and accounting-based measures of firm performance reported mixed results. We argued that prior work has relied on aggregate overall measures of the firm's IT capability, ignoring the specific type and nature of IT capability; and also has not fully considered important environmental conditions that influence the relationship. Drawing on a resource-based view, we advanced a contingency perspective and proposed that IT capabilities’ impact on firm resources was contingent on the “fit” between the type of IT capability/resource a firm possesses and the demands of the industry in which it competes. Specifically, using publicly available rankings as proxies for two types of IT capabilities (internally and externally focused), we empirically examined the degree to which three industry characteristics (dynamism, munificence, and complexity) influenced the impact of each type of IT capability on measures of financial performance. After controlling for prior performance, we found there was general support for the posited contingency model. The implications of these findings are also discussed.     

Impact of IT integration on the firm’s knowledge absorption and desorption

This paper examines the impact of the integration of IT systems with other organizations (IT integration) on the knowledge absorption and desorption of the focal firm. We ran an empirical study in Spain and found that IT integration enables the firm to absorb and desorb knowledge with other organizations, which in turn improves firm performance. This research provides two key contributions to the IS discipline: 1) We introduce the concept of desorptive capacity in the IS research and provide a scale for its measure, 2) we provide a theory of IT integration impact on the firm’s knowledge absorption and desorption.     

Does it pay to align a firm’s competitive strategy with its industry IT strategic role?

While researchers have increasingly recognized the importance of information technology (IT) in leveraging a firm’s competitive strategy for achieving superior firm performance, our understanding of the nature of how a firm’s competitive strategy aligns with its industry IT strategic role and how such alignment influences firm performance remains limited. Drawing upon strategic alignment perspective, this study aims to theorize and empirically test how the firm’s competitive strategy (i.e., cost leadership, differentiation, and dual strategy) aligns with its industry IT strategic role to improve firm performance. Based on the data of Chinese publicly listed firms during 2009–2015, our results indicate that different competitive strategy aligns with different industry IT strategic roles for achieving superior performance. Specifically, cost leadership strategy aligns with automate IT strategic role, dual strategy aligns with informate IT strategic role, and differentiation strategy aligns with transform IT strategic role in generating superior firm performance. We also discuss the theoretical and practical implications of the current study.     

Proactive or reactive IT leaders? A test of two competing hypotheses of IT innovation and environment alignment

When does it benefit a firm to take a lead in innovation with information technology (IT)? How should a firm align its IT innovation with a dynamic industry? In addressing these questions we present a typology of IT Innovation and Environment Alignment (ITIEA) based on a firm's IT innovation strategic orientation and the industry environment. The traditional ‘fit’ perspective predicts that a firm that matches its IT innovation with a dynamic environment would obtain performance benefits. In contrast, the ‘options’ perspective suggests that a firm that takes advantage of a stable environment to proactively pursue IT innovation and develop IT capability as real options would obtain performance advantage. We employ a quasi-experiment design to test these two competing hypotheses using archival data of IT leaders over a time frame of 6 years. We perform a longitudinal analysis of the performance change trajectories of proactive and reactive IT leaders over time. The results indicate a general support for the ‘options’ perspective that proactive IT leaders that lead in innovation with IT in relatively stable environments are found to consistently outperform reactive IT leaders in overall performance, allocative efficiency, and cost efficiency in management process. However, interestingly, the results also show a partial support for the ‘fit’ perspective that reactive IT leaders that emphasize intensive deployment of IT innovation in dynamic environments are found to obtain a cost advantage in production and operation process over time. The findings offer practical implications for managers to better engage in IT innovations to create and sustain competitive advantage. Synthesizing options thinking and dynamic capability perspective, we provide a framework to better understand IT innovation, dynamic environment, and performance outcomes. The findings also shed useful light on whether, when, and how to innovate with IT for sustained competitive advantage.     

Inside the adaptive enterprise: an information technology capabilities perspective on business process agility

Recent innovations in utility computing, web services, and service-oriented architectures, combined with a growing array of IT skills, have improved firms’ ability to be more agile in responding to change. Using the resource-based view of the firm, prior research suggests that IT resources, in isolation, are unlikely to yield superior performance and so as firms try to boost their agility, the question becomes how to configure IT resources to prepare for, or react to, change. In this paper, we posit that managerial IT capabilities based on IT-business partnerships, strategic planning, and ex-post IT project analysis lead to the development of technical IT capabilities associated with a flexible IT infrastructure which in turn drives agility or a firm’s ability to react to change in its products and markets. Using data from matched surveys of IT and business executives in 241 firms, we find that managerial and technical capabilities affect agility. In further testing, we reveal that in a stable setting, technical IT capabilities are more important to agility than managerial IT capabilities, while in a dynamic setting, the opposite is true. Thus, for firms operating in volatile markets, effective models of managerial IT governance are essential for delivering superior agility or adaptiveness.

IT-enabled knowledge ambidexterity and innovation performance in small U.S. firms: The moderator role of social media capability

This study examines the impact of information technology (IT)-enabled knowledge ambidexterity on innovation performance, and the potential moderator role of social media capability on a sample composed of 100 small U.S. firms. The empirical analysis suggests that IT infrastructure enables the firm to explore new knowledge and exploit existing/new knowledge to innovate more and better. We also find that social media capability has a positive moderator role in this equation: IT infrastructure and social media capabilities work together to enable knowledge ambidexterity.     

Information technology capability and firm performance: Role of industry

Despite several calls for considering industry in the IS value research, few studies investigated the relationship between benefits of IT and industries. This study extends Chae et al. (2014) by investigating how industry influences the relationship between IT capability and business performance. Unexpectedly, it finds that the control group in the industries in which the "transform" IT strategic role dominates showed superior performance than the IT leader. Also, the IT leaders in the "automate" IT strategic industry did not exhibit better business performance than the control firms. We discuss the implications of these findings.     

Developing information processing capability for operational agility: implications from a Chinese manufacturer

The operational agility literature suffers from a lack of clarity in terms of the process or underlying mechanisms through which operational agility is achieved. Drawing on the information processing view of the firm, this study attempts to address this gap by examining the process of operational agility development. A process model of developing information processing capability for operational agility is proposed. As the model suggests, operational agility is achieved through a two-step process – the construction of IT-enabled information processing network and the implementation of organizational control – to enhance the right information processing capability. We further identify three types of information processing capability – information sensitivity, information synergy and information fluidity – that enable operational agility. Furthermore, a five-step practical guide for developing information processing capability for operational agility is provided for practitioners. This is achieved by conducting a case study of Haier, one of the largest household appliance manufacturers in China. This paper concludes with a discussion of the potential contributions and directions for future research.     

Digital technology-enabled dynamic capabilities and their impacts on firm performance: Evidence from the COVID-19 pandemic

To understand whether companies can lock in the benefits of digital technology (DT) usage during the COVID-19 pandemic, we draw on a dynamic capability view to examine how digitalization capabilities generate impacts on firm performance. Through the analysis of 165 Chinese manufacturing companies, we find that market capitalizing agility and operational adjustment agility fully mediate the relationship between digitalization capabilities and firm performance. More interestingly, of the effect size of different mediation paths, market capitalizing agility has the strongest effect. We contribute to the existing information systems literature by revealing the possible mediational mechanisms that can solve the digital dilemma.     

Information technology and the search for organizational agility: A systematic review with future research possibilities

Organizations are increasingly turning to information technology (IT) to help them respond to unanticipated environmental threats and opportunities. In this paper, we introduce a systematic review of the literature on IT-enabled agility, helping to establish the boundary between what we know and what we don’t know. We base our review on a wide body of literature drawn from the AIS Basket of Eight IT journals, a cross-section of non-Basket journals, IT practitioner outlets, and premier international IS conferences. We review the use of different theoretical lenses used to investigate the relationship between IT and organizational agility and how the literature has conceptualized agility, its antecedents, and consequences. We also map the evolution of the literature through a series of stages that highlight how researchers have built on previous work. Lastly, we discuss opportunities for future research in an effort to close important gaps in our understanding.     

Evolution of the impact of e-business technology on operational competence and firm profitability: A panel data investigation

This study examines the evolution of the impact of e-business technology on operational competence and profitability using a panel dataset of 154 Spanish firms. We find that (1) e-business technology has a positive effect on operational competence that decreases over time and (2) the firm’s proficiency in exploiting a portfolio of operational capabilities has a positive impact on profitability that becomes more substantial over time. The findings provide some insights on how the initial and subsequent IT investments affect operational competence and profitability over time. This study methodologically illustrates how to perform a partial least squares estimation using panel data.     

The role of IT human capability in the knowledge transfer process in IT outsourcing context

Our research attempted to identify the behavioral process of knowledge transfer by examining the effects of IT human capability, human character, trust, and cooperative learning on it in an IT outsourcing situation. By analysing data collected from vendor and client matched-pair samples of 87 IT outsourcing projects, we found that both the client's and the vendor's character influenced trust, trust affects on cooperative learning, and the cooperative learning influence on knowledge transfer. More importantly, it we found that the client's IT human capability had a direct impact on cooperative learning and knowledge transfer. This indicated that client's IT human capability was a crucial factor in effective knowledge transfer during IT outsourcing. It also implied that client firms should identify and retain some IT personnel who can apply vendors’ competencies in IT practice and respond effectively to any technological challenges.     

Information Systems Offshore Outsourcing: An Exploratory Study of Motivations and Risks in Large Spanish Firms

Prior research has documented that IT investment increases market returns. Economic theories predict such returns to be recognized in accounting profitability; this relationship remains ambiguous in prior literature. We reexamine the relationship between IT investment and firm profitability. Our approach is unique in that we examine complementarities between distinct IT components. We document that a firm’s investments in IT components exhibit different impacts on its profitability conditional on the level of investments in complementary components.     

Sustaining and advancing IT careers: Women’s experiences in a UK-based IT company

This article contributes to a growing literature on women in IT occupations. Against a national and international context of women’s longstanding and continued under-representation in senior professional roles in IT, our study at organizational level tells the story of women’s career experiences in a specific UK-based IT company in relation to its culture, processes and practices. Utilising a concept from the gender literature – Acker’s (2006) ‘inequality regimes’ – the study bridges the gap between the gender and IS literature and feminist theorising in order to shed light on the lack of gender diversity in IT. The article specifically shows how components of organizational inequality regimes, namely, ‘organizing processes’, ‘legitimacy’ and ‘visibility’ of inequalities combine and interact to produce and maintain gender inequality in the IT workplace. The implications of this in the sector more generally are discussed.     

Analyzing the impact of a firm's capability on outsourcing success: A process perspective

We investigated the effect of a firm's resource capabilities and interaction processes on the success of IT outsourcing. Grounded in available literature on outsourcing relationship and process theory as well as a resource-based view of the IT resource capability, a conceptual model was composed to examine the causal structure of capability, process, and relationship in IT outsourcing. We identified the firm's resource capability factors and, based on the premise that relationship intensity should be affected by the IT outsourcing process, we developed a first-order factor analysis of resource capabilities in the interactions between the outsourcer and provider. Results of empirical testing using responses from 267 IT outsourcing project teams in Korea supported most of our hypotheses. The integration of corporate IT resource and capability theories with social exchange theory distinguishes our research from that of others, who have generally treated these theories separately.     

Strategy, IT applications for planning and control, and firm performance: The impact of impediments to IT implementation

Our study examined the association among strategy, the extent of IT applications to 12 planning and control functions, and firm performance. Special attention was paid to the moderating effect on these relationships of 15 technical, human, and organizational impediments to IT implementation. We analyzed survey data obtained from 296 Taiwanese companies, supplemented by financial data from publicly disclosed financial reports. Results indicated that strategy significantly influenced the extent of IT applications for planning and control. In turn, the extent of IT applications had a significant direct effect on firm performance, while the direct effect of strategy was insignificant. The relationship between strategy and the extent of IT applications, and between the latter and firm performance were both stronger when the level of impediments to IT implementation was low. The findings went beyond these general relationships to reveal systematic differences in the specific IT applications and impediments of firms pursuing different strategies.     

Developing community capability for e‐commerce development in rural China: A resource orchestration perspective

Community capability enables a large number of rural citizens to cooperatively engage in e‐commerce as an e‐commerce cluster, and it thus plays a critical role in e‐commerce development in the rural regions of developing countries. Taking the resource orchestration perspective as the theoretical lens, this study investigates the process for developing community capability. Two cases of community capability development in rural Chinese villages are studied. The findings reveal two settings for community capability development—government supported and self‐orchestrated—and show that community capability is developed through the individual capabilities of lead users and the resource orchestration interactions of stakeholders. This study has theoretical implications because it reveals the importance of developing community capability by orchestrating resources beyond merely providing training and education to rural community members and because it identifies the processes for developing community capability in the two respective settings. It also extends the resource orchestration perspective from a single‐firm context to a community context by revealing the resource orchestration interactions.