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.     

Impact of information technology capability on financial performance during the period of economic downturn: the case of Chinese listed companies

Several earlier studies validate the positive impact of information technology (IT) capability on firm performance during economic expansion in developed countries. Given sustained IT investments and rapid adoption of various IT in developing countries (e.g. China) in the 2000s, there is a need for new research to test whether prior findings still hold true with up-to-date data from a period of economic downturn in developing countries. Thus, this study attempted to reexamine the linkage between IT capability and financial performance during recent financial crisis in 2008, especially in China context. Our results show that during the period of financial crisis, Chinese firms with superior IT capability tend to outperform a sample of control firms on average profit ratios but not on cost ratios, even after adjusting for prior performance. We also find that the profit performance effects of IT capability can be sustained over a long period of economic downturn. This study contributes to research by extending a different context (i.e. China) from developed countries with new data from economic downturn and providing new finding to reconcile prior research.     

Balancing exploration and exploitation of IT resources: the influence of Digital Business Intensity on perceived organizational performance

Facing a barrage of novel information technology (IT), organizations must invest on the basis of the impact of IT capabilities on the organization’s performance. This research extends Bharadwaj’s (MIS Quarterly 169–196, 2000) resource-based view of the relationship between IT capability and performance by introducing both the mediating and moderating effects of Digital Business Intensity (DBI). Empirical data collected from CIO’s from US firms reveal that although IT capability positively influences organizational performance, this relationship may differ in strength at different levels of DBI. Our study also finds that IT capability is important in determining DBI, which in turn influences organizational performance. Findings highlight tensions between DBI exploration and IT capabilities exploitation. Results also suggest that companies that leverage their existing IT capabilities to drive DBI are more adept at securing performance returns. However, when DBI investments do not complement existing IT capabilities, DBI appears to dampen performance, further accentuated for high-DBI firms.     

Information technology,the organizational capability of proactive corporate environmental strategy and firm performance: a resource-based analysis

The study of the relationships between information technology (IT), environmental organizational issues and firm performance is a cutting-edge research topic for the information systems (IS) community. However, at present we know very little about these relationships. Drawing on the perspective of IT-enabled organizational capabilities and the literature on organizations and the natural environment, our study introduces conceptually the construct organizational capability of proactive corporate environmental strategy to the IS field. We propose that IT capability may enable the implementation of a proactive environmental strategy and that this strategy could play a significant role in determining the business value of IT. Using structural equations modeling with data collected from 63 firms, we find that IT capability is an enabler of proactive environmental strategy and that this strategy plays a significant role in mediating the effects of IT on firm performance. Our study provides initial evidence on the role of IT in the implementation of proactive environmental practices. Our results suggest to IT executives that their decisions matter in shaping environmental sustainability, which in turn will generate business value from IT.     

IT capability and organizational performance: the roles of business process agility and environmental factors

The business value of information technology (IT) has been one of the top concerns of both practitioners and scholars for decades. Numerous studies have documented the positive effects of IT capability on organizational performance but our knowledge of the processes through which such gains are achieved remains limited due to a lack of focus on the business environment. Such a linkage therefore remains the subject of debate in the information systems literature. In this study, we fill this gap by investigating the mediating role of business process agility and the moderating roles of environmental factors. On the basis of matched survey data obtained from 214 IT and business executives from manufacturing firms in China, our analyses show that even though firm-wide IT capability presents the characteristics of rarity, appropriability, non-reproducibility, and non-substitutability, its impact on organizational performance is fully mediated by business process agility. Our results also show that the impact of the environment is multifaceted and nuanced. In particular, environmental hostility weakens the effect of IT capability on business process agility, while environmental complexity strengthens it. The theoretical and practical implications of this study, and its limitations, are also discussed.     

IT capabilities for product innovation in SMEs: a configurational approach

With the advent of globalization and the knowledge-based economy, industrial SMEs must constantly innovate to remain competitive. Now, an important research issue in this regard concerns the role played by IT capabilities in enabling innovation processes such as new product development, and in determining the product innovation performance of these organizations. Using a configurational approach grounded in the resource-based view, contingency theory, and the notions of “fit” and equifinality, we argue that IT capabilities can be leveraged for innovation purposes to the extent that they are coaligned and thus constitute IT capability configurations. This paper presents the results of a survey of 588 Canadian industrial SMEs designed to further analyze this issue. Three IT capability configurations were thus empirically identified, that is, IT Defenders (n = 234), IT Analyzers (n = 91) and IT Prospectors (n = 263), the last two being associated to greater product innovation performance.     

Agility in responding to disruptive digital innovation: Case study of an SME

Disruptive digital innovation (DDI) often creates hypercompetitive market environment that forces firms to be agile to survive and remain competitive. Whereas most studies have focused on larger firms' effort to be agile, few have looked at how small‐ and medium‐sized enterprises (SMEs) respond to DDI. The study attempts to answer the research question of how SMEs achieve agility to respond to DDI. Drawing on a case study of an innovative SME, our study develops a framework on agility based on the processes of mitigating organizational rigidity, developing innovative capabilities, and balancing the tension of organizational ambidexterity. Specifically, our findings show that for SMEs, mitigating organizational rigidity is enabled by the mechanism of achieving boundary openness while developing innovative capability is enabled by the mechanism of achieving organizational adaptability. At the same time, given the inherent challenges of resource constraints, SMEs also need to balance the tension of organizational ambidexterity.     

The antecedents and consequences of technology standardizations in Korean IT small and medium-sized enterprises

With rapid changes in the business environment, leading or utilizing technology standards may help firms gain better performance through competitive advantage. Such activities related to technology standards are likely to provide numerous opportunities or benefits to small and medium-sized enterprises (SMEs) in the highly technological divide among firms. However, few studies have paid attention to drivers, obstacles, and results of technology standards activities in SMEs. Consequently, this study bridges this research gap by identifying the factors influencing technology standardizations, which in turn contribute to firm performance in SMEs. The analytic results of survey data collected from 250 SMEs in the Korean IT sector reveal that all technology standardizations have an effect firm performance. Benefits from standards, R&D capability, and insufficient resources are influential factors of all technology standardizations. However, support of related institutes only affects inbound standardization. This study discusses theoretical and practical implications on technology standardizations in SMEs based on these findings.     

Towards a framework for business process re-engineering in small and medium-sized enterprises

Business process re-engineering (BPR) is the vogue, although somewhat discredited, change management method. It is as an information technology (IT)-based and customer-driven approach to organizational change, undertaken to enable superior performance, such as cost reduction, shorter cycle time, higher product quality and increased customer satisfaction. Although the literature on re-engineering principles and prospects is large, there is little empirical research evaluating the success or failure of BPR initiatives. This is especially so in small- and medium-sized enterprises (SMEs) in which the potential for BPR benefits may differ significantly from that in their larger counterparts. SMEs are the fastest growing segment of most economies and are perceived to be more flexible and adaptable in terms of structure and speed of response than larger organizations. The literature speculates that SMEs have as good a chance of re-engineering successfully as their larger counterparts, although this is untested. Yet, with limited resources, such as IT and BPR expertise, and financial constraints, SMEs may find it difficult to re-engineer. This paper addresses the role of BPR in SMEs and develops a framework to assess its implementation potential. Factors that facilitate and inhibit BPR performance are identified and analysed as the basis for empirical testing. A set of propositions is developed that allows operationalization of the framework. The ultimate goal is to develop a process and tool set to assist SMEs wishing to undertake business process re-engineering.     

Adoption of software as a service in Indonesia: Examining the influence of organizational factors

In this study, we investigated the organizational factors that influenced Indonesian companies in their decision to adopt software as a service (SaaS). Based on a multiple-case study of 18 Indonesian companies, we identified three patterns: Top management support is an enabler for SaaS adoption; small to medium-sized enterprises (SMEs) are more likely to adopt SaaS than large companies; and organizational readiness is not an enabler for SaaS adoption. The last two patterns contradict existing information technology (IT) innovation adoption research. We explain this by examining the nature of SaaS as an IT innovation and the characteristics of Indonesia as a developing country.     

An exploratory study of information technology evaluation and benefits management practices of SMEs in the construction industry

While the number of articles on IT evaluation and benefits management has been substantial, limited attention has been given to these topics in small and medium-sized enterprises (SMEs), particularly the construction industry. This paper presents findings from a questionnaire survey that sought to examine the approaches used by 126 construction organisations to evaluate and justify their IT investments, as well as the benefits and costs that they have experienced due to IT implementation. The analysis of their responses identified three key findings. Firstly, different organisation types significantly differ in the amount they invest in IT and their firm size (in terms of turnover and number of employees) does not influence investment levels in IT. Secondly, the evaluation process adopted by construction SMEs is used as for both control and learning. Thirdly, a major barrier to justifying IT investments was attributed to having no strategic vision. While organisations experienced no significant differences in the tactical and operational benefits incurred after the adoption of IT, differences were found with respect to the strategic benefits. If construction SMEs are to leverage the benefits of IT, then this should form an integral part of their business strategy. Considering this, recommendations for IT evaluation for construction SMEs that are also pertinent for SMEs operating in other industry sectors, are presented.     

Board-level IT governance and organizational performance

Research on the strategic management of Information Technology (IT) resources has mostly focused on the oversight provided by the management team as a means to increase organizational performance. In recent years, boards of directors have also increased their involvement in IT matters, and various theoretical lenses suggest that this oversight too has the potential to influence organizational performance. Hence, this study synthesizes the resource-based and contingency views of MIS with corporate governance theories, and examines key antecedents and consequences of board-level IT governance (ITG) using a multi-method approach. Structural Equation Modelling analysis applied to organization-level data collected from 171 board members suggested that the level of ITG exercised by boards was contingent upon the organization's ‘IT use mode’, along the two dimensions of need for (a) fast and reliable IT, and (b) new innovative IT. But, the findings further suggested that the contingency approach may be suboptimal because it can cause new ways of leveraging IT to be ignored. High levels of board-level ITG, regardless of existing IT needs, increased organizational performance. This phenomenon was illuminated with applicability checks. Moreover, content analysis and structured interviews with board members further enriched these insights.     

The dual role of IT capabilities in the development of digital products and services

Past research on the business value of information technologies (IT) has demonstrated the positive contribution of IT capabilities (IT-C) to product innovation performance. However, with the advent of digital technologies, a new kind of product innovations gained importance: digital product and service innovations (DPI). As a consequence of their idiosyncratic characteristics, the usefulness and validity of existing product innovation management concepts cannot be transferred to the context of DPI without further ado. Accordingly, this study reinvestigates the role of IT-C in the specific context of DPI. Therefore, we begin with a differentiation of DPI from traditional, non-digital product innovation. Then, we propose that IT-C affect the performance of DPI projects via two paths. First, based on the notion that DPI rely on the use of innovative IT, we assume that IT-C directly impact DPI performance. Second, following prior research that has argued that the performance contribution of IT-C is mediated by other organizational intermediaries, we assume that IT-C also indirectly contribute to DPI performance through their positive influence on other organizational capabilities. One such organizational capability that mediates the influence of IT-C on DPI performance is a firm’s DPI capabilities (DPI-C). DPI-C allow firms to deploy their digital resources for DPI purposes and, thus, are an important antecedent for DPI performance. To test our assumptions, we use partial least squares–structural equation modeling technique and analyze survey data collected from DPI projects across different industries in Germany, Austria, and Switzerland.     

Strategy implications of IS planning: Executives’ perceptions on firm performance

This paper aims to explore the effect on business performance of both Information Technology (IT) and business strategy. All data were obtained form 294 IS executives in Greek Small-Medium Enterprises (SMEs) and analyzed using Ordinal Regression Analysis. As the results of this survey indicate, SMEs cannot increase business value without strategic planning. IT executives should be aware of IT issues because this can be an obstacle for the organization and will prevent them achieving their planning goals and increasing the value of the business.     

Hierarchical business value of information technology: Toward a digital innovation value chain

Information technology (IT) increasingly changes the ways through which firms develop and commercialize innovation. Prior studies have mainly focused on the direct effect of IT use on innovation performance, while little is known about how IT use for different purposes in the innovation processes leads to innovation performance at the organizational level. Drawing on the routine-based absorptive capacity (AC) framework, we conceptualize IT use for knowledge search and relational search as IT-enabled internal and external AC routines and unveil the hierarchical benefits resulting from IT use for innovation. We propose a model in which firms need to purposefully use IT to search for knowledge in the new product development process or search for relationships in the collaborative innovation process, leading to first-order benefits (i.e., internal innovation benefits and open innovation benefits) and, in turn, second-order benefits (i.e., innovation performance). By using a unique data set from 1028 German firms between 2003 and 2007, we find that IT use for knowledge search enhances internal innovation benefits, whereas IT use for relational search increases open innovation benefits. More importantly, internal and open innovation benefits mediate the relationships between IT use for knowledge and relational search and various innovation performance measures. Taken together, our findings shed light on a deeper understanding of the digital innovation value chain.     

Educational programmes for future employability of graduates in SMEs

There are many levels of learning, training, and upskilling within SMEs and these encapsulate varying combinations of formal and informal learning activities. However not all SMEs are proactive in their learning situations and a large proportion of SMEs are in constant ‘crisis management’ mode and therefore need to be encouraged to adopt a learning, training and upskilling environment if they want to survive and prosper. Recent research managed by the Programme for University and Industry Interface at the University of Limerick, Ireland (PUII in Available on line at: http://www.ul.ie/~puii/ (accessed January 21st, 2008)) was charged with identifying key skills and competencies required by individuals in SMEs to ensure their future generation employability. What clearly emerged from this piece of work was the articulation of a range of diverse interventions, which SMEs feel are required to enable them to expand their organizational capacity and the capability of their employees. However, the learning delivery models developed to date for the upskilling of individuals in industry have largely failed to get to the heart of the matter for the SME and are not sufficient to bridge the gap between the needs of the individual in the SME and the needs of the organization. To this end, SME-specific learning delivery models are urgently required to build and create innovative and sustainable learning environments in SMEs, which will simultaneously develop both the individual and the organization. This paper discusses the needs of SMEs in terms of learning and illuminates the need for new innovative programmes which will mark a new step in supporting the delivery on the global priority of educating and upskilling the workforce.     

Maximizing the positive influence of IT for improving organizational performance

In the analysis of whether information technology (IT) has an impact on organizational performance, focus is usually placed on the relationship between an organization’s investments in IT and that organization’s performance. Therefore, it is standard to devote special attention to the size and complexity of the organization, to the investments in other organizational resources that may affect the performance of IT, and to the manner in which the two variables are measured. However, one area that has not been well explored is the manner in which the relationship between investments in IT and organizational performance develops. In this article, we show empirically that the planning and management of IT influence the organization’s endowment of resources (physical and human), which consequently has positive effects on each of the IT-related areas usually found in organizations (applications, reliable and secure systems and communications, and training and support). In turn, the functioning of these areas influences the impact of IT on the organization, which then has positive effects on organizational performance. We have used data corresponding to IT management in Spanish universities, as well as independent rankings that are useful for evaluating their performance.     

Letter from the editor

Abstract

Organizational context plays an important role in how organizations develop and implement IT strategies and plans. Since, in developing nations like India where, in the presence of highly skilled based of technical manpower, embedded organizational and cultural issues exert a strong impact on strategies adopted by organizations, it becomes important to identify organizational attributes that determine IT effectiveness. In this paper we investigate the critical nexus between IT planning and IT effectiveness in the Indian corporate milieu with the aim of identifying strategies and practices that could result in effective IT usage in spite of organizational and cultural constraints. Empirical support was provided for this study by in‐depth interviews conducted with systems managers and, in some instances, CEOs. Results indicate that the majority of the organizations do not use IT effectively. Moreover, some of these deficiencies can be linked to planning and strategic aspects of IT management. Results are discussed in the light of existing conditions and the main outcome that emerges is that if organizations in India do not develop and implement strategies to use IT for both incremental as well as radical organizational improvements, they are not likely to experience significant IT‐related benefits.     

Shifting intra‐ and inter‐organizational innovation processes towards digital business: An empirical analysis of SMEs

The literature suggests that increasing investments in information and communication technologies (ICTs), knowledge exchange and sharing help SMEs tackle the current global and dynamic environment. Given that much of the useful knowledge resides outside the enterprises’ boundaries, these technological tools foster the gathering of big data and information. Despite these premises, few studies have considered the role of ICTs and big data in intra‐ and inter‐organizational ties and the consequent effects on enterprises’ innovation performance. The paper investigates whether ICTs oriented to intra‐organizational (in‐house research and development [R&D]) and inter‐organizational (open innovation) processes improve SMEs’ innovation performance. Therefore, via structural equation modelling (SEM), the study analyses a sample of 239 knowledge‐intensive SMEs located in Italy. The noteworthy results are that ICTs oriented to intra‐ and inter‐organizational innovation processes improve both these processes in generating new products and/or services. On this basis, managerial and academic implications are provided, along with avenues for further research.     

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.