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

Yang Chen, Yi Wang*, Saggi Nevo, Jiafei Jin, Luning Wang, Vincent W S CHOW

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

225 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)326-342
Number of pages17
JournalEuropean Journal of Information Systems
Volume23
Issue number3
DOIs
Publication statusPublished - May 2014

Scopus Subject Areas

  • Information Systems
  • Library and Information Sciences

User-Defined Keywords

  • Business process agility
  • Environmental factors
  • IT capability
  • Organizational performance

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