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Information Technology Capability and Its Impact on Firms Performance

In: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Kotor, Montengero, 10-11 September 2015

Author

Listed:
  • Turulja, Lejla
  • Bajgorić, Nijaz

Abstract

According to the resource-based view, sources of competitive advantage begin with the notion that differences in performance are fundamentally due to the distinctive resources and capabilities that are valuable, rare, inimitable and nonsubstitutable (Barney, 2007; Wu et al., 2006). Information technology (IT) as a resource of the company has the increasing importance for the researches and managers. Research on the IT value within organizations and firms' IT capabilities have expanded over the past decade (Pérez-López et. al., 2012). Tippins and Sohi (2003) in their study defined IT capability as the existence of IT infrastructure, IT knowledge and IT operations within company. The purpose of this paper is to analyze the impact of IT capability on firms' innovativeness and the relationship among IT capability, firms' innovativeness and business performance. The study uses survey data from managers and structural equation modelling to assess the relationships between IT capability, firms' innovativeness and business performance. This study finds that both IT capability and innovation capability play important role in achieving greater business performance. The findings indicate that managers should focus on development of the IT function within company, taking into account importance of IT investment as well as IT knowledge, and promotion of innovativeness.

Suggested Citation

  • Turulja, Lejla & Bajgorić, Nijaz, 2015. "Information Technology Capability and Its Impact on Firms Performance," Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference (2015), Kotor, Montengero, in: Proceedings of the ENTRENOVA - ENTerprise REsearch InNOVAtion Conference, Kotor, Montengero, 10-11 September 2015, pages 43-49, IRENET - Society for Advancing Innovation and Research in Economy, Zagreb.
    • Handle: RePEc:zbw:entr15:183629
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    References listed on IDEAS

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    1. Tseng, Shu-Mei, 2014. "The impact of knowledge management capabilities and supplier relationship management on corporate performance," International Journal of Production Economics, Elsevier, vol. 154(C), pages 39-47.
    2. Chung‐Jen Chen & Jing‐Wen Huang & Yung‐Chang Hsiao, 2010. "Knowledge management and innovativeness," International Journal of Manpower, Emerald Group Publishing Limited, vol. 31(8), pages 848-870, November.
    3. Birger Wernerfelt, 1984. "A resource‐based view of the firm," Strategic Management Journal, Wiley Blackwell, vol. 5(2), pages 171-180, April.
    4. Dibrell, Clay & Craig, Justin B. & Neubaum, Donald O., 2014. "Linking the formal strategic planning process, planning flexibility, and innovativeness to firm performance," Journal of Business Research, Elsevier, vol. 67(9), pages 2000-2007.
    5. Michael J. Tippins & Ravipreet S. Sohi, 2003. "IT competency and firm performance: is organizational learning a missing link?," Strategic Management Journal, Wiley Blackwell, vol. 24(8), pages 745-761, August.
    6. Anindita Chakravarty & Rajdeep Grewal & V. Sambamurthy, 2013. "Information Technology Competencies, Organizational Agility, and Firm Performance: Enabling and Facilitating Roles," Information Systems Research, INFORMS, vol. 24(4), pages 976-997, December.
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    Cited by:

    1. Okharedia Goodheart Akhimien & Simon Ayo Adekunle, 2023. "Technological environment and sustainable performance of oil and gas firms: a structural equation modelling approach," Future Business Journal, Springer, vol. 9(1), pages 1-11, December.

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    More about this item

    Keywords

    Information Technology Capability; Innovation; Innovativeness; Resource Based Theory; Performance; Dynamic Resource View;
    All these keywords.

    JEL classification:

    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management

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