Developing Organizational Agility through IT and Supply Chain Capability

Abstract

Organizations have increasingly invested money in information technology (IT) in order to improve their agility. It is generally believed that organizations with greater IT investment tend to be more agile to response to environmental changes. However, the issue of whether IT is an enabler or impeder of organizational agility still remains unresolved. Drawing upon resource-based view theory and the literatures of information systems and supply chain management, the authors develop and test a theoretical model that integrates IT capability, supply chain capability and organizational agility. The authors propose that IT capability enables the development of a higher level of supply chain capability which is embedded within inter-firm processes and in turn enhances organizational agility. Structural equation modelling is employed to test their theoretical conceptualization of 310 Australian fast-growth small-to-medium enterprises across different industrial sectors. The results show that IT capability does contribute to firm agility through enhancing inter-firm supply chain processes such as integration, information sharing and coordination. This research highlights the role of IT-enabled intermediated processes and the ways in which IT is used by firms to enhance core business processes.