Information Technology, Cross-Channel Capabilities, and Managerial Actions: Evidence from the Apparel Industry

Abstract

Information technology (IT) has changed the dynamics of competition in the U.S. economy. Firms are gaining competitive advantage by competing on technology-enabled processes. For the retail industry, technology is breaking down the barriers between different retail channels and is making omnichannel retailing inevitable – an integrated sales experience that melds touch and-feel information in the physical world with online content. Omnichannel retailing is becoming a trend, critical for the success of retailers. To keep up the pace of change, existing retailers will need to create an omnichannel strategy and develop more omnichannel innovations. Based on the theories of resource-based view (RBV), IT business value, and competitive dynamics, this study examines the factors that affect cross-channel capabilities and managerial actions in the U.S. apparel industry. We have collected a longitudinal dataset on public apparel companies from 1995 to 2007. The empirical results reveal that both the quantity and scope of investments in enterprise IT applications are positively related to cross-channel capabilities. Financial resources positively moderate the relationship between enterprise IT applications and cross-channel capabilities. We find that enterprise IT applications increase the frequency and broaden the types of managerial actions. The effects of cross-channel capabilities on managerial actions are mixed. While market-oriented capabilities such as e-commerce and multi-channel cross-selling capabilities broaden the types of managerial actions, operation-oriented capabilities, such as cross-channel fulfillment, narrow the range of a firm’s managerial actions. The findings of the study provide important implications for managers in apparel and other retail sectors.