Abstract
The primary aim of this article is to identify antecedents of firm's success in specific circumstances of the New economy. Many researchers have tried to answer the question Why do some firms persistently outperform others?. One of the most dominant view on this issue is a resource based view (RBV) or resource-based theory (RBT). According to this theory, 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 non-substitutable. Information technology as a resource of the company has the increasing importance for the researches and managers. Research on the information technology (IT) value within organizations and firms' IT capabilities have expanded over the past decade. IT capability is defined as the existence of IT infrastructure, IT knowledge and IT operations within company. The purpose of this paper is to analyse the interaction impact of IT capability and firms' innovation on business performance. The study uses survey data from managers and structural equation modelling to assess the relationships between IT capability, firm's innovation 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.
Highlights
Many scholars have tried to answer the question “Why do some firms persistently outperform others?” [1]
In line with previous studies that have shown that information technology (IT) alone will not result in increased innovation and competitiveness, but improvement IT skills along with IT processes and IT infrastructure will have positive impact on innovativeness, we propose the following hypothesis: H1: IT capability has a positive effect on the innovativeness
This study contributes to literature confirming innovativeness as a capability that stands between IT capability and firms’ performance
Summary
Many scholars have tried to answer the question “Why do some firms persistently outperform others?” [1]. “Distinctive competencies are those attributes of a firm that enable it to pursue a strategy more efficiently and effectively than other firms” [1] This discussion led to the development of the several theories and approaches of which one of the most prominent is resource based theory [1,2,3]. Barney and Clark [4] have identified four characteristics of resources essential for gaining sustainable competitive advantage, namely, value, rarity, imperfect imitability, and organized to capture value, known as the VRIO framework. They classified firm resources into four categories: physical capital resources, financial capital resources, human capital resources and organizational capital resources
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