The effect of the information technology implementation on organizational performance in manufacturing companies

Abstract

Information technology is essential and critical for companies when collaborating with external partners. This study examines the effect of information technology (IT) implementation on organizational performance through information sharing and inventory management. The study involved a distribution of questionnaires to 500 manufacturing companies that was followed by a data screening, resulting in 93 valid questionnaires. Partial Least Square (PLS) technique was employed for data processing. The results show that IT implementation affects information sharing, inventory management, and organizational performance. Meanwhile, information sharing has an influence on inventory management and organizational performance. In addition, inventory management affects organizational performance. This study also reveals that information sharing and inventory management mediate the relationship between IT implementation and organizational performance. IT implementation can improve organizational performance, particularly in punctual product delivery. Information sharing with partners will improve inventory, especially in maintaining safety stock while improving the company's performance. This result paves the way for practitioners to improve organizational performance in the context of supply chain management.