The impact of IT capability on the performance of SMEs in Ghana: the mediating role of business process agility

Abstract

ABSTRACT Information technology (IT) is widely regarded as a competitive tool, particularly under conditions of a turbulent business environment. While IT capability can arguably enable firms to achieve superior performance, there is a limited understanding of the mechanisms and boundary conditions through which IT capability enhances firm performance. We developed and tested a model with the assumption that the relationship between IT capability and firm performance is channeled through business process agility (BPA), and conditional on the level of investment in Research & Development (R&D). The proposed relationships are tested on a sample of 400 SMEs in Ghana, a developing African market economy. This paper finds that BPA partially mediates the effect of IT capability on firm performance. The paper further finds that R&D investment strengthens the indirect effects of IT capability on firm performance, via BPA – both at high and low levels of R&D investment. The theoretical and managerial implications are discussed.