The Effects of Key Moderators on the Relationship Between Firm-wide IT Capability and Firm Performance: An Empirical Investigation of An Integrative Model of IT Business Value

Abstract

In the competitive and dynamic marketplace of the contemporary organization, IT has become an integral part of the organization’s success or failure. The IT function has been shown to be a valuable resource in creating IT capabilities that can contribute to superior competitive performance. Yet, the topic of IT business value continues to demand the attention of researchers and practitioners as both communities recognize the potential for IT, yet still require a more thorough understanding of how IT can be effectively leveraged to enable improved competitive performance. This dissertation explores the complex relationship between the firm’s IT capability and firm performance with the goal of expanding understanding for both research and practice. This research investigates a higher-level model that builds upon prior research to offer a more holistic representation of the firm’s overall IT capability. In addition, the model integrates key external and internal influences that are posited to interact with the firm’s IT capability to moderate its relationship with firm performance. The findings of this study provide initial evidence that the higher-level and integrative model may offer a more complete representation of a firm’s overall IT capability and thereby reveal new insights with meaningful implications for research and practice. The findings of this study provide empirical support for the idea that firm-wide IT capability enables improved competitive performance for the firm, suggesting that firms should actively seek to develop a firm-wide IT capability. This study also provides evidence that firms may reap favorable performance benefits from the individual sub-process groups that underlie the firm-wide IT capability construct. This finding suggests that firms may be able to gain incremental performance benefits as they work over time to create an overall, comprehensive firm-wide IT capability. Furthermore, this research suggests that the synergistic benefits of the overall firm-wide IT capability construct may outperform the benefits of each individual sub-process group alone. Finally, the IT capability construct definitions and item statements developed for this study may provide initial guidance to organizations beginning the process of understanding and developing the ten key IT capabilities identified and described in this dissertation.