The impact of IT capabilities on firm performance: The mediating roles of absorptive capacity and supply chain agility

Researchers and practitioners regard information technology (IT) as a competitive tool. However, current knowledge on IT capability mechanisms that affect firm performance remains unclear. Based on the dynamic capabilities perspective and the view of a hierarchy of capabilities, this article proposes a model to examine how IT capabilities (i.e., flexible IT infrastructure and IT assimilation) affect firm performance through absorptive capacity and supply chain agility in the supply chain context. Survey data show that absorptive capacity and supply chain agility fully mediate the influences of IT capabilities on firm performance. In addition to the direct effects, absorptive capacity also has indirect effects on firm performance by shaping supply chain agility. We conclude with implications and suggestions for future research.

► We propose a model to examine how IT capabilities affect firm performance through absorptive capacity and supply chain agility.
► Both absorptive capacity and supply chain agility will improve firm performance.
► Flexible IT infrastructure will impact absorptive capacity and supply chain agility directly.
► IT assimilation cannot influence absorptive capacity and supply chain agility directly.
► Absorptive capacity and supply chain agility will fully mediate the impacts of IT capabilities on firm performance.