Information technology (IT) governance and IT capability to realize firm performance: enabling role of agility and innovative capability

Abstract

Purpose – With the ever-growing turbulent business setting, there is a great interest to study how a firm tailors information technology (IT) capability to shape agility and innovation capability to stay ahead of the competition. This study examines how IT governance and IT capability can be tailored to achieve firm performance through agility and innovative capability in a turbulent environment. Design/methodology/approach – Drawing on the dynamic capability theory, this study based on the primary survey data of 253 responses from senior IT and business executives in China proves the hypothesized relationship in the proposed model. Findings – This study shows that the IT governance mechanism positively impacts on IT-enabled dynamic capabilities. Further, IT-enabled dynamic capabilities positively impact on agility and innovative capability that in turn support to achieve firm performance. The environmental uncertainty is only significant in the ITenabled dynamic capabilities–business process agility relationship. Research limitations/implications – This study suggests corporate leaders and executives to better exploit their resources and tailor IT capabilities in the turbulent environment. Further, this study offers theoretical and practical implications. Originality/value – This study proposes ways for executives to examine the multifaceted nature of environmental uncertainty to achieve agility, innovation and firm performance rather than simply investing in IT.