From IT Capabilities to Supply Chain Performance: The Mediating Effects of Supply Chain Agility and Absorptive Capacity

While information technologies have been taken as the competitive tool in improving supply chain performance, its investment cannot guarantee to meet firms’ performance expectations. Our understanding about the mechanisms by which IT affects supply chain performance remains unclear. Based on the perspective of dynamic capabilities theory, we derive a model to examine the effects of a firm’s IT capabilities, namely IT infrastructure flexibility and IT assimilation on supply chain performance. In particular, we examine the mediating effects of the firm’s higher-order organizational capabilities, namely supply chain agility and absorptive capacity on the relationships between IT capabilities and supply chain performance. Results from a survey show that the firm’s supply chain agility can fully mediate IT capabilities’ influence, while absorptive capacity partially mediate the influences of IT capabilities on supply chain agility. In addition, IT infrastructure flexibility can improve the firm’s IT assimilation. Contributions and implications of this study are discussed.