Mediating Effects of Supply Chain Integration: From IT Capability to Firm Performance

While information technology (IT) has been increasingly embedded in firms’ supply chain processes, the underlying mechanisms of how IT capability improves firm performance remain unclear. Drawing upon resource-based view and theory of swift and even flow, this study examines how IT capability (i.e., internally-focused IT capability, externally-focused IT capability, and IT business spanning capability) influences firm performance through supply chain integration (SCI) (i.e., internal and external integration). Using data collected from 222 firms in China, we find performance impacts of different IT capability are mediated by different SCI. Specifically, internal integration mediates the impact of internally-focused IT capability and external integration mediates the impact of externally-focused IT capability, while both internal and external integration mediate the impact of IT business spanning capability. We also find IT business spanning capability positively moderates the impact of internally-focused IT capability on internal integration. Theoretical contributions and implications of this research are also discussed.