This research explores how top management participation and three types of IT capability enable SMEs' competitive process alignment and flexibility capabilities. Our research hypotheses are tested using data from 310 Australian SMEs. Results show that top management participation and external IT linkage capability positively affect both process alignment and process flexibility. While IT infrastructure capability and IT business spanning capability positively affect process alignment, they are not significantly related to process flexibility. In addition, both process alignment and process flexibility capabilities have significant positive effects on SME performance. Contributions and implications of this study are discussed.
Information technology (IT) is regarded as a facilitator for both small and large firms to speed up transactions between firms and their suppliers and customers, achieve real-time communication, lower transaction costs, and enhance speed and flexibility. However, understanding whether and how IT helps small-to-medium enterprises (SMEs) to create business value still remains unclear. Drawing upon resource-based view theory, we develop and test a theoretical model to explore the interrelationships between IT resources (IT expertise, IT infrastructure), IT capability (IT integration), IT-enabled inter-firm processes (activity integration, coordination, partnership enhancement), and organizational performance in the fast growth SME context. We propose that IT business value depends on how SMEs employ IT resources to develop IT capability which facilitates inter-firm partnership processes along value chains. Structural equation modelling is employed to test our theoretical conceptualization of 310 Australian fast-growth SMEs across different industrial sectors. Results show that IT contributes to fast growth SME performance through the development of IT capability and enhancement of inter-firm partnership activities. This research highlights the role of IT in business value creation and the ways in which IT is used by fast growth SMEs to foster core business competencies.
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