How Does IT Capability Impact Organizational Agility in the Supply Chain Context?

Organizational agility is regarded as a strategic capability, helping firms to compete, survive, and succeed in fast changing environments. Companies with greater IT investments are expected to be more agile. However, the issue of whether IT is an enabler or impeder of agility still remains unresolved. Drawing upon resource-based view theory, the authors test a theoretical model that integrates IT capability, supply chain capability and organizational agility. The authors propose that IT capability enables the development of a higher level of supply chain capability which is embedded within inter-firm processes and in turn enhances agility. Structural equation modeling is employed to test their theoretical conceptualization of 310 Australian fast-growth small-to-medium enterprises across different industrial sectors. The results show that IT capability does contribute to firm agility through enhancing inter-firm supply chain processes. This research highlights the role of IT-enabled intermediated processes and the ways in which IT is used by firms to enhance core business processes.