Information technology and organizational capabilities

Business value of information technology (IT) is one of the most important research streams in information systems (IS) research. In this study, we follow the resource-based view (RBV) in strategy literature to study how IT enables firms to develop new organizational capabilities. Using structured content analysis, we have collected longitudinal data from news media for 49 publicly traded apparel firms in the U.S. over the period of 1995 to 2007. The financial data were collected from Standard & Poor's COMPUSTAT data. In this research, we study how IT assets affect apparel firms' organizational capabilities such as operational capability, customer service, and ability to innovate. The U.S. apparel industry is largely heterogeneous in its use of IT and organizational capabilities, and therefore provides a particularly interesting case to investigate the relationship between them. Our empirical results show that IT can lead to higher level of organizational capabilities. Firm financial resources are important in affecting the relationship between IT and operational efficiency as well as the relationship between IT and customer service. In addition, we find that operational efficiency plays a mediating role in how IT affects customer service. Highlights? We find that IT is positively related to operational efficiency, customer service, and product development. ? Our results suggest that financial resources complement IT in acquiring high-order organizational capabilities. ? Operational capability plays a mediating role in how IT affects customer service capabilities.