IT Enabled Organizational Agility and Firm Performance: Evidence from Chinese Firms

In this study, we examine the role of information technology (IT) in improving organizational agility and firm performance from the perspectives of the resource-picking and capability-building mechanisms of rent creation, and the hierarchy of dynamic capabilities. We divide IT capabilities into IT exploration capability, which corresponds to the resource-picking phase, and IT exploitation capability, which corresponds to the capability-building phase. Based on the concept of a hierarchy of dynamic capabilities, we establish the theoretical links between lower order capabilities (IT exploitation), higher order capabilities (organizational agility), and performance. Using the partial least squares (PLS) structural equation modeling approach, we empirically test the proposed relationships using data from 289 manufacturers in the Pearl River Delta region of Guangdong, China. Our results suggest that 1) IT exploration capability (resource picking) affects IT exploitation capability (capability building); 2) IT exploitation capability has positive effects on customer, operational, and partner agilities (higher order of capabilities); and 3) the IT enabled organizational agilities positively affect firm performance. We discuss the theoretical and practical implications of our findings and the opportunities for future