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Research Note—Information Technology in Supply Chains: The Value of IT-Enabled Resources Under Competition

School of Business, Renmin University of China, Beijing, China
School of Business and Management, Hong Kong University of Science and Technology, Hong Kong, China
Rady School of Management, University of California at San Diego, La Jolla, California 92093
dongsht{at}gmail.com
seanxu{at}ust.hk
kxzhu{at}ucsd.edu

In this study, we seek to better understand the value of information technology (IT) in supply chain contexts. Grounded in the resource-based theory in conjunction with transaction cost economics, we develop a conceptual model that links three IT-related resources (backend integration, managerial skills, and partner support) to firm performance improvement. The model differs from previous studies by proposing a moderating effect of competition on the resource-performance relationships. Using data of 743 manufacturing firms, our analysis indicates significant contribution of IT to supply chains, which is generated through development of the digitally enabled integration capability and manifested at the process level along the supply chain. The technological resource alone, however, does not hold the answer to IT value creation. In fact, managerial skills, which enable adaptations on supply chain processes and corporate strategy to accommodate the use of IT, are shown to play the strongest role in IT value creation. Furthermore, backend integration and managerial skills are found to be more valuable in more competitive environments. While commodity-like resources have diminishing value under competition, integrational and managerial resources become even stronger. Overall, our results shed light on the key drivers of IT-enabled supply chains, and provide insights into how competition shapes IT value.

Key Words: IT business value; competition; supply chain; resource-based view; moderation effect; intangible resources; backend integration; managerial skills
History: This paper was received on April 11, 2006.