Developing Organizational Agility Through IT and Supply Chain Capability

Organizations have increasingly invested money on information technology (IT) in order to improve firms' agility. It is generally believed that companies with greater IT investment tend to be more agile to respond to environmental changes. Yet, the issue of whether IT is an enabler or impeder of organizational agility still remain unresolved. Drawing upon the resource-based view theory, the information systems (IS) and supply chain management literature, we develop and test a hypothesized model that integrates IT capability, supply chain capability and organizational agility. We propose that IT capability enables the development of a higher level of IT-based supply chain capability which is embedded within inter-firm processes and in turn enhances organizational agility. Structural equation modeling is employed to test our 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 such as integration, information sharing and coordination. 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.