Impact of Information Technology on innovation in determining firm performance.
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Date
2017
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Abstract
The aim of this study was to investigate if IT Capability played a moderating role on
the relationship between Innovation Capability and the Firm Performance. The study
used resource-based theory to test if IT was a competitive resource, by examining
the role it played between the constructs of innovation capability and firm
performance. A cross-sectional study was conducted amongst two hundred and
ninety two (292) employees at the Hillside Aluminium Smelter in Richards Bay,
South Africa. The results showed a strong, positive and statistically significant
relationship between innovation and firm performance (r-value of 0.616, p-value
<0.01, and R2 value of 0.375). The results also support the model in showing a
moderate and statistically significant relationship between IT Capability and
Innovation Capability (r-value of 0.563, p-value <0.01, and R2 value of 0.32). The
conceptual model tested the moderation role of IT Capability between Innovation
Capability and Firm Performance. These results showed a favorable result for the
moderator variable (p-value <0.01), however the Innovation Capability as the
independent variable showed an unfavorable results (p-value=0.579 > 0.05), albeit
with a good R2 value of 0.45. Consequently, a multiple regression analysis was
conducted using IT Capability and Innovation Capability as independent variables.
This model proved to be statistically significant with both p-values of <0.01 and a R2
value of 0.4573. This result fitted well with the research analysis. For practice, the
drive for innovation as a key determinant of future firm competitive advantage must
factor in the technological capability, specifically information technology. Through
the careful selection of IT resources and skills, IT capabilities the are valuable, rare,
imperfectly imitable, and non-substitutable can be achieved, resulting in IT as a
strategic resource.
Description
Masters Degree. University of KwaZulu-Natal, Durban.