Reconceptualization of information technology flexibility for supply chain management: An empirical study

Abstract

IT flexibility is an increasingly important factor in today's dynamic business environment. However, earlier research lacks 1) an integrated framework that corresponds to diverse processes for supply chain management and 2) an explanation of how IT flexibility affects firms’ performance in the supply chain context. To fill these gaps, our study theorised a research model by integrating disparate streams of IT flexibility research with three types of IT flexibility, namely, operational, transactional, and strategic, and tested both the direct and indirect effects of the three IT flexibility types on firm performance. Our theoretical model uses an extended resource-based view to highlight the role of IT flexibility in managing interdependent firm relationships in supply chains. Using a partial least squares approach to structured equation modelling analysis on 162 questionnaires from supply chain practitioners, we found two significant relationships: (1) transactional IT flexibility affects operational IT flexibility, and (2) operational IT flexibility affects strategic IT flexibility. Transactional IT flexibility also affects strategic IT flexibility, thus playing a pivotal role in the effectiveness of the other two flexibility types. In addition, it was identified that transactional and operational flexibilities affect firm performance indirectly, via process integration capability, while strategic flexibility directly affects firm performance. By classifying diverse IT flexibility attributes into three types, a comprehensive and explicit concept of IT flexibility in inter-organisational relationships is attained, which allows practitioners to target key resource investments to realise the full potential of IT in the supply chain.