Information technology and firm performance: mediation role of absorptive capacity and corporate entrepreneurship in manufacturing SMEs

ABSTRACT

The success of small and medium-sized enterprises (SMEs) depends on dynamic capabilities, as it provides opportunities to remain competitive and perform well in the dynamic business environment. Although several studies show the significant positive impacts of dynamic capabilities on firm performance, our knowledge of the underlying mechanism through which IT capabilities affect the firm performance is not yet clear. Applying the dynamic capability view, this study investigates the intervening role of absorptive capacity and corporate entrepreneurship. The data of 417 respondents is collected from medium-sized manufacturing sector SMEs in Punjab, Pakistan. The research hypotheses have been analysed through the structural equation modelling method by using the Smart-PLS software. The research findings show that absorptive capacity and corporate entrepreneurship partially mediates the relationship between IT capabilities and firm performance. Furthermore, the sequential path of IT technical skills, absorptive capacity, corporate entrepreneurship, and firm performance is highly significant as compared to other paths.

KEYWORDS:

• Information technology capabilities
• absorptive capacity
• corporate entrepreneurship
• firm performance

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes on contributors

Nabeel Rehman is a lecturer in Business Management at the Institute of Business Management, University of Engineering and Technology, Lahore, Pakistan. He has done his Ph.D. from University of Malaya, Malaysia. Main interest areas are Knowledge Management, Entrepreneurship, Information Technology.

Sadaf Razaq Lecturer in University of Engineering and Technology (UET) Lahore, Pakistan. She has six years of teaching experience. Her major interest areas are Business Economics and Knowlwdge Management.

Ammara Farooq, Lecturer in University of Engineering and Technology (UET) Lahore, Pakistan. She has three years of teaching experience. Her major interest areas are Business Management and Knowlwdge Management.

Nayab Mufti Zohaib, Assistant Professor in Bahria University Lahore, Pakistan. She has five years of teaching experience. Her major interest areas are Marketing and Corporate Governance.

Mohammad Nazri Bin Mohd Nor, Dr. Nazri is a senior lecturer in Management in the Faculty of Business & Accountancy, Universiti of Malaya. He obtained his Doctorate of Business Administration (DBA) from the University Teknologi MARA (UiTM), MBA and BBA from the National University of Malaysia. His industrial experience was with RHB Investment Bank spanning over 10 years. His research interest includes Management, Organisational Behaviour, and Knowledge Management. His major areas of teaching include Human Capital, Leadership, Business Ethics and Islamic Perspectives in Business.