IT Capabilities, Process-Oriented Dynamic Capabilities, and Firm Financial Performance

TL;DRAbstract

More and more publications are highlighting the value of IT in affecting business processes. Recognizing firm-level dynamic capabilities as key to improved firm performance, our work examines and empirically tests the influencing relationships among IT capabilities (IT personnel expertise, IT infrastructure flexibility, and IT management capabilities), process-oriented dynamic capabilities, and financial performance. Process-oriented dynamic capabilities are defined as a firm’s ability to change (improve, adapt, or reconfigure) a business process better than the competition in terms of integrating activities, reducing cost, and capitalizing on business intelligence/learning. They encompass a broad category of changes in the firm’s processes, ranging from continual adjustments and improvements to radical one-time alterations. Although the majority of changes may be incremental, a firm’s capacity for timely changes also implies its readiness to execute radical alterations when the need a

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