IT-ENABLED DYNAMIC CAPABILITY ON PERFORMANCE: AN EMPIRICAL STUDY OF BSC MODEL

Few studies have investigated the influence of "information capital," through IT-enabled dynamic capability, on corporate performance, particularly in economic turbulence. Our study investigates the causal relationship between performance perspectives of the balanced scorecard using partial least squares path modeling. Using data on 845 Brazilian companies, we conduct a quantitative empirical study of firms during an economic crisis and observe the following interesting results. Operational and analytical IT-enabled dynamic capability had positive effects on business process improvement and corporate performance. Results pertaining to mediation (endogenous variables) and moderation (control variables) clarify IT's role in and benefits for corporate performance.

KEYWORDS:
Corporate performance; information technology; dynamic capability; business process improvement; economic turbulence

Sector		Firm size
Type	%	(Numbers of employees)	%
Agribusiness	4	Up to 250	32
Commerce	10	251 to 500	15
Finance	8	501 to 3000	12
Manufacturing	38	3001 and more	41
Services	40

Latent variables	1	2	3	4	5
1 - Operational ITDC	0.79
2 - Analytical ITDC	0.78	0.80
3 - Business process improvement	0.50	0.51	0.73
4 - Customer performance	0.31	0.32	0.62	0.74
5 - Financial performance	0.34	0.37	0.48	0.49	0.85
AVE	0.62	0.65	0.53	0.55	0.72
Composite reliability	0.87	0.88	0.77	0.78	0.88
Means	3.12	3.17	3.57	3.86	3.43
Standard deviation	0.92	0.94	0.81	0.62	0.69
Variance coefficient	0.29	0.29	0.24	0.16	0.19
Skewness \|Sk\|	0.28	0.38	0.32	0.73	0.34
Kurtosis \|Ku\|	0.40	0.31	0.04	1.16	0.15

First latent variables	Items	1	2	3	4	5
1 - Analytical ITDC	AITDC_1	0.761	0.600	0.378	0.272	0.253
	AITDC_2	0.781	0.607	0.377	0.244	0.275
	AITDC_3	0.814	0.652	0.411	0.240	0.272
	AITDC_4	0.799	0.603	0.424	0.234	0.274
2 - Operational ITDC	OITDC_1	0.604	0.793	0.376	0.284	0.281
	OITDC_2	0.619	0.826	0.391	0.245	0.269
	OITDC_3	0.641	0.798	0.432	0.207	0.290
	OITDC_4	0.639	0.800	0.427	0.298	0.350
3 - Business process improvement	BPI_1	0.389	0.391	0.724	0.399	0.415
	BPI_2	0.336	0.318	0.780	0.603	0.360
	BPI_3	0.387	0.415	0.676	0.332	0.269
4 - Customer performance	CP_1	0.124	0.128	0.449	0.777	0.403
	CP_2	0.214	0.237	0.494	0.806	0.387
	CP_3	0.380	0.367	0.442	0.626	0.279
5 - Financial performance	FP_1	0.223	0.242	0.336	0.361	0.830
	FP_2	0.328	0.344	0.440	0.427	0.838
	FP_3	0.302	0.346	0.437	0.436	0.873

Case	Relationship between variables	Path coefficient	Standard error	t-	p-	R² (%)
Case	Relationship between variables	Path coefficient	Standard error	value	value	R² (%)
1	Operational ITDC -> BPI	0.278	0.048	5.797	0.000	28.7
	Analytical ITDC -> BPI	0.290	0.047	6.197	0.000	28.7
	BPI -> CP	0.623	0.024	25.571	0.000	38.9
	BPI -> FP	0.294	0.039	7.541	0.000	28.8
	CP -> FP	0.302	0.042	7.239	0.000	28.8
2	Operational ITDC -> BPI	0.313	0.047	6.616	0.000	29.5
	Operational ITDC × Size -> BPI	0.083	0.049	1.702	0.089
	Analytical ITDC -> BPI	0.286	0.048	5.915	0.000
	Analytical ITDC × Size -> BPI	0.044	0.053	0.823	0.411
	Size -> BPI	−0.073	0.031	2.392	0.017
	CP × Size -> BPI	−0.001	0.046	0.026	0.979
	BPI -> CP	0.634	0.024	26.247	0.000	40.3
	BPI × Size -> CP	0.069	0.059	1.176	0.240
	Size -> CP	−0.038	0.028	1.380	0.168
	BPI × Size -> FP	0.007	0.045	0.163	0.870	29.3
	Size -> FP	0.057	0.029	1.980	0.048
	CP -> FP	0.300	0.042	7.095	0.000
	BPI -> FP	0.289	0.041	7.099	0.000
3	Operational ITDC -> BPI	0.275	0.046	6.032	0.000	28.2
	Operational ITDC × Sector -> BPI	0.061	0.077	0.795	0.426
	Analytical ITDC -> BPI	0.273	0.047	5.844	0.000
	Analytical ITDC × Sector -> BPI	−0.020	0.054	0.371	0.711
	Sector -> BPI	0.016	0.038	0.421	0.674
	Sector -> CP	−0.062	0.038	1.639	0.101	41.1
	BPI -> CP	0.629	0.025	25.030	0.000
	BPI × Sector -> CP	−0.080	0.031	2.590	0.010
	CP -> FP	0.285	0.043	6.578	0.000	29.5
	CP × Sector -> FP	−0.081	0.036	2.230	0.026
	BPI -> FP	0.293	0.042	7.058	0.000
	BPI × Sector -> FP	0.009	0.046	0.190	0.849
	Sector -> FP	0.008	0.050	0.158	0.875

Relationship between variables	Path coefficient	Standard error	t-value	p-Value	R² (%)
Operational ITDC -> BPI	0.278	0.049	5.725	0.000	28.68
Analytical ITDC -> BPI	0.290	0.048	6.054	0.000	28.68
Operational ITDC -> CP	−0.016	0.045	0.355	0.723	38.87
Analytical ITDC -> CP	0.021	0.048	0.442	0.659
BPI -> CP	0.621	0.031	20.033	0.000
Analytical ITDC -> FP	0.154	0.050	3.090	0.002	31.06
Operational ITDC -> FP	0.022	0.050	0.444	0.657
BPI -> FP	0.207	0.044	4.654	0.000
CP -> FP	0.300	0.041	7.256	0.000

Relationship between variables	Path coefficient	t-value
Operational ITDC -> CP	0.381	14.082
Operational ITDC -> FP	0.343	11.082
Analytical ITDC -> CP	0.378	13.410
Analytical ITDC -> FP	0.377	12.916
BPI -> FP	0.490	18.174

Relationship between latent variables	Indirect effect	Standard error	t-value	p-value	Direct effect	Total effect	VAF (%)
Operational ITDC -> BPI -> CP	0.173	0.007	2.432	0.015	−0.016	0.157	100
Operational ITDC -> BPI -> FP	0.057	0.027	0.822	0.411	0.022	0.079	72
Operational ITDC -> CP -> FP	−0.048	0.004	6.282	0.000	0.022	−0.026	0
Analytical ITDC -> BPI -> CP	0.180	0.002	9.577	0.000	0.021	0.201	90
Analytical ITDC -> BPI -> FP	0.060	0.023	6.789	0.000	0.154	0.214	28
Analytical ITDC -> CP -> FP	0.063	0.019	8.171	0.000	0.154	0.217	29
BPI -> CP -> FP	0.186	0.060	3.434	0.001	0.206	0.392	47

Effect of excluded exogenous variable on endogenous variable		R² Included (%)	R² excluded (%)	f² effects size	Explanation
1	Operational ITDC -> BPI	28.7	25.6	0.04	small
1	Analytical ITDC -> BPI	28.7	25.3	0.05	small
2	Operational ITDC -> CP	38.9	38.9	0.00	small
	Analytical ITDC -> CP	38.9	39.1	0.00	null
	BPI -> CP	38.9	12.8	0.43	large
3	Operational ITDC -> FP	31.1	31.1	0.00	null
	Analytical ITDC -> FP	31.1	30.2	0.01	null
	BPI -> FP	31.1	28.2	0.04	small
	CP -> FP	31.1	25.6	0.08	small

Effect excluded exogenous variable on endogenous variable		Q² included	Q² excluded	q² effects size	Explanation
1	Operational ITDC -> BPI	0.150	0.136	0.02	small
1	Analytical ITDC -> BPI	0.150	0.134	0.02	small
2	Operational ITDC -> CP	0.211	0.208	0.00	null
	Analytical ITDC -> CP	0.211	0.208	0.00	null
	BPI -> CP	0.211	0.065	0.18	medium
3	Operational ITDC -> FP	0.218	0.218	0.00	null
	Analytical ITDC -> FP	0.218	0.212	0.01	null
	BPI -> FP	0.218	0.198	0.03	small
	CP -> FP	0.218	0.178	0.05	small

Sector	Relationship between variables	Path coefficient	Standard error	t-value	p-value	R² (%)
Agribusiness	Operational ITDC -> BPI	0.225	0.250	0.898	0.369	26.5
	Analytical ITDC -> BPI	0.322	0.279	1.156	0.248	26.5
	Operational ITDC -> CP	0.460	0.212	2.172	0.030	43.2
	Analytical ITDC -> CP	−0.245	0.301	0.813	0.416
	BPI -> CP	0.489	0.180	2.716	0.007
	Operational ITDC -> FP	−0.236	0.321	0.735	0.462	25.4
	Analytical ITDC -> FP	−0.011	0.286	0.039	0.969
	BPI -> FP	0.333	0.261	1.273	0.203
	CP -> FP	0.335	0.252	1.329	0.184
Manufacturing	Operational ITDC -> BPI	0.298	0.079	3.768	0.000	27.6
	Analytical ITDC -> BPI	0.259	0.082	3.181	0.001	27.6
	Operational ITDC -> CP	0.075	0.064	1.172	0.241	46.8
	Analytical ITDC -> CP	−0.052	0.072	0.713	0.476
	BPI -> CP	0.671	0.049	13.706	0.000
	Operational ITDC -> FP	0.048	0.086	0.561	0.575	36.7
	Analytical ITDC -> FP	0.075	0.083	0.898	0.369
	BPI -> FP	0.175	0.075	2.331	0.020
	CP -> FP	0.410	0.068	6.061	0.000
Commerce	Operational ITDC -> BPI	0.423	0.143	2.959	0.003	28.7
	Analytical ITDC -> BPI	0.154	0.136	1.131	0.258	28.7
	Operational ITDC -> CP	−0.193	0.152	1.272	0.203	26.7
	Analytical ITDC -> CP	−0.008	0.183	0.045	0.964
	BPI -> CP	0.593	0.105	5.641	0.000
	Operational ITDC -> FP	0.068	0.180	0.379	0.705	24.1
	Analytical ITDC -> FP	0.263	0.155	1.699	0.089
	BPI -> FP	0.160	0.147	1.089	0.276
	CP -> FP	0.172	0.141	1.225	0.221
Services	Operational ITDC -> BPI	0.160	0.074	2.167	0.030	28.7
	Analytical ITDC -> BPI	0.389	0.069	5.677	0.000	28.7
	Operational ITDC -> CP	−0.086	0.069	1.260	0.208	26.7
	Analytical ITDC -> CP	0.119	0.072	1.650	0.099
	BPI -> CP	0.586	0.049	11.953	0.000
	Operational ITDC -> FP	−0.002	0.076	0.020	0.984	24.1
	Analytical ITDC -> FP	0.229	0.075	3.052	0.002
	BPI -> FP	0.223	0.069	3.227	0.001
	CP -> FP	0.251	0.065	3.861	0.000
Finance	Operational ITDC -> BPI	0.498	0.138	3.604	0.000	41.5
	Analytical ITDC -> BPI	0.166	0.155	1.074	0.283	41.5
	Operational ITDC -> CP	0.036	0.208	0.175	0.861	45.4
	Analytical ITDC -> CP	0.011	0.177	0.061	0.951
	BPI -> CP	0.643	0.117	5.499	0.000
	Operational ITDC -> FP	−0.062	0.205	0.303	0.762	29.6
	Analytical ITDC -> FP	0.336	0.178	1.890	0.059
	BPI -> FP	0.128	0.193	0.663	0.507
	CP -> FP	0.246	0.188	1.308	0.191

Fundação Getulio Vargas, Escola de Administração de Empresas de S.Paulo Av 9 de Julho, 2029, 01313-902 S. Paulo - SP Brasil, Tel.: (55 11) 3799-7999, Fax: (55 11) 3799-7871 - São Paulo - SP - Brazil
E-mail: rae@fgv.br

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