Drivers and export performance impacts of IT capability in ‘born‐global’ firms: a cross‐national study

Abstract

Past research focusing on large firms has argued that information technology (IT) capability enhances firm performance. However, these studies have seldom explored why firms develop IT capability, and have also left a void the understanding of the role of IT capability in Small-and medium-sized enterprises (SMEs). This study attempts to fill that void by examining the effect of relevant environmental and firm-level factors on IT capability, and the effect of IT capability on the export performance of Chinese and US born-global firms, a special breed of export-focused SMEs. Results indicate that environmental factors such as information intensity, and firm-level factors such as international entrepreneurial orientation, prompt born-global firms to develop IT capability. Further, our results also strongly emphasise the positive role that IT capability plays on the performance of born-global firms. Finally, a comparative analysis of the Chinese and US born-global firms revealed a lack of a cross-cultural difference in the factors leading these firms to develop IT capability, therefore supporting the 'convergence' perspective in cross-cultural research.

Information management for the internationalization of SMEs: An exploratory study based on a strategic alignment perspective

“…Relative to technological capabilities specifically, IT can be classified as technologies for handling, storage and communication (Zhang et al, 2007). IT capabilities can be divided in two groups: management capabilities and technical capabilities (Root, 1994).…”

“…However, given the "specificities" of SMEs (Welsh & White, 1981), it seems appropriate to conduct a study on this particular group of enterprises. The differences between SMEs and large businesses are many: 1) SMEs have highly centralized structures and employ generalists rather than specialists (Thong, 1999) 2) SMEs lack in-depth IT/IS knowledge and technical skills within the organization leading to a lower level of awareness of the benefits of IT (Delone, 1988), 3) SMEs have limited funds to develop and maintain sophisticated IT infrastructures (Thong et al, 1996), and 4) SMEs have much less access to the necessary management and financial resources to correct situations arising from an unwise or unsuccessful IT investment (Zhang et al, 2007).…”

“…Tushman and Nadler (1978) proposed that as work related uncertainty increases, so does the need for increased amounts of information. A more uncertain environment can be observed by a strong competition in product quality over the market, several differences in product standards, and the need to adapt products for oversees markets (Zhang et al, 2007). A high level of environmental uncertainty is thus expected to be related to high information requirements.…”

“…Based on the Kearns and Lederer's (2004) work on business dependence on IT, it can also be expected that environmental uncertainty influences the alignment of IT capabilities. Environmental uncertainty leads a company to develop technological capabilities (Kearns & Lederer, 2004), including the development of IT skills (Zhang et al, 2007). Thus, the two following research hypotheses:…”

“…The performance of an organization depends on its ability to develop information systems in relation with the level of uncertainty it faces (Zhang et al, 2007;Kearns & Lederer, 2004). Tushman and Nadler (1978) propose that organizations are more effective when there is a match between information requirements facing the organization and information processing capacity.…”