The effects of information technology capability and knowledge base on digital innovation: the moderating role of institutional environments

Abstract

PurposeBased on the knowledge-based view, this study investigates how firms' information technology (IT) capability broadens and deepens their knowledge base, which consequently improves digital innovation. By further drawing on the institutional theory perspective, this study examines how the relationships between IT capability and knowledge base are moderated by the institutional environments in which the firm operates.Design/methodology/approachThis paper uses 170 samples of Chinese firms and an empirical test conducted by the authors following a hierarchical moderated regression analysis.FindingsThe results find that IT capability positively affects knowledge breadth and knowledge depth, which consequently improves digital innovation. Furthermore, the study reveals the negative moderating effects of enforcement inefficiency on IT capability–knowledge breadth relationship, and the negative moderating effects of government support on IT capability–knowledge depth relationship.Originality/valueThis research is one of the earliest attempts to explore the impact of the institutional environment of emerging economies on IT capability. It also clarifies the impact of knowledge breadth and knowledge depth on digital innovation.

Influence of IT support on firms' cross-channel integration: the moderating role of institutional environment

“…As Rogers et al (2007) contend, "arguments from institutional theory can contribute to a better understanding of the social context of OM [operations management] and supply chain management strategies" (p. 569). Scholars have further proposed that institutional environment influences the value of firms' resources and capabilities (Peng et al, 2009), and that the development of firms' IT capability should be adapted to their unique institutional environments (Wei et al, 2021)…”

“…The institutional theory literature has identified dysfunctional competition and government support as key variables in institutional environments (Qian et al, 2013). Some scholars have specifically proposed the potential moderating role of these two institutional factors in the context of emerging markets (Smirnova, 2020;Wei et al, 2021). Su et al (2016) have argued the performance effect of knowledge creation capability is contingent on dysfunctional competition and government support.…”

“…Scholars have further proposed that institutional environment influences the value of firms' resources and capabilities (Peng et al. , 2009), and that the development of firms' IT capability should be adapted to their unique institutional environments (Wei et al. , 2021).…”

“…Although IT support is understood to be a type of dynamic capability, its role in supporting strategy and process is subject to external influences, such as institutional environment (Wei et al, 2021). Institutional theory proposes that firms' business arrangements can be affected by institutional environment (Peng et al, 2008).…”

“…Dysfunctional competition reflects the extent to which firms' competitive behaviour in the market is opportunistic, unfair, and even unlawful (Li and Atuahenegima, 2001), while government support reflects the extent to which local governments provide general and extensive support to firms in terms of beneficial policies, technical support, financial support, and access to advanced technology and other equipment (Wright et al, 2005;Zhang et al, 2017). According to institutional theory, as dysfunctional competition and government support can greatly impact institutional environments (Smirnova, 2020;Wei et al, 2021), it may be important to regulate the role of IT support for CCI. This study thus also investigates the moderating role of institutional environment on the relationship between IT support and CCI.…”