The Influence of Information and Communication Technology on Firm Performance Through Competitive Advantage: A Case Study in Cosmetic Industries of Indonesia

Abstract

Nowadays, Information and Communication Technology becomes important for companies to be able to operate their business when facing competitors. ICT adoption can help to access opportunities when markets are dynamic and uncertain. Company knowledge can be a real competitive resource in order to improve company performance. ICT is considered capable of producing the best performance of the company. With the development of the company's performance, it will create renewal of resources that can compete in uncertain market conditions. This journal aims to determine the influences of ICT on company performance through competitive advantage as its mediating variable. Data was collected from 37 cosmetics industries in Bandung, Indonesia. All respondents were chosen by using probability sampling using the cluster sampling method. The data analysis is used to see the influence and hypothesis testing by using Path Analysis. The results show that ICT has a positive effect on company performance through competitive advantage as a mediating variable. KEY WORDSInformation, communication technology, firm performance, competitive advantage. Every company has a set standard for achieving effective and efficient company performance with the aim of producing economic results (Mohamed Abdi & Yassin Sheikh Ali, 2013). These standards are created using company capabilities and resources (tangible and intangible) (Barney, 1991;Penrose, 1959;Wernerfelt, 1984). Company resources can be in the form of utilizing ICT (Information Communication and Technology) to determine strategies that are capable of winning competition in the field (Lucchetti & Sterlacchini, 2004;Lyver & Lu, 2018).The theory of Resources-based theory of the firm (RBV) that refers to the thinking of Penrose (1959) states that companies are limited by their capabilities and resources. Furthermore, based on the idea of Grant (1996) these capabilities and resources will increase through new knowledge that is managed and processed by the company from time to time. So that company resources that are well managed will create renewal of resources that can compete in uncertain market conditions.The company in this research is a cosmetics industry company in Bandung Raya, Indonesia. Where at this time cosmetics have begun to shift into daily major needs. There was even a survey from NPD (National Purchase Diary Panel Inc.), a market research company in America, that 23% said that they would not reduce their cosmetics costs even though their financial condition was not too good (Kumar, 2005). This proves that the position of cosmetics can be aligned with other primary needs such as clothes and food.The cosmetics industry is a company that manufactures cosmetic products with standards set by Balai POM which is an institution in Indonesia which is responsible for overseeing the circulation of drugs and food in the community. Data obtained from Balai POM (2018) there are 37 cosmetics industries in Bandung Raya, 17 industries in Bandung City, 4 industries in Kab. West Bandung, 12 indus...