Managerial capabilities of information technology and firm performance: role of e-procurement system type

Firms need to find a proper fit between their own information technology (IT) capabilities and IT systems in order to enhance performance. Thus, the purpose of this paper is to examine the moderating effect of certain e-procurement system types on the relationship between IT capabilities and firm performance. Moderated regression analysis is used to test for interaction effects of IT capabilities, including collaboration capability and dynamic capability, and e-procurement system types including, E-market and Extranet. Data of 142 Korean manufacturing firms are collected and used in the analysis. There is a stronger effect when relationships between IT capability and firm performance are considered with the involvement of other resource such as e-procurement system type. When e-procurement has a minimum-information sharing function and a high market-making function, collaboration capability had a greater contribution on financial performance. On the other hand, when an e-procurement system has limited search functions, the dynamic capability shows a greater contribution to financial performance. The result of this paper gives a strategic view by providing a new perspective regarding the suitability between e-procurement being used by itself and the IT capability necessary for this.