Effect of Information Systems Resources and Capabilities on
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Effect of Information Systems Resources and Capabilities on Firm Performance: A Resource-Based Perspective T. RAVICHANDRAN AND CHALERMSAK LERTWONGSATIEN T. RAVICHANDRAN is an Associate Professor in the Lally School of Management and Technology, Rensselaer Polytechnic Institute. He holds a joint appointment in the School of Information Technology and the Decision Sciences and Engineering Systems Department. His research expertise and interests are in the following areas: strategic implications of information technology, supply chain management and business model innovations, innovation diffusion and assimilation, and organizational renewal and growth through innovations. His research in some of these areas has been funded by grants from the National Science Foundation, John Broadbent Endowment for Research in Entrepreneurship, and Pontikes Center for the Management of Information. His research has been published in academic journals such as Communications of the ACM, Decision Sciences, European Journal ofInformation Systems, IEEE Transactions on Engineering Management, Logistics Information Systems, Journal of Management Information Systems, and MIS Quarterly. In addition, he has published more than 40 papers in national and international conference proceedings. He currently serves as an Associate Editor of MIS Quarterly. He is also a member of the Editorial Review Board of IEEE Transactions on Engineering Management. He has served as a guest editor for the ACM Database for Advances in MIS. CHALERMSAK LERTWONGSATIEN is an Information Technology Specialist at the Information & Communication Technology Center at the Ministry of Finance, Thailand. He has also served as a visiting lecturer at several universities in Thailand. He holds a Ph.D. in Management Information Systems from Rensselaer Polytechnic Institute, New York. His research interests include strategic implications of information technology and e-commerce diffusion. He has published articles in the Proceedings of the International Conference in Information Systems, Proceedings of the Americas Conference on Information Systems, and the Journal of Global Information Technology Management. We draw on the resource-based theory to examine how information systems (IS) resources and capabilities affect firm performance. A basic premise is that a firm's performance can be explained by how effective the firm is in using information technology (IT) to support and enhance its core competencies. In contrast to past studies that have implicitly assumed that IS assets could have direct effects on firm performance, this study draws from the resource complementarity arguments and posits that it is the targeted use of IS assets that is likely to be rent-yielding. We develop the theoretical underpinnings of this premise and propose a model that interrelates IS resources, IS capabilities, IT support for core competencies, and firm performance. The model is empirically tested using data collected from 129 firms in the United States. The results provide strong support for the research model and suggest ABSTRACT:
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Figure 3. Path Coefficients and R^ Values of the Structural Model with Objective Firm Performance Variables (ROS).
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