Information Technology Resources, the Organizational Capability of Lean-Agile Manufacturing, and Business Performance

Information Technology Resources, the Organizational Capability of Lean-Agile Manufacturing, and Business Performance

Morteza Ghobakhloo (Department of Industrial Engineering, Minab Higher Educational Center, University of Hormozgan, Bandar Abbas, Iran) and Adel Azar (Department of Management and Economics, Tarbiat Modares University, Tehran, Iran)
Copyright: © 2018 |Pages: 28
DOI: 10.4018/IRMJ.2018040103

Abstract

This article drew on the resource-based view of the firm and assessed how manufacturing firms—particularly in developing countries—can leverage their IT resources in support of lean manufacturing and agile manufacturing. The data collection was conducted via a survey of Iranian automobile manufacturers that supply international automobile makers. The result showed that IT resources are crucial to the development of lean manufacturing and agile manufacturing. The value of IT is truly transformed to performance improvement when IT resources are effectively leveraged in support of these manufacturing systems. Lean and agile manufacturing are two manufacturing strategies that can co-exist in one system and agile manufacturing may flourish under lean manufacturing circumstances. Complementarities exist among different practices of lean manufacturing as well as different dimensions of agile manufacturing. The authors' findings offer theoretical insights regarding the values of IT-enabled lean manufacturing and agile manufacturing at operation and strategic levels.
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1. Introduction

Understanding how business performance is affected by Information Technology (IT) is an important and cutting-edge research topic (Benitez-Amado and Walczuch, 2012), as it allows managers and practitioners to better evaluate the value of IT resources controlled by firms (Ghobakhloo and Tang, 2014). Resource-Based View (RBV) is the well-established theory which has been used widely by IT and operations management scholars to study the business value of IT (Benitez-Amado et al., 2010; Liang et al., 2010; Melville et al., 2014). The early RBV studies tried to directly link IT resources to business performance improvement. This strand of research assumed that higher investment in IT or controlling IT resources alone would provide organizations with performance improvement. Yet, their findings were mixed and inconclusive leading to ‘IT productivity paradox’ arguing that while impressive IT success stories exist, so do equally major IT failure cases. In the early 2000s, IT scholars started to argue that ‘IT productively paradox’ can be indeed the consequence of the way we look at IT directly contributing to business performance (Li and Ye, 1999) and proposed that the performance effect of IT may indeed go through some other factors (Bharadwaj, 2000; Melville et al., 2004; Rai et al., 2006; Wade and Hulland, 2004). Accordingly, they introduced the idea of assuming the third construct branded as ‘IT-enabled capability’, as the mediator between IT resources controlled by a firm and business performance. Accordingly, IT-enabled capability perspective emerged proposing that IT has an indirect, not a direct, impact on business performance through IT-enabled capabilities. This perspective, for the first time, enlightened us that a firm’s IT resources, per se, do not improve business performance. IT in effect can augment critical organizational capabilities, or interact with other organizational resources, processes or capabilities, to secure business performance improvement (Bharadwaj et al., 2007; Tian et al., 2010). This perspective revolutionized the way IT scholars viewed the business value of IT.

IT business value scholars introduced some IT-enabled capabilities that can transform the value of IT resources into business performance improvement. For example, recent scholars revealed that firms can use their IT resources to create invaluable organizational capabilities such as ‘IT-enabled mass-customization’ (Jitpaiboon et al., 2013) and ‘proactive corporate environmental strategy’ (Benitez-Amado and Walczuch, 2012) that significantly improve business performance. Despite recent efforts to understand the mechanism by which IT interacts with organizational issues and consequently creates performance improvement, this research background is in its infancy, and the understanding of these relationships are still limited. In effect, the research on the relationships between IT, organizational issues, and business performance is a cutting-edge research topic for IT scholars and practitioners and new IT-enabled capabilities are being identified and introduced continuously into the IT business value background (e.g., Ayabakan et al., 2017; Jin et al., 2014; Im and Rai, 2013; Lee et al., 2016; Pang et al, 2014; Wang et al., 2016).

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