MODEL DEVELOPMENT OF INFLUENCE OF INFORMATION TECHNOLOGY CAPABILITES ON PRODUCT AND PROCESS INNOVATION TO IMPROVE FIRM PERFORMANCE

• Main Author: Anggara, Noverdy
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/44148
• Institution: Institut Teknologi Bandung

Utilization of Information technology has greatly developed in recent years in Indonesia. Utilization of IT (IT capability) is intended to improve firm performance. However, this condition is contrary to what is felt by firm who do not feel the benefits of IT utilization even though investment to build IT infrastructure has drained corporate funds. This phenomenon is referred as "paradox productivity" in information technology. The impact of IT investment by companies is not felt directly. To improve firm performance, companies must innovate products and processes. To support IT Utilization in product innovation, companies must be oriented to market conditions (market orientation) so that product fit with customer need. Companies can also hire IT expert (IT business partnership) to implement new information technology. In this study, the data processing was carried out using 65 data from manufacturing companies that already use IT. Survey was collected online using a questionnaire that has been arranged. PLS-SEM method was chosen to predict whether IT capability can improve firm performance. The results show that IT capability has an indirect effect on firm performance. Product Innovation has a role to mediate the influence, while process innovation supports the product innovation in the company. IT business partnership have an effect to moderate the influence exerted by IT capability on process innovation. Other results show that market orientation does not have a moderating effect on the influence of IT capability on product development activities in the company.