An Empirical Investigation of Mediation Effects between Information Communication Technology Implementation and Firm Performance: Role of Knowledge Absorptive Capacity and Knowledge Management Capability

  • Yang, Kyung-Hoon (Department of Information Systems, University of Wisconsin-La Crosse) ;
  • Koo, Chul-Mo (School of Business Administration, Chosun University) ;
  • Koh, Chang-E. (Department of Information Technology & Decision Sciences College of Business Administration University of North Texas) ;
  • Lee, Dae-Yong (School of Business Administration, Chosun University)
  • Published : 2008.06.13

Abstract

This research examined the mediation effects of knowledge absorptive capacity (KAC) and knowledge management capability (KMC), between information communication technology (ICT) implementation and firm performance. In the past, studies investigated KAC and KMC separately. While studies of KAC focus on the flow of information, those of KMC focus on knowledge creation triggered by innovative information. However, KAC and KMC are not mutually exclusive and as such we investigated them together in this research. We surveyed 126 companies and analyzed hypotheses with LISREL analysis. This research provided empirical support for the Nonaka's contention that the information processing has a positive effect on knowledge creation. We also found that there is a mediation effect between ICT implementation and firm performance. Not only is there a direct effect of ICT implementation on firm performance, but there is an indirect effect through KAC and KMC. KAC has a positive effect on both KMC and firm performance. However, it has been discovered that while KMC has mediation effect, it is not significant as an independent factor for firm performance.

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