IT as An Enabler to Enhance Fast Growth Small-to-Medium Enterprise Performance

Information Technology (IT) is regarded as a facilitator for both small and large firms to speed up transactions between firms and their suppliers and customers, achieve real-time communication, lower transaction costs, and enhance speed and flexibility. However, understanding whether and how IT can help firms to create business value still remains unresolved. Drawing upon resource-based view theory, source-position-performance framework, we develop and test a theoretical model to explore the interrelationships between IT resources (IT human resources, IT infrastructure), IT capability (back-end integration), IT-enabled inter-firm processes (activity integration, coordination, partnership enhancement), and organizational performance in the fast growth small-to-medium enterprises (SMEs) context. We propose that the value of IT depends on how firms employ technologies to develop IT capability which facilitates inter-firm integration and enhances intermediate business processes along the value chains. Structural equation modeling is employed to test our theoretical conceptualization of 310 Australian fast-growth SMEs across different industrial sectors. The results show that IT resources do contribute to fast growth SME performance through developing IT capability and enhancing inter-firm value chain processes such as integration, coordination and partnership enhancement. This research highlights the role of IT resources and IT capability in business value creation and the ways in which IT is used by fast growth SMEs to enhance core business competencies.