IT integration, operations flexibility and performance: An empirical study

Abstract

Purpose: This study examines the relationship between IT implementation and performance with manufacturing flexibility based on a sample drawn from a set of manufacturing firms.

Design/methodology/approach: The relationships were analyzed using structural equations modeling (SEM) using EQS 6.2 software. Previously, an explanatory factor analysis confirmed one-dimensionality of the scales, Cronbach’s alpha was calculated to evaluate its internal consistency and a confirmatory factor analysis was run to observe scales’ validity.

Findings: This research proves a significant positive and direct effect of IT implementation on operations performance with 4 out of 6 flexibility dimensions (Machine, Labour, Material handling and Volume). Mix and Routing flexibility dimensions show no significant impact on firm performance.

Research limitations/implications: It is necessary to be cautious when generalizing these findings, as service firms were not part of the sample even when statistical results prove robustness suggesting that the findings are quite reliable. Some flexibility dimensions show no significant impact in performance (Routing and Mix flexibility). This is consistent with the fact that these flexibility dimensions act as variability absorbers within the manufacturing process.

Originality/value: This research proves a significant positive and direct effect of IT implementation on operations performance. Results show not only the links between IT implementation and operations performance, but also the magnitude of every impact. The model considers IT integration as the degree of alignment that existing technology resources in a firm have with the business strategy, in terms of importance and support for this strategy.