The strategic role of firm agility in the relationship between IT capability and firm performance under the COVID-19 outbreak

Abstract

Purpose Leveraging theory from the dynamic capability literature, this study aims to explore how information technology (IT) capability influences firm agility and subsequently translates into firm performance. Design/methodology/approach This study examines the proposed relationships by using survey data from a sample of 296 Chinese retail firms. Structural equation modeling is used to test this study’s hypotheses. Findings The following results are produced: the direct effect of IT capability on firm agility is confirmed; firm agility has a direct impact on firm performance; and the indirect effect of IT capability on firm performance via firm agility is demonstrated (i.e. partial mediation). Originality/value The catastrophic outbreak of the COVID-19 pandemic has heightened the importance of firm agility more than ever. Although the traumatic event is painful, however, there is nothing like a crisis to offer a tremendous business opportunity. In response to the pandemic circumstance, firms are required to operate their business by reacting to unpredictable and dynamic market changes quickly and efficiently. This study sheds light on why firms should develop their IT capability and how it affects firm performance via firm agility during the COVID-19 outbreak.