IT Usage and Innovation Performance of SMEs in China: A New Perspective

Abstract

Existing studies on the information technology (IT) usage of firms are constrained within the perspective of “IT tool” or “IT investment.” Few studies have analyzed the IT usage of firms from a new perspective. This study aims to fill this gap by examining the impact of IT usage on the innovation performance of small- and medium-sized enterprises (SMEs) from the perspective of the product value chain (PVC). A research model integrating IT usage width, IT usage frequency, manufacturing flexibility, human capital quality, and firm innovation performance was proposed for this analysis. Furthermore, a quantitative analysis was performed on a sample of more than 1300 Chinese manufacturing firms using the newest data provided by the World Bank. Results validate that IT usage width and IT usage frequency have a significantly positive impact on the innovation performance of SMEs. Manufacturing flexibility plays a partially mediating role between IT usage frequency and the innovation performance of SMEs. Moreover, human capital quality has a significantly positive moderating effect on IT usage width and the innovation performance of SMEs. IT usage width and IT usage frequency appear to be important predictors of the innovation performance of SMEs, whereas there are substantial differences in the influencing mechanism of IT usage width and IT usage frequency on the innovation performance of SMEs.