Relationship Between Information Technology-Enabled Dynamic Capabilities and Competitive Performance: Mediating Role of Sensing and Responsiveness Agility

The recent interest in information technology and dynamic capabilities has led many companies to develop information technology-enabled dynamic capabilities (ITDC) to enhance firm competitive performance. Further, scholars have hypothesized that ITDC enables sensing agility and response agility. Drawing on IT literature and dynamic capability theories, this research analyzes the relationship between ITDC and competitive performance in small enterprises. We expand the current study by examining the role of sensing and response agility in mediating the relationship between ITDE and the competitive performance of these firms. The sample size was selected using a simple random technique. Through partial least squares structural equation modeling PLS-SEM, the SmartPLS software package 3.3 was used to analyze the data. The result demonstrated that organizational agility mediates the relationship between ITDC and firm competitive performance. Also, the findings revealed important insights for managers and researchers further to understand the effects of ITDC on competitive performance. A performance-importance map was employed to augment the results of the PLS-SEM analysis, revealing that ITDC and response agility are the most crucial variables, despite their lower performance levels. This underscores the need to improve these aspects to enhance competitive performance. Therefore, managers should focus on building, re-configuring, renewing, and deploying ITDC to deal with environmental changes effectively. This research can also guide small enterprises to identify the resources required to build ITDC and further highlight the significance of organizational agility in improving firms’ performance.