The impact of IT capability on organizational agility and performance: the role of IT spending

Purpose This study aims to investigate how critical information technology capability (ITC) components such as managerial and technical ITCs (MITC and TITC) impact organizational performance through organizational agility (studied as business process and market responsive agilities; BPA and MRA). Furthermore, the influence of information technology spending (ITS) on the ITC–agility linkage, along with ITC-agility-performance relationship at different levels of ITS are thoroughly examined. Design/methodology/approach Data are collected through a matched-pair field survey taking information technology (IT) and bank managers as target participants. The analysis is performed using AMOS-25, a covariance-based structural equation modeling approach. Findings The findings are three-folded. First, both MITC and TITC positively influence BPA and MRA. Furthermore, MRA and TITC (but not BPA and MITC) establish a positive impact on performance. Second, BPA and MRA significantly mediate TITC–performance relationship, while there exists significant mediation of only BPA (but not of MRA) on MITC-performance. Third, ITS has a significant positive effect on MITC–BPA–MRA relationship. However, it only exhibits a significant positive impact on TITC–MRA and not on TITC–BPA linkage. Originality/value In the era of digital transformation, it is essential to understand how ITCs shape performance outcomes. Furthermore, extant literature reports the empowering impact of ITCs on organizational agility. However, the focus on ITC-driven agility and performance, along with the ITS impacts, is very sparse. Moreover, academic research lacks enough studies on ITS and its effect on ITC-agility linkage and its moderated-mediating effect on ITC–agility–performance relationships. It substantiates the novelty of the research.