Unpacking the effect of IT capability on the performance of export-focused SMEs: a report from China

Export-focused small and medium-sized enterprises (SMEs) in China face a number of barriers to success, two primary ones being the liability of foreignness and resource scarcity. In order to transcend these challenges and be able to survive/prosper in the hypercompetitive international market, where players include large resourceful multinational organizations with experience in varied national contexts, these firms need to develop different organizational capabilities. In this paper, we specifically examine the role of a key organizational capability - information technology (IT) capability - and its different dimensions, in determining performance of export-focused SMEs in China. Our study reveals that IT capability has a positive impact on such firms' performance. This finding indicates the need for their owners/managers to invest in IT capability. Further, the study also highlights specific sub-dimensions of IT capability that export-focused Chinese SMEs should (or should not) develop, so as to derive maximum performance-related gains for the minimum amount spent on IT.