Information Synergy As the Catalyst Between IT Capability and Innovativeness: Empirical Evidence from Financial Service Sector

Abstract

Introduction. Previous studies about the effect of information technology (IT) on firm performance have presented no conclusive evidence. In this study, we examine the effect of IT on a firm`s innovativeness and introduce information synergy as the catalyst between them. Information synergy is the state of a company in which individuals pool their resources and collaborate across roles or boundaries through information technologies. Method. A research framework and the associated hypotheses are proposed. An empirical survey was conducted and questionnaires were mailed to 400 financial firms in Taiwan. Analysis. A total of 76 valid observations was collected and analysed using structural equation modelling technique with partial least square analysis. Results. The empirical result shows that IT capability does not have a direct effect on innovativeness; it has an indirect effect through information synergy and accounts for 32.3% of the variance in information synergy, while IT capability and information synergy account for 74% of the variance in innovativeness underlying the structural model. Conclusions. Information synergy is the key to improving a firm`s performance as represented by the level of innovativeness. Regardless of how large the size of IT investment is, what really matters is how well the IT is being used for sharing timely information and making the right business decisions.