The role of information technology capabilities in mediating board information technology governance and firm performance

Abstract

Board information technology governance (BITG) and information technology (IT) capabilities play a substantial part in making a good firm’s performance. Thus, the present study aims to examine the relationship between th e BITG (i.e. structures, processes, and relational mechanisms) and IT capabilities on the firm performance and the mediating role of IT capabilities on the relationship between the BITG and firm performance. A stratified random sampling technique was utilized to collect the data of the medium-sized enterprises in Iraq. There are 300 questionnaires distributed among board members at the medium-sized enterprises of the state of Baghdad, and 223 questionnaires have proceeded for data analysis. The Statistical Package for the Social Sciences (SPSS) software and AMOS technique was employed to analyze the data. The findings suggest that BITG (i.e. structures, processes and relational mechanisms) and IT capabilities are positive and significantly affect the firm performance. The BITG (i.e. structures, processes, and relational mechanisms) also affects IT capabilities. Moreover, the result also suggests that IT capabilities mediate the relationship between BITG (i.e. structures, processes, and relational mechanisms) and firm performance. The findings of this study add value to the existing body of literature on BITG, IT capabilities and firm's performance, especially in a less developed economy like Iraq that of fers different institutional settings, litigation environments and cultures than in developed countries. The findings are also beneficial to the policymakers, professionals and boards of directors in optimizing the IT functions of the companies.