modern business world modern business is dependent on information technology it a

Modern business is dependent on information technology (IT) and most companies are obliged to turn to electronic market in order to achieve competitive advantage
Business Systems Research | Vol. 7 No. 1 | 2016
and superior business performance. Companies implement information technologies
in order to improve both efficiency and effectiveness of business processes. The
importance of human resources (Song et al., 2005) and information technology
(Chae et al., 2014) have been recognized in previous studies in the context of
achieving superior business performances. However, a question arises: is it possible to
give priority to one resource over another? Does information technology in the
context of the digital era have a higher importance than human resources? This
topic is especially important for firms whose main activity is not directly related to IT
bearing in mind specific conditions of business in the New Economy and a
particular need for business transformation from traditional to electronic business.
Business globalization and competition create business pressures on firms and
managers to react faster and make better business decisions. Investments in the
information technology are often considered business-critical factors for improving
the quality of products and services, both efficiency and effectiveness of decision
making and business processes. By leveraging their IT capability, modern businesses
try to increase revenues, reduce costs, or both. On the other side, there is an
increasing importance of HR practices for the firms competitive advantage and
business performance in the Digital economy, whose main characteristic is a
turbulent business environment with rapid changes (Chen & Huang, 2009).
Consequently, when it comes to the digital age, there is a logical question of
whether human resources or information technologies are more important for firms?
The knowledge-based economy in the 1990s came to be called the Digital
economy or the New economy. This economy is based on dynamic, rather than
static resources (Carlsson, 2004). Static resources are those resources that represent
collection of assets to be used in an appropriate manner in the business activities
(Barney, 1986). Dynamic capabilities help firms to deal with rapidly changing
environments, considering the firms abilities to create additional value (Teece et al.,
1997) through constant improvement of the existing resources. In this connection,
dynamic capability view (DCV) represents theoretical base of this paper. The central
question addressed by DCV is how firms can obtain superior business performance
which has long been examined by strategic management literature. DCV
emphasizes firms ability in modifying, integrating and reconfiguring organizational
resource base to match changing environments (Teece et al., 1997).
In order to address the question of whether information technology has a higher
importance than human resources in the digital era, we identified a research topic
which would simultaneously analyze not only the relation between IT capability and
HRM capability but the relations between these two constructs and performance as
well. Most of the previous studies emphasized one specific causal link, without
providing an integrative approach (Crawford et al., 2011; Chae et al., 2014). To fill
this gap, we developed a research model that addresses relationships between IT
capability, human recourse management capability and firms performance. Thus,
the objective of this research is to analyze the causal relations between these
constructs considering the following research questions at the firm level:
o RQ1: How does IT capability affect human resource management capability?
o RQ2: How does human resource management capability improve firms
o RQ3: Does human resource management capability mediate the link between
IT capability and firms performance?

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