The Combined Effects of IT and HRM Capabilities on Competitive Performance: Empirical Evidence from Service and Manufacturing SMEs

Building on the resource-based perspective, we analyze the combined effects of two highly-valued organizational resources, namely IT capabilities and HRM capabilities, on the competitive performance of SMEs. Three resource configurations are derived from data on 227 SMEs (121 manufacturing SMEs, 106 service SMEs) through a cluster analysis: “IT Capabilities-Dominant Configuration” (ITC), “E-Business Capabilities-Dominant Configuration” (EBC), and “HRM Capabilities-Dominant Configuration” (HRC). HRC is the best-performing one, followed by EBC, and ITC is the worst-performing. The results show that manufacturing and service firms are very unevenly distributed within HRC and ITC configurations, suggesting notable differences between the two sectors regarding their respective IT and non-IT capability-building. The fact that service SMEs are overwhelmingly represented (93%) in the worstperforming configuration and completely absent (0%) in the most effective configuration while displaying the strongest IT infrastructure capabilities confirms that the IT productivity paradox is aggravated in service SMEs and calls for further investigation.

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