The Moderating Effect of IT Capability on the Relationship Between Business Process Reengineering Factors and Organizational Performance of Banks

7/30/2019 The Moderating Effect of IT Capability on the Relationship Between Business Process Reengineering Factors and O

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Journal of Internet Banking and Commerce An open access Internet journal (http://www.arraydev.com/commerce/jibc/)

Journal of Internet Banking and Commerce, August 2012, vol. 17, no.2 (http://www.arraydev.com/commerce/jibc/ )

The Moderating Effect of IT Capabili ty on the Relationship

between Business Process Reengineering Factors andOrganizational Performance of Banks

Kabiru Jinji ri RingimCollege of Business, Universiti Utara MalaysiaPostal Address: School of Technology Management and Logistic s, Universiti UtaraMalaysia

Author's Personal/Organizational Website : www.cob.uum.edu.my Email: [email protected] Kabiru J injiri Ringim is a Ph.D. candidate in Operations Management at the School of

Technology Management and Logistics; College of Business, Universiti Utara Malaysia.His areas of interests are Project Management, Process Reengineering, PerformanceManagement, Operations Management, e-Commerce and Technology Management.

Mohd Rizal RazalliDirector MBA Programme and Senior Lecturer, College of Busi ness, UniversitiUtara MalaysiaPostal Address: School of Technology Management and Logistic s, Universiti UtaraMalaysia, 06010 UUM Sintok, Kedah, Malaysia

Author's Personal/Organizational Website: www.cob.uum.edu.my Email: rizal @uum.edu.my Dr. Mohd Rizal Razalli is a Director of MBA Programme at Othman Yeap AbdullahPostgraduate and Senior Lecturer at the College of Business, University Utara Malaysia.(UUM). He holds a PhD in Operations Management. He is actively involved in

Conferences and publication to journal. His area of expertise is on OperationsManagement, Project Management, Business P rocess Reengineering, and PerformanceManagement.

Norlena Hasnan Senior Lecturer, College of Business, Universiti Utara MalaysiaPostal Address: School of Technology Management and Logistic s, Universiti UtaraMalaysia, 06010 UUM Sintok, Kedah, Malaysia

Author's Personal/Organizational Website: www.cob.uum.edu.my


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JIBC August 2012, Vol. 17, No.2 - 2 -

Email: norlena @uum.edu.my Dr. Norlena Hasnan is a Senior Lecturer at the College of Business, University UtaraMalaysia (UUM). She holds a PhD in Management, actively involved in conferences andpublication to journal. Her area of expertise is on Performance Management, Project

Management, Balance scorecard, and management sciences.

Abst rac t

The objective of this paper is to investigate the moderating effect of IT capabilityin the relationship of Business Process Reengineering (BPR) factors and theorganizational performance. BPR factors are operationalized by changemanagement, BPR strategy alignment, customer focus, managementcommitment, IT investment, and adequate financial resources. The IT capabilityincludes IT knowledge, IT operations and IT objects. Data was collected through

a hand-delivery method by sending questionnaires to 560 banks (Commercial,Microfinance and Mortgage). This study used stratified random samplingsproportionate to the numbers of the banks for sample selection. The findingsshowed that IT capability moderated the relationship between BPR factors suchas change management, customer focus, management commitment and overallorganizational performance of the bank. Furthermore, the result revealed that ITcapability moderated the relationship between IT investment, managementcommitment and customer service management performance. The outcome of this study provides important insight to researchers for understanding on theeffects of BPR factors and IT capability on organizational performance.

Key words: Business process reengineering, Information technologycapability, Organizational performance, Banks, Nigeria.

Kabiru Ji njiri Ringim, Mohd Rizal Razalli and Norlena Hasnan 2012

INTRODUCTION

The progressive globalization of financial markets requires market participants tomake changes to their operational processes beyond local competition to globalcompetitiveness. This trend has led many banks in developing countries toimprove customer service quality, speed, reduce operating costs, and enhanceprofitability performance. Innovative banking services and personalized bankingportfolio management are evolving as the market consolidates due to mergersand acquisitions of banks and up-to-date strategy. As a result, the focus is nolonger on cutting costs alone, but rather on simultaneously improving services tocustomers. In other words, the processes must not only be more efficient, butalso more customer-friendly as well. The Central Bank of Nigeria (CBN) initiated


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a BPR programme tagged project EAGLES (Efficiency, Accountability, Goalorientations, Leadership Effectiveness and Staff motivation) to enhance theoperations and quality of banks assets and services (CBN, 2009).

The CBN in partnership with PricewaterhouseCoopers conducted acomprehensive assessment of the bank's core and non-core operations thatrequired fundamental restructuring. The identified areas were customer servicedelivery, regulatory function of the CBN, performance management &benchmarking, information technology, customer satisfaction, human resourcesand administration and communication effectiveness at all stakeholder levels(CBN, 2009). In doing so, attempts are being made to adopt approaches in thefinancial sector that have proven effective in other industries, particularly those inmanufacturing. One of these approaches is known as Business ProcessReengineering (BPR). BPR is a major management approach that can focus ondoing things in a better way that is clearer and easier to achieve a radical

improvement on quality, speed, customer service, and reduction in cost. Allen(1994) argued that, the focus of reengineering is on the process of redesign,which relates to doing things better and clearer. One of the primary goals of thefinancial service industry is to always enhance processes that would improvecustomer service performance through the management approach of costreduction, improving quality, speed, and customer service for profit maximization.

Therefore, management scholars argue that organizations can become proactivein operation by adopting business process reengineering (BPR) to achieve aremarkable improvement in organisational performance

In Nigeria, liberalization of the banking sector has changed the form of

competitive advantage for the industry. New generation banks emerged. The oldgeneration banks consolidate operations either by merger, acquisition, raised upcapitalization based and reengineer their operations in order to be able toimprove their performance and compete effectively. The consequences of merger and consolidation of operational process and an intensified foreigncompetition in the financial service industry through liberalization andglobalization faced by the organizations led to radical changes in operations, andservices that resulted in conflicting performance. Customer focus became a keyfactor in determining the success of an organization (Idris, 2011). The bank thathas the highest customer base and highest customer focus rate became themarket leader in the industry. Hence, the quality of customer service becomes a

driving force in ascertaining business survival in the banking industry. To surviveand excel in dynamic business environment became a concern for the banksperformance.

The dynamic capability in form of IT capability was introduced to address thetheoretical limitation of having sustainable performance in turbulent businessenvironment (Paulous, 2004). Also, complementarity theory was mentioned toaddress the inadequacy of sustaining competitive advantage (Dedrick,


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Gurbaxani, & Kraemer, 2003; Kohli & Devaraj, 2003; Melville et al., 2004). Thispaper is aimed to study the moderating effect of IT capability attributes to therelationship between BPR factors and organisational performance of Nigerianbanks using survey questionnaires.

LITERATURE REVIEW

Assessment of bank performance is essential for bank managers, regulators andcustomer (depositors and investors). In a turbulent financial environment, bankperformance provides information for the investors and depositors to either retainor withdraw their investment from the bank. Managers are constantly challengedto improve their deposit or loan activities in order to enhance the profitabilityperformance of their organization. Tvorik and McGivern (1997) investigatedperformance by comparing economic and organizational factors. They concludedthat organisational factors influenced the profitability more than that of the

economic factors. The performance of organizations could be assessed byresource-based view, as explored by a number of researchers (Wernerfelt, 1984;Barney, 1986; Prahalad & Hamel, 1990). Organizational performance could belinked with market orientation, organization learning, human resourceproductivity, quality improvement or any other component (Day, 1994; Banker &Sinkula, 1999; Santos-Vijande et al., 2005).

Organisational PerformanceOrganizational performance reflects an organization's understanding andknowledge regarding customer needs and expectations (Slater & Narver, 1995).Razalli, (2008) found that hotel performance could be improved through good

leadership practice and provision of customized service design for selectclientele in the service sector. Hence, business organization can maximize theircustomer satisfaction for better profitability, increased sales volume, whichultimately improves overall performance benefit (Baker & Sinkula 1999).Generally, organizational performance is assessed by the application of financialor both financial and non-financial measures. There are number of studies in theliterature that used non-financial measures to evaluate the effectiveness andperformance of organization (Quinn & Rohrbaugh, 1983; Venkatraman &Ramanujam, 1986). It is suggested that four models i.e. human relations; internalprocess; open system and rationale goal model could represent theorganizational performance (Quinn & Rohrbaugh, 1983). Wheelen and Hunger

(1998) argued that appropriate performance measures depend on theorganizations and their objectives i.e. profitability, market share and costreduction.

Financial indicators, such as return on investment (ROI), earnings per share(EPS) and return on equity (ROE) are used by the number of organizations tomeasure their progress. Return on investment is used to reflect the profitabilitywhile corporate performance was measured by operating cash flows and return


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on investment capital (Hasnan, 2006; Sorenson, 2002).Rashid et al., (2003)measured firm's financial performance using the financial indicators, such asreturn on assets, return on investments and current ratios. Financial ratios reflectthe financial performance of the organization by an examination of financial

statements, as indicated by profitability, liquidity, leverage, asset utilization andgrowth ratios (Ho & Wu, 2006). In today's global dynamic and competitiveenvironment, banks could improve and diversify their products and services tomeet changing customers' demands and enhance their performance forsuccessful survival.

Farooq, (2003) reported that the performance of privately owned banks is betterthan that of state-owned banks. Hence, more customers were attracted by thehigh-quality service, adequate capital base and sound management of privatebanks. Also, Chowdhury and Kashfia, (2009) reported that analysis of the growthand development achieved of selected private banks in terms of stable growth of

branches, employees, deposit, loans and advances, net income, earnings pershare are better compared to the state owned banks. In addition, Calomiris(1999) argued that the merger and consolidation of bank operations results in theimprovement of efficiency that is associated with operating cost reduction andenlargement of bank customer relationships. Adolphus (2007) examined thefinancial indicators in Nigerian banks. He found that the capital adequacy ratiosignificantly correlates negatively with bank solvency. The cash reserve ratiocorrelates negatively and significantly with the proportion of non-performingloans. The total loans to deposits correlate negatively significant with banksolvency.

BPR Factors The literature review on BPR studies shows that the opinion of scholars on thesubject matter can be classified into two (Herzog, Polajnar, & Tonchia, 2007).

The first group includes the scholars that agree that BPR is a panacea toturbulent market changes, customer demand and competition (Davenport &Short, 1990; Hammer, 1990, Terziovski, Fitzpatrick, & ONeill, 2003), while thesecond group holds the opposing view claiming that BPR has failed to meet itsexpectations (Mumford, 1995; Biazzo, 2002). According to Al-Mashari, Irani andZairi (2001) the average success rate achievement of implementing BPR indeveloped countries was 55 percent, being 61 percent achieved in the USA and49 percent in Europe. The majority of studies on BPR have focused on the

importance of the various factors for successful implementation in themanufacturing industry, while relatively few studies have been conducted in thebanking industry. Therefore, it is risky to generalize the BPR success rate,because the evaluation is subjective as cross national differences (such ascultural belief, norms and values) may exist. Reengineering is a painful processbecause the whole set of values and beliefs in the organization are beingchallenged (Hammer &Champy 1993). BPR factors in the present study havebeen adapted based on the scope of study and fit to the banking industry, which


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is in line with the previous studies (Al-Mashari & Zairi, 1999; Ahmad et al., 2007;Salimifard, et al., 2010). BP R factors are the independent variables, whichincludes 1) Change Management, 2) Management Commitment, 3) Lessbureaucratic and flatter organizational structure, 4) P roject Management, 5)

Customer Focus, 6) Effective process redesign, 7) Adequate financial resources,and 8) Information technology (IT) infrastructure.

IT Capability The review of previous studies that focus on a direct relationship between IT andorganizational performance fail to consider capabilities, that are improved by ITand which are true facilitators of performance improvement (Tippins & Sohi,2003). Other studies have relied on the erroneous assumption that adoption of ITwould improve performance (Dewett & J ones, 2001). While IT can improveefficiency, it may not provide competitive advantage, because the sametechnology could be adopted by competing organizations. Therefore, Tippins and

Sohi (2003) proposed that IT related benefit can only be realized when theorganization develops IT competency and then uses it as a set of co-specializedresources to leverage other complementary resources. Yongmei, Hongjian and

J unhua (2008) suggested that IT capability is an important moderating variablelinking IT investments to firm performance. The model and hypotheses areverified by sample data from leading IT firms in China. Similarly, Said, Hui, Taylorand Othman (2009) found that IT capability moderates the relationship betweencustomer-focused strategies and organizational performance by providing a

justification for LGAs to invest in terms of resources and commitment, inadopting CF-strategies and IT.

Theoretical Approaches There are number of theoretical approaches for examining firm resources andbusiness values. The principal theories are transaction cost economics(Williamson 1971, 1981, 1986), the resource based view (Wernerfelt 1984;Barney 1986, 1991; Deirickx and Cool 1989) and the relational view of firm (Dyer& Singh, 1998) of the firm. In addition the concepts of dynamic capabilities(Teece and Pisano 1994; Teece et al. 1997), absorptive capacity (Cohen andLevinthal 1990), complementary (Teece 1986) and strategic assets (Amit andSchoemaker 1993), and value chain analysis (Porter 1985). RBV asserts thatorganizations can outperform their competitors through developing resourcesthat are unique and diversely distributed. These differences lead to variations in

firm performance among firms in similar industries (Peteraf, 1993). However, theRBV is void of a single definition of the term resource (Wade &Hulland, 2004).Many researchers use the terms resources and capabilities interchangeably(Christensen & Overdorf, 2000; Gold et al. , 2001).

RESEARCH METHODOLOGY

The research setting was a cross-sectional study design. It involves gathering the


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data only once or at one point in time to meet the research objectives (Cavana,Dalahaye, & Sekaran, 2001). The advantage of using a cross-sectional study isthat it is economical and does not take time like a longitudinal study. The majorityof the previous studies on BPR used case study descriptive research design

(ONeil & Sohal, 1999). The data from this study was collected from seniormanagement, executives, managers and head of departments that represent therespective banks in Nigeria. In this study, attempts were made to increase theresponse rate such as by reminding the respondents through telephone call,SMS and self-visit (Sekaran, 2006). As a result of this efforts, 460 questionnairesresponded by the banks were returned out of the 560 questionnaires distributedby hand delivery to the respondent banks (commercial, microfinance andmortgage) in Nigeria. This makes the response rate of 82.14% based on thedefinition of response rate (J obber, 1989). Out of these 460 responses collected,417 questionnaires were useable for further analysis making a valid responserate of 74.0%. This response rate is considered adequate considering that,

according to Sekaran, (2006) the response rate of 30% is acceptable for surveys.

RELIABILITY TESTINGAll variable's measures were tested for validity and reliability. Inter- correlationanalysis was conducted and the results for the test were significant. Thereliability test for each dimension emerged after factor analysis was conducted.Cronbachs alpha coefficient is widely used as a measure of reliability. Table 1shows the results of the reliability test. Flynn, Schroeder, and Sakakibara (1994)argued that a Cronbachs alpha of 0.6 and above was considered an effectivereliability for judging a scale. The generally agreed lower limit for Cronbachsalpha may decrease to 0.60 in exploratory research (Hair et al., 2010). A

research instrument can be considered to be reliable if the result of the study canbe replicable under a similar methodology with stability of measurement overtime (Golafshani, 2003). Therefore, the Cronbachs alpha coefficients of theresearch instruments are shown in Table 1.

Table 1: Summary of Reliability Analysis of Major Variables

Variables No. of itemsNo of items

deleted.Cronbachs

AlphaDependent VariablesOrganizationalPerformance

10 0 0.87

Operation's cost reduction 5 0 0.99Customer ServiceManagement

3 0 0.71

Business operation'sefficiency

2 0 0.60

Moderating VariablesIT Capabil ity 10 0 0.83Independent VariablesBPR Factor s 29 0 0.80


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IT Investment 4 0 0.75BPR Strategy alignment 4 0 0.73Customer Focus 4 0 0.74Management Commitment 3 0 0.71

Change Management 8 0 0.77Financial Resources 6 0 0.71

MODERATED REGRESSION

Hierarchical regression or moderator regression has been suggested by manyauthors as the technique for analysing the moderating effect (Baron & Kenny,1986; Frazier et al., 2004). Russ and McNeilly (1995) argued that a less stringentsignificance level of p


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capability on the relationship between BPR factors and organisationalperformance is demonstrated in Table 2.

Table 2: Summary of hypothesis testing on moderating effect of IT capability on

BPR factors and organisational performance relationshipHypothesis Statement of Hypothesis RemarksH A: 3A IT capabili ty moderates the relationship

between BPR factors organisationalperformance of banks.

PartiallySupportedHypothesis

HA: 3A 1 IT capability moderates the relationship betweenChange management and overall performance of the bank.

Supported

HA: 3A 2 IT capability moderates the relationship betweenAdequate financial resources and overallperformance of bank

Not Supported

HA: 3A 3 IT capability moderates the relationship between

IT investment and overall performance of banks.

Not supported

HA: 3A 4 IT capability moderates the relationship betweenManagement commitment and overallperformance of banks.

Supported

HA: 3A 5 IT capability moderates the relationship betweenCustomer focus and overall performance of banks.

Supported

HA: 3A 6 IT capability moderates the relationship betweenBPR Strategy alignment and overall performanceof banks.

Not supported

Hypothesis testing of IT capability attributes - BPR factors Customer servicemanagement performance

To test the extent of IT capability attributes that moderates the relationshipbetween BPR factors and customer service management performance, ahierarchical multiple regression was conducted. The BPR factors were firstentered into the step 1, followed by the moderator (IT capability) into step 2, andthe interaction terms in step 3 of the regression model. Table 3 shows the resultof the hierarchical multiple regression analysis of the moderating effect of ITcapability on the relationship between BPR factors and customer servicemanagement performance. BPR factors were entered first in step 1, explaining21.3% of the variance. After the entry of IT capability at step 2 the total varianceexplained by the model as a whole was 24.7%. In step 3, the interaction termswere entered, which resulted in additional variance explaining up to 26.5%. TheSig. F change from step 1 to 2 was significant at the 1% level; however, the Fchange was not significant from step 2 to 3. However, upon scanning of the betacoefficient for individual interaction terms between IT capability x IT Investment(= -.168, t=-1.989, p=.047) and IT capability x management commitment(=.190, t=2.288, p=.023) both at the 5% significant level. This suggests that ITcapability moderates the relationship between BPR factors (IT investment,Management commitment) and customer service management performance.Whilst, hypotheses H A 3C 3 and 4 supported, hypotheses H A 3C 1, 2, 5 and 6


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are rejected. The summary of hypothesis testing on the moderating effect of ITcapability on the relationship between BPR factors and customer servicemanagement performance is shown in Table 3.

Table 3: Summary of hypothesis testing on moderating effect of IT capability onBPR factors and customer service management performance

Hypothesis Statement of Hypothesis RemarksH A: 3C IT capabili ty moderates the relationship

between BPR factors and customer servicemanagement performance of banks.

PartiallySupportedHypothesis

HA: 3C 1 IT capability moderates the relationship betweenChange management and customer servicemanagement performance of the bank.

Not Supported

HA: 3C 2 IT capability moderates the relationship betweenAdequate financial resources and customer servicemanagement performance of the bank.

Not Supported

HA: 3C 3 IT capability moderates the relationship between ITinvestment and customer service managementperformance of banks.

Supported

HA: 3C 4 IT capability moderates the relationship betweenManagement commitment and customer servicemanagement performance of banks.

Supported

HA: 3C 5 IT capability moderates the relationship betweenCustomer focus and customer servicemanagement performance of banks.

Not supported

HA: 3C 6 IT capability moderates the relationship betweenBPR Strategy alignment and customer servicemanagement performance of banks.

Not supported

DISCUSSION ON FINDINGS

This study found that IT capability moderates three (3) BPR factors, i.e., 1)change management, 2) management commitment, and 3) customer focus. Thisfinding indicates that management commitment has both a direct and indirectsignificant effect on the overall performance of banks. The indirect effect is via ITcapability. This finding also entails that banks that have excellent managementcompetence would have a strong IT capability that would lead to a higher level of performance. The prior studies by Shao, Feng, Choudrie, and Liu (2010) havesuggested that the interaction between the chief information officer competence

and top management team moderate the relationship between IT investment andorganizational performance. This also explains the experience of the ITproductivity paradox based on the resource-based based view and knowledge-based view. Empirical research shows that the CIOs strategic IT knowledge andbusiness knowledge, as well as the interaction with top management teammembers, has a significant influence on the distribution and integration of ITwithin the organization (Armstrong & Sambamurthy, 1999; Smaltz &Sambamurthy, 2006). The issues of IT knowledge or CIOs competence are new.


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Previous research mainly focused on the direct association for IT knowledge of the CIOs on organizational performance.

In a similar way, the moderating effect of IT capability on the relationship

between customer focus and overall performance support the literature, whichsuggested that IT capability in combination with customer focus strategiesenhance an organizations ability to rapidly develop and deploy more innovativecustomer-focused focused techniques or processes to enhance performance(Clark, Cavanaugh, Brown & Sambamurthy, 1997). An empirical study by Said,Hui, Taylor and Othman (2009) also reported that a high level of IT capabilityenables organizations to perform services with greater speed, more accuracyand more convenient ways for customers. This finding is consistent with theargument put forward by Barney, Wright, and Ketchen (2001) who suggest thatthe synergy between two or more resources will create a sustainable competitiveadvantage

The moderating effect of IT capability on the relationship between changemanagement and overall performance was in line with study conducted byAhmed, Zbib, Arokiasamy, Ramayah and Chiun, (2006) findings that reported,resistance to change was negatively related to achievement of predeterminedgoals and user satisfaction. Furthermore, a change management initiative wasfound to moderate the relationship between resistance and user satisfaction.When Change management is high, it means that the users are not very happywith the changes imposed on them. This in turn will lead to lower performance.

This indicates that managing the change effectively by acknowledging resistanceas natural and expected, giving importance to employees concern, having

regular and open communication, get everyone's participation, and promote skillsand development are some of the ways to lower the organizational resistance.Employees are not really resisting the change, but rather they may be resistingthe loss of jobs, loss of pay, or loss of comfort.

However, this study does not find any statistical evidence that IT capabilitymoderates the relationship between project management and overallperformance or its dimensions. The most plausible explanation may be due tothe weak and insignificant value of the inter-correlation between the variable andIT capability. Another justification for the insignificant results between BPRstrategy alignment and overall performance or other dimensions of performance

may be related to the lack of connectivity between strategy and BPR project asone of the reasons for failures in the organization (Bandara et al., 2007). Thenon-significant relationship between BPR strategy alignment and performancemight be due to the implementation of BPR by the organization as a quick fix,i.e., for reactive purposes not as a proactive initiative (Terziovski et al., (2003).BPR factors- IT capability- customer service management, cost reduction andbusiness operations efficiency performance.


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The moderating effect of IT capability on the relationship between IT investment,and management commitment on the three dimensions of performance variables(cost reduction, business operation's efficiency and customer servicemanagement) is consistent with previous literature, which suggested that IT

payoff and RBV literature provides a theoretical rationale for how IT capabilitymoderates the relationship between IT investment and firm performance(Yongmei, Hongjian, & J unhua, 2008). The IT productivity paradox is explainedby the revised model, with IT investment affecting firm performance indirectlythrough IT infrastructure. To some extent, the influence that IT investment has onhuman-IT resources and IT-enabled intangibles also affects firm performance,however, these relationships are moderated by the IT capability, implying that nomatter how much a firm spends on IT, enhanced performance will not occurwithout advancing IT capability.

The overall findings from the study prove that links between IT capabilities on the

relationship between BPR factors and organizational performance have beenestablished in the study. This linkage provides a new empirical contribution toacademic knowledge and practitioners. The challenge for academia is to carryout more research on multi-disciplines to establish the links for the benefit of theindustry and society as a whole. As for practitioners, in the search fororganizational excellence, organizations should not be dependent on a particularmanagement technique, but rather, multi management techniques are essentialfor organizational survival and success. The following section discusses theimplications of the study.

IMPLICATION OF THE STUDY

In summary, this study provides evidence that IT capability plays a critical role inmoderating the relationship between BPR factors and organizationalperformance. This finding provides support for the resource-based view of thefirm, which highlights the importance of intangible resources (managementcommitment, customer focus, change management and IT investment) andcapability (IT capability) in explaining organizational performance. Furthermore,this study not only provides evidence of a significant relationship of BPR factorsand performance, but it also provides relationship between BPR factors anddimensions of organizational performance.

LIMITATIONS TO THE STUDY This study is subject to several shortcomings that limit interpretation of thefindings. One of the limitations in this research is the common method variance(CMV) is a potential problem in behavioural research (Podsakoff et al., 2003).

This study adopts Harmans (1967) single factor analysis to test the commonmethod bias and the design approach to instrument development to reducecommon method bias. Future research may collect data from different sources.


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In addition the study used subjective self-reported perceptual measures inassessing the studies. Even though an attempt was made to identify the bestrespondents by contacting the key personnel that provide the best information,the accuracy of self-perception might be strongly influenced by the respondents

experience in the management of the organizations and frame of reference at thepoint in time. For instance, perceived biasness may occur if a person with a highreputation strongly believes that their management practices are more advancedcompared to other organizations.

DIRECTIONS FOR FUTURE RESEARCH

The sample from the study is limited to Nigerian banks. Future research shouldconsider replicating this study in other cultures or countries especially on themoderating effect of IT capability dimensions. In addition, further research is also,needed to be conducted in other sector or industry besides banking such as

manufacturing, or construction sector. This research would help to generalize thefindings of this study in a broader context. Alternatively, a cross-culturalcomparative analysis would further enhance the understanding of BPR and ITcapability of different cultures.

SUMMARY AND CONCLUSION

An attempt was made in the present study to investigate the link between BPRfactors and IT capability and their effect on organizational performance. Theresults of the present study establish the important role of IT capability towardscompetitive advantage and organizational excellence. IT operations, IT objects

and IT knowledge are the most important dimensions of IT capability attributesthat contribute to higher organization performance. Stakeholders in theorganization should recognize the important role that IT operations play inmanaging the organization. Putting in competent CIO leadership will provide theright culture for organizational excellence since IT has the necessary capabilitiesto drive strategic competitive advantage and performance. The role of ITcapability is not only to coordinate but also to provide competitive advantage fororganizational profitability performance and growth.

The overall findings from the study have proven that the relationship betweenBPR, IT capability on organizational performance have been established in the

study. This study provides new empirical contribution to academic knowledgeand practitioners. To the academia, more research on multi-disciplines need tobe conducted to establish the relationship beneficial to the industry and society ingeneral. To the practitioners, the search for organizational performance andcompetitive advantage should not be dependent on a particular managementtechnique but multiple management initiatives, which are important for survivaland success.


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The Moderating Effect of IT Capability on the Relationship Between Business Process Reengineering Factors and Organizational Performance of Banks