A STUDY OF THE RELATIONSHIP BETWEEN INFORMATION TECHNOLOGY, KNOWLEDGE MANAGEMENT AND SUPPLY CHAIN CAPABILITY

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1 Pinnacle Research Journals 1 A STUDY OF THE RELATIONSHIP BETWEEN INFORMATION TECHNOLOGY, KNOWLEDGE MANAGEMENT AND SUPPLY CHAIN CAPABILITY ABSTRACT ROOHOLLAH ADRANG* *Master of Industrial Engineering, Department of Industrial Engineering, Islamic Azad University, Qazvin Branch, Qazvin, Iran. The aim of the present study is to explore the relationship among information technology, knowledge management and supply chain capability of 50 manufacturing companies in Mazandaran, Northern Province of Iran. Senior managers, middle managers, industrial engineers and supply chain managers of the companies were selected as appropriate respondents of the study. After distribution of 150 questionnaires among respondents, 126 usable questionnaires were returned. The research method used for this study is descriptive-correlation. Further, the analysis was carried out utilizing Structural Equation Modeling (SEM) methodology by LISREL 8.8 software. Factor analysis and the findings show that information technology has a significant positive influence in managing knowledge in organizations. Further, knowledge management has a significant positive impact on supply chain capability of selected companies. The results of the current study provide further insight for business owners and managers of organizations, on investing in information technology to achieve competitive advantages. KEYWORDS: Information Technology, Knowledge Management, Supply Chain Capability. INTRODUCTION In the recent global economy, the increasingly rapid flow of information, knowledge is increasingly considered as an important resource of competitive advantage for organizations. Thus, the idea of knowledge management has enjoyed widespread popularity in today s studies. Moreover, it has been established that organizations will achieve competitive advantages by improving their supply chain capability. Thus, researches focused on factors positively impact supply chain capability of companies (Chamazkoti et al., 2012a). Further, according to Chamazkoti et al. (2012b), the important issue in today s uncertain environment is that organizations should adapt themselves to environmental changes to achieve competitive advantages. The useful way contributes to this adaption is the usage of information technology in organizations. Investing in information technology provides appropriate situation contributes to sharing, applying and managing knowledge in organizations. Moreover, applying updated and sophisticated web based technology facilitate this knowledge management. Knowledge management is among the important factors that lead to the effectiveness of

2 Pinnacle Research Journals 2 organizations. It seems that knowledge management gets crucial importance in today s business. The businesses should use the new and updated data, information, and knowledge in their sector and adapt themselves to the environmental improvements in order to survive in the market. There is little attention given to research on the relationship among information technology, knowledge management and supply chain capability. Therefore, the present study tries to propose a framework on the mentioned topic among 50 manufacturing companies in Mazandaran, Northern Province of Iran. LITERATURE REVIEW The author of this study could find some related researches which are as follows: Chamazkoti et al. (2012a) investigated the relationship between knowledge management and supply chain capability of 40 manufacturing companies in Raje industrial township of Mazandaran. Factor analysis and the findings show that knowledge sharing has a significant positive influence on supply chain capability of the selected companies. Further, there are some studies investigating supply chain capabilities (i.e. Maleki et al., 2012; Mohr & Sohi, 1995; Clemons & Row, 1993; Shore & Venkatachalam, 2003; Malone, Yates, & Benjamin, 1987; Shin, 1999; Clark & Stoddard, 1996; Sahin & Robinson, 2002; Bowersox et al., 1999; Wu, et al, 2006; Collis, 1994; Teece et al., 1997; Rogers, Daugherty, & Stank, 1993; Sinkula, Baker, & Noordewier, 1997). RESEARCH MODEL AND HYPOTHESES Taking into account the above mentioned literature, it is inferred that information technology will affect knowledge management in organizations. Further, knowledge management will affect supply chain capability of organizations. It is important to note that the author has used for dimensions of Information Exchange, Inter- Firm Coordination, Inter-Firm Activity Integration and Supply Chain Responsiveness for measuring Supply chain capability of companies. Furthermore, the author has used for dimensions of knowledge Creation, Knowledge Retention, Knowledge Sharing and Knowledge Innovation for measuring knowledge management of organizations. Therefore, the following model and hypotheses are proposed:

3 Pinnacle Research Journals 3 FIGURE 1. RESEARCH MODEL H 1 : Information technology has a significant positive relationship with knowledge management. H 2 : Knowledge management has a significant positive relationship with supply chain capability. METHODOLOGY STATISTICAL POPULATION Statistical population of this study includes 50 manufacturing companies in Mazandaran. Senior managers, middle managers, industrial engineers and supply chain managers were considered as appropriate respondents for this research. After distribution of 150 questionnaires among respondents, 126 usable questionnaires were returned. Table 1 shows the descriptive statistics of the respondents. TABLE 1. DESCRIPTION OF THE RESPONDENTS Item Description Frequency Percentage Gender Male Female % 0% Age Below Above % 51% 17% Education Organizational Status Bachelor Master PhD Senior Manager Middle Manager Industrial Engineers Supply Chain Manager % 54% 10% 21% 21% 28% 30%

4 Pinnacle Research Journals 4 INSTRUMENT In order to collect the necessary data, a questionnaire was used to test the hypotheses of the study. The questionnaire consists of four sections. First section includes 4 questions about demographic information of respondents (see table 1). Second section includes 10 questions for measuring the level of information technology used by organizations. Moreover, third section includes 20 questions for measuring four dimensions of knowledge management. Finally, Fourth section includes 20 questions measuring four dimensions of supply chain capability. The author used five-point Likert type scale for all the items. Response categories range from 1 (strongly disagree) to 5 (strongly agree). RELIABILITY AND VALIDITY The summary statistics of formal survey are shown in Table 2. For reliability evaluation we utilized Cronbach's alpha. The Cronbach's alpha reliability of all variables are more than 0.7 (α>0.7), which indicates all scales demonstrate good reliability. TABLE 2. ITEM STATISTICS Number of Questions Mean Std. Deviation Cronbach s Alpha Information Technology Knowledge Creation Knowledge Retention Knowledge Sharing Knowledge Innovation Knowledge Management Information Exchange Inter-Firm Coordination Inter-Firm Activity Integration Supply Chain Responsiveness Supply Chain Capability For evaluating the validity of the questionnaires, we used content validity and construct validity. Content validity deals with how representative and comprehensive the items were in creating the scale. It is assessed by examining the process by which scale items are generated (Moon & Kim, 2001). Content validity assured us that all aspects and parameters that impact on main content were evaluated. In order to test the content validity after devising a framework for the questionnaire, we asked 20 experts to modify it if needed. These experts evaluated all the implemented criteria in the questionnaire and modified it.

5 Pinnacle Research Journals 5 Construct validity determines the extent to which a scale measures a variable of interest (Moon & Kim, 2001). In this research we used factor analysis for considering the structure of research. Confirmatory factor analysis was used to investigate the construction of the questionnaire. Factor analysis depicted that all the mentioned criteria have been measured in these questionnaires. MEASUREMENT MODEL OF INFORMATION TECHNOLOGY In the initial step, we applied confirmatory factor analysis in LISREL 8.8 and eventually conducted path diagram of X model. We tested the relationship between information technology latent variables and its indicators. Fitness's indices (Chi-square/df < 3, RMSEA < 0.1, and P- value < 0.05) show good fitness of our X model, proving that the selected indicators are good representatives for each dimension of information technology. MEASUREMENT MODEL OF KNOWLEDGE MANAGEMENT In the next step, we applied confirmatory factor analysis in LISREL 8.8 and eventually conducted path diagram of Y model. We tested the relationship between knowledge management latent variables and its indicators. Fitness's indices (Chi-square/df < 3, RMSEA < 0.1, and P- value < 0.05) show good fitness of our Y model, proving that the selected indicators are good representatives for each dimension of knowledge management. MEASUREMENT MODEL OF SUPPLY CHAIN CAPABILITY Finally, we applied confirmatory factor analysis in LISREL 8.8 and eventually conducted path diagram of Y model. We tested the relationship between supply chain capability latent variables and its indicators. Fitness's indices (Chi-square/df < 3, RMSEA < 0.1, and P-value < 0.05) show good fitness of our Y model, proving that the selected indicators are good representatives for each dimension of supply chain capability. STRUCTURAL EQUATION MODELING In this study, the relationship among information technology, knowledge management and supply chain capability were tested using the SEM technique. For testing our hypotheses, we performed our structural model applying ten questions of information technology, four dimensions of knowledge management, and four dimensions of supply chain capability. Figure 2 shows the results of the SEM analysis. Fitness's indices also show good fitness of the Structural model.

6 Pinnacle Research Journals 6 FIGURE 2. STRUCTURAL EQUATION MODELING TABLE 3. FITNESS INDICES Fitness Indices Measure of Index Principle Chi-Square/df < 3 P-Value < 0.05 RMSEA < 0.1 TABLE 4. THE RESULTS OF THE HYPOTHESES TEST No Hypothesis Path t-value Result coefficient H 1 Information Technology Knowledge Management Accepted H 2 Knowledge Management Supply chain capability Accepted

7 Pinnacle Research Journals 7 DISCUSSION AND CONCLUSION The aim of the present study is to investigate the relationship among information technology, knowledge management, and supply chain capability of 50 manufacturing companies in Mazandaran, Northern Province of Iran. Past studies examined the relationship between these three factors with other factors, but, lack of sufficient research examining these three factors with each other was the main reason this research was carry out. Further, because of the positive consequences of supply chain capability for organizations, examining factors contribute to the improvement in the level of supply chain capability have been of particular interest of researchers which was another reason this research was carry out. The results of the current study show that information technology has a significant positive relationship with knowledge management of organizations. It implies that, managers should invest in advanced information technology to facilitate managing knowledge in their organizations. Further, it has been established that knowledge management has a significant positive relationship with supply chain capability of organizations. The confirmation of this hypothesis implies that if organizations try to create, share, maintain, and innovate knowledge in their organizations, and also among their supply chain partners, the level of their supply chain capability will increase. The results of the current study provide further insight for managers and business owners to apply suitable information technology to facilitate managing knowledge which contribute to increasing supply chain capability of organizations. REFERENCES 1. Bowersox, D.J., Closs, D.J., Stank, T.P., (1999), 21st century logistics: Making supply chain integration a reality. East Lansing: Michigan State University and Council of Logistics Management 2. Chamazkoti, H. E., Namadchian, H., & Davoudi, S. M. M. (2012a). A study of the impact of knowledge management on supply chain capability. Spectrum: A journal of multidisciplinary research, 1(7): Chamazkoti, H. E., Namadchian, H., & Davoudi, S. M. M. (2012b). An investigation of the role of IT advancement in organizational learning of Iranian companies. Spectrum: A journal of multidisciplinary research, 1(7): Collis, D. J. (1994), Research note: How valuable are organizational capabilities, Strategic Management Journal, 15, Maleki, M., Davoudi, S. M. M., & Moradi, H. (2012). Information technology impact on supply chain capability and firm performance. International journal of research in IT< management and engineering, 1(3): 1-26.

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