The impact of IT on decision structure and firm performance: evidence fromthe textile and apparel industry

Clarifying the relationships between information technology (IT), organizat ional performance, and decision structure remains an important area of inqu iry in IS research. Through an empirical analysis and complementary case ex amples, our study examines these associations among firms operating in the US-based apparel and textile industry from 1992 to 1997. Based on data gath ered from 50 public firms located across the USA, the study finds that IT u sed to enhance internal communication supports a decentralized decision str ucture, which in turn is associated with higher financial performance. Henc e, IT exhibits an indirect performance effect. However, use of IT to enhanc e communication is also found to have a direct performance effect in large organizations. This paper proposes that use of communication enhancing IT c an support organizational learning processes by facilitating flexible excha nge of skills and knowledge across functional areas. Case examples are used to illustrate how these learning effects can materialize. (C) 2001 Elsevie r Science B.V. All rights reserved.