Moderating Effects of IT Applications on IT Capability and Competitive Advantage

: Generally, this study aims to assist domestic companies to determine appropriate Information Technology (IT) applications to attain Competitive Advantage (CA). Specifically, this study aims to assess enhancement causes by IT applications between IT capability and CA. A new CA model by incorporating IT applications in organizations is then proposed. Pilot study was used to test a set of newly developed questionnaire prior to 500 Malaysian companies and 295 set of questionnaire were collected. Multiple group analysis of Structural Equation Modelling (SEM) was conducted to analyze the data collected from survey. Ten most regular utilized IT applications: (1) content management systems, (2) decision support tools, (3) document management tools, (4) email systems, (5) Intranet, (6) Internet access (7) knowledge base/repository, (8) search engine, (9) website content management and (10) workflow systems are supported having enhancement effects on IT capability and CA. This study implies a novel framework important for reaping CA. In addition to the literature of strategic management, this study would be a benefactor for domestic companies in adopting IT applications. The findings of this study can be generalized by other multi-ethnic, multi-cultural and developing countries.


Introduction
Recent studies explored IT research to delineate the relationships of IT resources and its capabilities to improve organizational performance from different attempts (Ashrafi and Mueller, 2015;Lew et al., 2013;2014;. These different approaches conceptualize interrelationships of IT resources, IT capability and Competitive Advantage (CA) as key constructs in different ways. They focused on how IT resources create IT capability to organizations when measured by CA.
A number of researchers (Chang and Seow, 2016;Lew et al., 2015;Steven and Wim, 2009;Zhang et al., 2016) indicated IT applications enhance IT capability to organizations. Focuses were on revealing several regular utilized IT applications for improving organizational CA (Sher and Lee, 2004;Leistner, 2010;Zehrer, 2011). None of the previous studies actually bridged the IT applications to CA. This leads to issues about understanding "how -relationship orientation (either positive or negative impacts of tested key constructs) but not "what -types of IT application". Overlooking on "what" types IT application being tested for enahncement effects leads to a research scarcity delivering thorough tests of its enhancement effects of theoretical propositions.
The present study will bridge this research gaps by having a more comprehensive way by adding all IT applications from past research followed by testing the moderating effects of the entire set of IT applications on IT capability and CA. Specifically, the research question being addressed is, by having an IT application, how do an IT capability create competitive advantage for the organization?
There are multiple cultures and races of population in Malaysia (60.3%-Malays and Aboriginals, 24.6%-Chinese and 7.1%-Indians) (DSM, 2011). These multiple races and cultures affect business activities in individuals and organizations (Furner et al., 2009). One dominance about conducting research in a country of multiple races and cultures is this cultural intersection of KM can reveal unseen areas created by multiple cultures (Giudice et al., 2012). With this, Malaysia which holds key IT capability can deliver sustinable organizational CA likewise developing countries such as United States, European countries and Australia (Marchand et al., 2000).
This study intensifies to the field of research in three circumstances. First, it closes a previous research gap such as uncertainty of IT application that can generate value; uncertainty of IT application and its capabilities that bringing organizational CA; scarcity of available empirical research in this study context. The results propose that the value of IT capability, when measured by CA, is moderated by IT applications. This delineation between IT applications, IT capability and CA further prolong the motivations of recent studies (Ashrafi and Mueller, 2015;Lew et al., 2013;2014; for the relationships between IT capability and their impact on an organizational achievement. Secondly, this article attends the issues of focusing on "how" instead of "what" in previous research. Thirdly, smart adoption of IT application will be enabled and focused by practitioners or managers.

Literature Review
Measuring Competitive Advantage (CA) for an organization is a multifaceted and complicated challenge, as demonstrated by the variety of previous research and their research findings are summarized in Table 1.
From the examination of previous theoretical concepts, approaches and studies of Information Technology Capability (ITC) and organizational CA from years 2000 to 2015, uncertainty and scarcity of what types of IT application can generate value for CA are obvious. Basically, past researches only determined if ITC had positive impact on organizational CA without finding what IT application contributed to ITC and its moderating effects on organizational CA. Besides, no research specified how and which IT application was important. Thus, it is difficult for IT and knowledge practitioners to plan their IT applications effectively for organizational CA.
A complete measurement of organizational CA advantage from IT application perspective was also not demonstrated in any past researches. Hence, practitioners have difficulties to empirically bridge IT application to organizational CA. CA is "The capability of creating, storing, sharing and utilizing knowledge using dynamic capability, integrating capability and utility capability" (Kim, 2001;Lew et al., 2014;Sher and Lee, 2004;Tallon, 2008).
Although currently there is no perfect framework, critical review of the literatures found significant evidences on the moderating effects of IT applications on the relationships between ITC and organizational CA. The reviewed frameworks also enable the identification of independent variables, dependent variable and moderating variables.
Organizational Information Processing Theory (OIPT) has been identified as important upon which the present research is based on.
The conceptual framework used in this research is presented in Fig. 2 while the methodology of this research is presented in Section 3.

Theory Development
Information Technology (IT) Applications Sher and Lee (2004) implied an important concept between usage of Information Technology (IT) application and organizational Competitive Advantage (CA). The IT application costs were trimmed down by the usage of Information Technology (IT) application.
In Austrian, a Knowledge Management (KM) model was proposed by Zehrer (2011) for tourism organizations. The findings revealed corporate portals, electronic newsletters, e-mail and discussion forums enhanced IT capability such as knowledge sharing. Transforming tacit knowledge (expert's experience) to explicit knowledge (readability form of information) is possible and the stored information is ever ready to be used by employees in future.
The most regular utilized types of IT applications are content management systems, Internet Access, Intranets, groupware, document management systems, workflow systems, object and relational databases, data warehousing systems, Web site content management and data mining systems (Alavi and Leidner, 2001;Debowski, 2006;Leistner, 2010;Meso and Smith, 2000;Ngai and Chan, 2005;Lew et al., 2013). These advanced information technologies can be applied to organize, improve and accelerate huge organizational Knowledge Management (KM) internally and externally (Alavi and Leidner, 2001).
The technologies such as knowledge base, portals and search engine allow larger knowledge collection and speedy knowledge retrieval to the person who needs it. With these proper IT applications, KM activities are facilitated (Leistner, 2010;Lew et al., 2013;2014). For instance, having a knowledge base as a database facilitates knowledge creation. It can then serve as a repository to store the newly created knowledge/previous knowledge. Other KM activities such as knowledge sharing and utilization are possible when the stored knowledge is retrieved to be shared among employees and utilized when one needs it.
Several IT applications were regarded as moderators in KM's effect on IT capability (Sher and Lee, 2004). First, e-mail was the most frequently utilized tool; however, the findings indicated that e-mail was not really effective for KM implementation. Second, document management was found to be enhancing dynamic capability. Synchronisation with external entities and document sharing enhanced communication and coordination and induced responsiveness among organizational participants. Third, powerful search engine often encouraged knowledge availability for fast decision making. Finally, data warehousing was found to enhance dynamic capability. Implementation of powerful databases allowed speedy knowledge storage and retrieval. It was also highlighted that, security and accessibility of the entire KMS were critical in achieving organizational Competitive Advantage (CA).  Bixler (2000) Competitive advantage A set of fifteen expected benefits Three major perspectives of organizational Fourteen measurements of of a KMS was determined competitive advantage were not explored organizational competitive advantage are adopted 1. The reason of a type of KMS being selected was not highlighted. 2. The right ITC to enable the organizational competitive advantage was not investigated 3. KMS was not viewed in greater details in terms of their knowledge process which can lead to the appropriate selection of ITC. Kim (2001) Integrating and Four distinct Knowledge Management The study did not explore the impact of ITC ITC includes: utility capabilities (KM) models-termed as types I, II, III -organizational CA. 1. Integrating capability and and IV were developed from knowledge The findings were non-supportive results of 2. Utility capability and service types as foundation.
relationships between KM models and ITC while past research shows positive results. Therefore, the KM model developed was insufficient to link ITC to organizational competitive advantage. Sher and Lee IT applications IT applications were proven in enhancing The findings were just based on 13% of IT applications enhance dynamic (2004) dynamic capability towards the top 100 Taiwanese organizations, and integrating capabilities which organizational CA.
leading a doubtful generalization to will then contribute to competitive represent the population.
advantage. Dynamic and IT applications were seen as The research design was only focused IT applications are moderators of integrating capabilities moderators in KM's impact on dynamic capability; a narrower scope the relationship of dynamic on dynamic capability. without consideration of other ITC capability and competitive perspectives.
advantage. Rajiv and Sanjiv IT applications The use of IT and the effectiveness Relationships of organizational KM When organizational competitive (2005) of KM implementation were efforts, organizational prior KM advantage is achieved from right evaluated based on the public practices and private information information technology capability announcements and market were not examined.
(ITC), appropriate IT applications perceptions of performance.
The positive impacts were based on the should be identified but not the published KM effort on any of KM the KM activities Tanriverdi (2005) IT applications Better way of understanding knowledge The relevancy of the framework is doubtful as Mediating roles of KM is observed strategy was investigated using IT small and medium enterprises (SMEs) between IT applications and applications from large multi-business were excluded. organizational CA. organizations perspective.
When the framework is highly concerned The roles of IT applications will be with knowledge and IT applications, investigated in the current research knowledge-and-technology intensive to confirm its contribution in this organizations will be more appropriate research stream. instead of multi-business organizations. Moreover, there is still elusive link between IT applications Burca et al. (2006) IT applications This research extended the fundamental However, this study did not consider the For achieving the organizational CA, relationship of service practice to way of service provider and service type the suitable IT applications for performance by integrating IT classification. The matching of the right the right organizations are required. sophistication. This integration was service to the right type of organization supported by findings of positive may be miss-matched without the service relationship between IT sophistication type information. and service performance. Wang et al. (2007) Dynamic Despite the research contributions described above, Sher and Lee (2004)'s findings were doubtful as it was just based on 13% of the top 100 Taiwanese organizations, leading to generalisation issues to represent population. The present study will bridge this research gap by having a more comprehensive way by increasing sample size to 500 (Lew et al., 2015).
Systematic Literature Review (SLR) was used to explore and analyze previous notorious studies prior to developing research questions and theoretical model (Kitchenham et al., 2007). Based on SLR, IT applications enhance KM activities and the enhancement effect is controlled by various IT applications (Lew et al, 2013;2014;Sher and Lee, 2004). With this, an organization will prioritize IT applications effectively and efficiently. Based on this notation, Research Question (RQ) and Hypothesis (H1) are then identified as:

Information Technology (IT) Capability
The IT capability is a group of three exogenous constructs: Dynamic, integrating and utility capabilities (Kim, 2001;Lew et al., 2014;Sher and Lee, 2004;Tallon, 2008). They are used to predict endogenous construct, organizational CA and adopted in this study. The three IT capabilities are operationally adopted as follows.

Dynamic Capability
The capability to confront external challenges through organizational flexibility and the ability to integrate, build and reconfigure internal and external competencies" (Lew et al., 2014;Sher and Lee, 2004;Tallon, 2008;Wang et al., 2007).

Integrating Capability
The capability to link individual components and services for the purpose of sharing software, communication and data resources" (Kim, 2001;Lew et al., 2014;Sher and Lee, 2004).

Utility Capability
The capability to include IT planning, training, education, customer service and support" (Kim, 2001;Lew et al., 2014).

Competitive Advantage
Organizational (CA) is the endogenous construct in this model (Fig. 1). It is determined by exogenous constructs included in the model and so it is also seen as an outcome. This is perfectly acceptable in Structural Equation Modelling (SEM) and test for all hypotheses can be provided with one structural model test (Hair et al., 2010). CA is operationalized as "the capability of creating, storing, sharing and utilizing knowledge using dynamic capability, integrating capability and utility capability" (Ashrafi and Mueller, 2015;Bixler, 2000;Bhatt et al., 2010;Burca et al., 2006;Lew et al., 2013;2014;Qi et al., 2008;Sher and Lee, 2004;Tallon, 2008;Tanriverdi, 2005).
H1 hypothesizes types of IT applications moderate the level of enhancement on organizational CA with IT capability.

Methodology
This study randomly chose 500 middle managers from MSC Malaysia status companies as the target population. MSC Malaysia companies was selected for its business nature of IT and knowledge which is believed more relevant to the current scope of study (Lew et al., 2013;2014; MSC is defined as:

"MSC status is recognition by the Government of Malaysia through the Malaysia Digital Economy Corporation (MDEC), for ICT and ICTfacilitated businesses that develop or use multimedia technologies to produce and enhance their products and services. It is also a mark of world-class service and achievement and your passport and gateway to a host of privileges granted by the Government of Malaysia to the business entities" (MDEC, 2016).
The survey questionnaire designed was pre-tested by 50 middle managers and evaluated by 3 experts. The results of pilot study, suggestions and comments of experts were assessed and appropriate amendments were made.
In this study, missing data was treated by list wise deletion. Cronbach's coefficient alpha was used to confirm internal consistency reliability.
Multiple group analysis was carried out to examine the moderating effects of types of IT applications towards the exogenous and endogenous constructs. The moderating effects are tested with the final structural model for two separate two-group analyzes (Garson, 1998). This study also used the parameter estimates to confirm moderation effect. Table 2 lists the hypotheses of moderating constructs.

Results
The Cronbach's Alpha measures with all above 0.70, indicating internal consistency reliabilities (Sekaran, 2003;Bowling, 2009). 500 respondents were contacted electronically for answering the questionnaire. Completed surveys were received from 302 individuals (50.3%). After treating the missing data using list wise deletion; leaving 295 questionnaires (49.2%) for analysis. Table 3 presents the gender, age, ethnicity breakdowns, position and department, number of year in the position and qualification of the respondents in this study.
A total of 295 respondents answered in this study. They were classified and analyzed by different groups such as gender, age, position, education qualification; detailed results are displayed in Table 3.
Ten IT applications were incorporated into hypothesis. The hypotheses were numbered from H1a to H1j (Table 2) as follows:

H1x: IT Application moderates the level of enhancement on organizational competitive advantage with Information Technology (IT) capability H1x 0 : There is no difference on organizational competitive advantage of IT capability with IT Application
The moderating effects of an IT application were tested by "Combined Group", "With IT Application Group" and "Without IT Application Group" for all the IT applications. For instance, testing of H1b "Content Management Systems" was carried out by the "Combined Group", "With Content Management Systems Group" and "Without Content Management Systems Group". Types of IT applications moderate the level of enhancement on organizational competitive advantage with Information Technology (IT) capability. H1a: Electronic mail system moderates the level of enhancement on organizational competitive advantage with IT capability. H1b: Content management systems moderate the level of enhancement on organizational competitive advantage with information IT capability. H1c: Decision support tools moderate the level of enhancement on organizational competitive advantage with information IT capability. H1d: Knowledge base/repository moderates the level of enhancement on organizational competitive advantage with IT capability. H1e: Document management tools moderate the level of enhancement on organizational competitive advantage with IT capability. H1f: Search engine moderates the level of enhancement on organizational competitive advantage with IT capability. H1g: Website content management moderates the level of enhancement on organizational competitive advantage with IT capability. H1h: Intranet moderates the level of enhancement on organizational competitive advantage with IT capability. H1i: Internet access moderates the level of enhancement on organizational competitive advantage with IT capability. H1j: Workflow systems moderate the level of enhancement on organizational competitive advantage with IT capability.  With IT application group Without IT application group U → CA (p value) Email system 0.520*** (0.000) 0.275* (0.012) 0.992***(0.000) Content management 0.520*** (0.000) 1.116** (0.003) 0.072 (0.317) Decision support tools 0.520*** (0.000) 0.758* (0.037) -0.042 (0.582) Knowledge base/repository 0.520*** (0.000) 0.445*** (0.000) 0.808 ( Table 4 lists the path estimates in of "IT Application" moderates the relationships of Utility capability (U) → Competitive Advantage (CA), Dynamic capability (D) → Competitive Advantage (CA) and Integrating capability (I) → Competitive Advantage (CA) relationships. Bolded path estimates show significant relationships and un-bolded path estimates show non-significant relationship of U → CA, D → CA and I → CA respectively.
There is one squared multiple correlation, R-squared (R 2 ) for endogenous construct. It is the "percent variance explained in that variable". R 2 is an indicator of the fit of distinctive equations in the structural model (Garson, 1998). For instance, looking at the R 2 values of "Email System", the "Combined Group" reported for 52.8% of the variance in CA; "With Email System" reported for 39.6% of the variance in CA and "Without Email System" accounted 91.5% of the variance in CA.

Discussion
Direct moderating effects are found from the ten IT applications on the main constructs as presented in Fig. 2. Table 5 lists hypotheses and statistical results. Results of H1a were in line with past research (Coussement and Poel, 2009;Hwang, 2012). Email exchanges are essential tools for IT capability. Client and organizational emails were proven to improve predictive performance of customer attrition (Coussement and Poel, 2009). From the Coussement and Poel (2009)'s study, by integrating emotions and information available from emails, new opportunities are generated and the purpose of retaining customers is achieved. H1a: Electronic mail system moderates the level of enhancement on organizational competitive advantage with Yes IT capability. H1b: Content management systems moderate the level of enhancement on org organizational competitive Yes advantage with IT capability. H1c: Decision support tools moderate the level of enhancement on organizational competitive advantage with Yes IT capability. H1d: Knowledge base/repository moderates the level of enhancement on organizational competitive advantage with Yes IT capability. H1e: Document management tools moderate the level of enhancement on organizational competitive advantage with Yes IT capability. H1f: Search engine moderates the level of enhancement on organizational competitive advantage with IT capability. Yes H1g: Website content management moderates the level of enhancement on organizational competitive advantage with Yes IT capability. H1h: Intranet moderates the level of enhancement on organizational competitive advantage with IT capability. Yes H1i: Internet access moderates the level of enhancement on organizational competitive advantage with IT capability. Yes H1j: Workflow systems moderate the level of enhancement on organizational competitive advantage with IT capability.
Sharing knowledge by emails was tested by Hwang (2012). Collectivist cultural orientation has moderating effects towards social norms on attitude and knowledge sharing by emails (Hwang, 2012).
One possible interpretation for this outcome obtained is that content management systems are "the tools that offer abilities to integrate, classify and codify knowledge from various sources" (Benbya et al., 2004). With this, integrating capability was tested "With Content Management" which subsequently improved competitive advantage.
Another interpretation for this outcome obtained is that authorized users can create knowledge anytime and anywhere from Knowledge Management System (KMS). Hence, contents of KMS must be monitor cautiously to ensure its integrity and readiness (Debowski, 2006).
Results of H1c supported past research (Meso and Smith, 2000;Sher and Lee, 2004). Decision support tools enhance communication between working teams especially for professionals situated far apart from each other (Meso and Smith, 2000). Furthermore, decision support tools are specifically crucial when organizations need flexibility and creativity for making speedy and unknown market structures and business rivals (Sher and Lee, 2004).
Results of H1d supported the findings of several past studies (Davenport and Prusak, 2000;Debowski, 2006), which stated business warehouse stored new knowledge. The stored knowledge was extensible to intellectual assets which are required to achieve sustainable CA.
One interpretation for this outcome obtained is that document management tools are among the most frequently utilized types of IT applications (Alavi and Leidner, 2001;Ngai and Chan, 2005). Furthermore, positive aspects of the document management tools were also highlighted by Jones (2012) in line with the future deployment of electronic document management systems. Although some users might see some shortcomings in the document management systems implementation, generally, the implementation was delivering benefits to organizations.
One interpretation for this outcome obtained is that "Search Engines" is not only for information searching. For instance, the search engines such as Yahoo! Search and Google are not only for information searching engines but users of such engines can utilize search engines as portals to make their business more visible online and enhance their business competitiveness (Rangaswamy et al., 2008).
Ford Motor Company utilized Website to redefine the auto manufacturing industry so as to gain a competitive stronghold in emergent electronic markets and get closer to its customers. The organization has established the auto-exchange mart to enable consumers get highly customized products while the organization saves substantial amount of capital in engaging auto designers, financiers, marketers and production engineers. They would also save in paying for insightful knowledge about the customers, customer needs, trends in consumer tastes and the evolution in consumer behavior. With the Website, Ford is actually creating a sustainable competitive advantage in the auto industry (Kerwin, 2000).
Results of H1h were in line with the findings of a study testing real time Intranet for production management (Ionesco, 1998). By using Intranet, the teamwork between geographical separated departments are enhanced. Employees' awareness has also increased on the production process.
Results of H1i supported Debowski (2006) and Shegda (2003)'s findings. Internet resulted in enhancement of integrating capability. Debowski (2006) discovered that Internet access is required for exchanging emails.
Results of H1j were in line with the findings of a previous study carried out by Reijers and Aalst (2005) which showed that workflow management systems are extensively utilized for increasing organizational performance. Substantial increase was accomplished for the sixteen researched business processes from the six Dutch organizations (Reijers and Aalst, 2005).
These results also supported the findings of Fakas and Karakostas (2004)'s study that presented the architecture of a novel workflow management system. Active directory system was proposed to obtain a list of all users participating in Web workflow processes. With the architecture, distributed workflow administration and management were facilitated. In addition, the available users would be discovered dynamically from the workflow management system (Fakas and Karakostas, 2004).

Research Implications
These findings of study would offer as guidelines to organizations on incorporating significant IT applications for organizational competitive advantage. IT applications are utilized to make information technology capability available. This study identified the ten most useful IT applications from a pool of twenty-one applications. As predicted, the results of this study implied that all the ten IT applications are essential for organizations to enhance the level of competitive advantage. In this regards, it was also found that the usage of IT applications such as content management systems, decision support tools, document management tools, email systems, Intranet, Internet access knowledge base/repository, search engine, website content management and workflow systems tend to moderate the level of competitive advantage.

Limitations and Recommendations
This is a cross-sectional design. A single-time description survey was conducted due to budget and time constraint. The survey results may reveal only a snapshot analysis of a specific point of time. Longitudinal study is recommended in future when budget and time allowed. Respondents were limited to middle managers. It could be extended to other level of positions.

Conclusion
A research model of IT applications on IT Capability (ITC) and competitive advantage was first established, measured and statistically validated. Dynamic capability, integrity capability and utility capability were validated as independent constructs. This study concludes that ten IT applications: (1) content management systems, (2) decision support tools, (3) document management tools, (4) email systems, (5) Intranet, (6) Internet access (7) knowledge base/repository, (8) search engine, (9) website content management and (10) workflow systems have moderating effects within the research model. The findings of this study provide implications of active IT applications for competitive advantage in Malaysia, as well as other multi-ethnic, multi-cultural and developing countries that wish to be IT-oriented organizations and centres.