IT capability and innovation

We propose that information technology (IT) capability promotes innovation performance by facilitating knowledge-intensive assets. We use firms listed on InformationWeek 500 as a measure of IT capability, finding that IT capability positively impacts firm innovation. We further determine that IT capability is important in innovation, indicating that firms may facilitate knowledge assets by advancing networks and sharing information efficiently. Furthermore, the relationship between IT capability and firm innovation is more pronounced for firms with more intense competition because innovation is more critical in competitive high-tech industries. By fostering knowledge sharing, our study can provide a more nuanced understanding of IT's role in impacting firm innovation in an increasingly complex environment. This study contributes to the literature on innovation and the economic consequences of IT capability.