The effect of integrated information technology on innovative capability and its impact on firm performance

The firm performance constituted a serious problem for Indonesian Logistics Service Providers (LSP), so that the performance improvement is important and urgent matter for the companies particularly in the context of ASEAN Economic Community. Conceptually, some previous researches showed that the firm performance was influenced by innovative capability and the capability influenced by resources. The researches also showed that not all resources had positive and significant effect on innovative capability. The integrated IT as one of resources and it must be owned by logistics service provider in Indonesia in accordance with government regulation. This research aimed to assess the effect of integrated information technology (IT) on firm performance pass through innovative capability. This research used causal research methodology and analyzed by Partial Least Squares (Smart-PLS 2.0). It was found that integrated IT had positive and significant effect on firm performance pass through innovative capability. It showed that resources must be modified into capabilities in order to have a positive and significant impact on firm performance.