IT Capabilities, Customer Engagement, and Performance Twenty-third Americas Conference on Information Systems, Boston, 2017 1 Contemporary Micro-IT Capabilities and Organizational Performance: The Role of Online Customer Engagement Full Paper Jessica Braojos University of Granada, Spain jbraojos@ugr.es Jose Benitez Rennes School of Business, France jose.benitez@rennes-sb.com University of Granada, Spain joseba@ugr.es Javier Llorens University of Granada, Spain fllorens@ugr.es Abstract We theorize that the development of two contemporary social commerce-IT capabilities (social media and e-business technology) help to online engage customers to improve organizational performance. We test this theory by employing a secondary dataset on a sample of 100 small U.S. firms. The empirical analysis suggests that social media capability and e-business technology capability positively affect organizational performance through social and conventional online customer engagement. Research and managerial implications are discussed. Keywords: IT capabilities, online customer engagement, organizational performance, business value of IT. Introduction Information technology (IT) is changing the way firms operate internally as well as improving the firm’s relationship with its suppliers and customers. However, since some IT resources (e.g., outsourceable IT artifacts) have become ubiquitous, what is key in explaining IT-based performance variation is how the firm leverages IT resources (i.e., IT capabilities) instead of how much invests in IT resources (Pavlou & El Sawy 2006). Different types of IT capabilities can coexist in a firm (Chen et al. 2015). Drawn from prior classifications of firm capabilities (Luo et al. 2013), and the emerging popularity of social media usage in the corporate world, we differentiate two kinds of contemporary IT capabilities (social media capability and e-business technology capability). While social media capability is the firm’s ability in using and leveraging social media platforms to execute business activities, e-business technology capability refers to the firm’s ability in leveraging web technology. Social media sites (e.g., Facebook, Twitter) are reaching tremendous importance in the corporate world. The way firms manage their social media sites can create customer responses toward or against the company. For example, Hero Baby, an international consumer food company specialized on products for babies, has been recently unable to manage the controversy around its product quality. When a journalist woman put into question the quality of Hero Baby products for containing palm oil on Twitter, the firm responded criticizing the woman, accusing her of being a bad mother. This inability in managing the situation has shocked the company with hundreds of users giving support to the journalist and showing their refusal to buy Hero Baby products. Then, social information sharing has assumed a crucial role in transactions, giving rise to the so-called social commerce phenomenon. Social commerce is a new concept characterized by the interplay of social media and e-business platforms allowing customers’ participation and the subsequent effect on customers’ decision-making behavior (e.g., buying a product/service) (Zhang brought to you by CORE View metadata, citation and similar papers at core.ac.uk provided by AIS Electronic Library (AISeL)