Competitive advantage and simultaneous mutual influences between information technology adoption and service innovation: Moderating effects of environmental factors

Although the effect of information technology (IT) adoption on competitive advantage is well documented, the mechanism that explains this effect and the magnitude of the effect that is contingent on other variables remain unclear. The objective of this study is to quantify the reciprocal causation between IT adoption and service innovation, determine the respective roles of service innovation and IT adoption in competitive advantage and to estimate the moderating effects of environmental factors. Data analysis reveals a bidirectional relationship between IT adoption and service innovation. In contrast to the findings of most related studies, service innovation has a positive effect on competitive advantage; however, IT adoption has a negative effect on competitive advantage. A high level of environmental factors is more likely to increase the positive effect of service innovation on competitive advantage, but it is also more likely to decrease the negative effect of IT adoption on competitive advantage. (C) 2018 Elsevier B.V. All rights reserved.