Partner Informedness, Relational Capability, and Performance of Small and Large Firms

We seek to understand how small and large firms differ in their ability to leverage relationships with suppliers. Despite suffering from resource scarceness, many small firms manage relationships with multiple suppliers. We propose that IT-enabled partner informedness constitutes a shift parameter that alters the relative effectiveness of relational capability in determining firm performance for small and large organizations. We further theorize that the level of shift induced by partner informedness is more for small firms as compared to large firms. We test our theory using primary matched-pair survey data from 182 small and large firms in India. Empirical analysis using partial least squares provides broad support for our hypotheses. Our distinct contributions lie in our examination of the role that one dimension of firm informedness plays in shifting the effect of a core organizational capability on firm performance and our examination of how small businesses derive value from information technologies