The Intervening Role of BPR in the ICT -- Business Performance Relationship

The critical importance of information and communication technologies (ICT) for the firms nowadays, and the big ICT investments they make, necessitate a deeper understanding of 'how' ICT affects business performance, through identification of the intervening mechanisms and variables in the relationship between ICT and business performance. This paper describes an empirical investigation of whether and to what extent Business Process Reengineering (BPR) has an intervening role in the relationship between ICT investment and business performance. Using Structural Equation Modeling (SEM), and the Cobb-Douglas production function, we constructed a model which includes a multi-item construct for measuring the extent of BPR. Our results show that BPR mediates partially the relationship between ICT investment and business performance. On the contrary BPR does not have such an intervening role in the relationship between the non-ICT investment (in 'traditional' assets) and business performance.