Many researchers have conducted discourse and empirical studies, confirming that IT improvesfirms’ competitiveness. Nevertheless, how or through what process IT has improved firms’competitiveness still has not been established and remains as a major research question. Inother words, IT researchers have found for decades that IT capability is resource which isvaluable, rare and difficult to imitate and helps firms to secure competitiveness in the market. However, they also found that they could not identify key mechanisms to bring betterperformances through IT capability. IT capability has a limitation of paradox that may restrictfirm's competence to respond to risks or opportunities. In addition, in decisive business process,the absence of agility may limit the performances of the firm substantially. Thus, we examine what IT capabilities of internal resources of the firm are needed andinvestigate how and through what process they make effects to link business process agilitywith effects of IT. Our study focused on the following two research questions. First, is therepositive relationship between internal and external IT capability and business process agility?Second, to what extent does internal IT capability positively moderate the link between externalIT capability and business process agility? To answer these questions, we conceptualize threetypes of internal IT capability such as IT business spanning capability, IT infrastructurecapability, and IT proactive stance, and define external IT capability as vendor support andconsultant effectiveness. Based on these arguments, we propose that:Hypothesis 1: External IT capability will have a positive effect on business process AgilityHypothesis 2a: IT business spanning capability will have a positive effect on business processagilityHypothesis 2b: IT infrastructure capability will have a positive effect on business processagilityHypothesis 2c: IT proactive stance will have a positive effect on business process agilityHypothesis 3a: IT business spanning capability moderates the relationship between externalIT capability and business process agilityHypothesis 3b: IT infrastructure capability moderates the relationship between external ITcapability and business process agilityHypothesis 3c: IT proactive stance moderates the relationship between external IT capabilityand business process agilityTo test the proposed research model, we analyzed a total of responses from firms via PartialLeast Square, using SmartPLS 2.0. The results showed that internal IT capability and externalIT capability had statistically significant effects on business process agility. However, it wasidentified that there was difference in moderation effects of internal IT capability. It was foundthat IT infrastructure capability had no significant effect between external IT capability andbusiness agility while IT spanning capability and IT proactive stance had a significant moderatingeffect between this relationship. Based on those results, we suggest that an effective model of IT governance on firm operationis essential to provide superior agility and adaptability in volatile markets. Theoretical implicationsin our study show empirical evidences from different perspectives to agility studies which arestill in primitive stage and it has practical contributions to be a good guideline for decisionmaking related to firm information technology by providing substantial insights