The paper explores a mechanistic understanding of IT-enabled innovation in a context of supply chain. Based on the innovation dynamics perspective and resource-based view, it links IT resources for supply chain management and IT-enabled innovation via e-business capability with supply chain partners. A conceptual model is formulated to explain how and why IT can enable product and process innovations along the supply chain, and is empirically validated by the data from 676 manufacturing firms in six countries. It was found that IT resources for supply chain management are capable of achieving IT-enabled innovation through both upstream and downstream e-business capability to collaborate with suppliers and customers. The paper contributes to the literature of digitally enabled supply chain management and IT business value. It also allows important managerial implications to firms, especially those in manufacturing sector, about how to chase IT-enabled innovation in supply chains to overcome today’s depression.