Inside the adaptive enterprise: an information technology capabilities perspective on business process agility

Recent innovations in utility computing, web services, and service-oriented architectures, combined with a growing array of IT skills, have improved firms’ ability to be more agile in responding to change. Using the resource-based view of the firm, prior research suggests that IT resources, in isolation, are unlikely to yield superior performance and so as firms try to boost their agility, the question becomes how to configure IT resources to prepare for, or react to, change. In this paper, we posit that managerial IT capabilities based on IT-business partnerships, strategic planning, and ex-post IT project analysis lead to the development of technical IT capabilities associated with a flexible IT infrastructure which in turn drives agility or a firm’s ability to react to change in its products and markets. Using data from matched surveys of IT and business executives in 241 firms, we find that managerial and technical capabilities affect agility. In further testing, we reveal that in a stable setting, technical IT capabilities are more important to agility than managerial IT capabilities, while in a dynamic setting, the opposite is true. Thus, for firms operating in volatile markets, effective models of managerial IT governance are essential for delivering superior agility or adaptiveness.

The dual role of IT capabilities in the development of digital products and services

Past research on the business value of information technologies (IT) has demonstrated the positive contribution of IT capabilities (IT-C) to product innovation performance. However, with the advent of digital technologies, a new kind of product innovations gained importance: digital product and service innovations (DPI). As a consequence of their idiosyncratic characteristics, the usefulness and validity of existing product innovation management concepts cannot be transferred to the context of DPI without further ado. Accordingly, this study reinvestigates the role of IT-C in the specific context of DPI. Therefore, we begin with a differentiation of DPI from traditional, non-digital product innovation. Then, we propose that IT-C affect the performance of DPI projects via two paths. First, based on the notion that DPI rely on the use of innovative IT, we assume that IT-C directly impact DPI performance. Second, following prior research that has argued that the performance contribution of IT-C is mediated by other organizational intermediaries, we assume that IT-C also indirectly contribute to DPI performance through their positive influence on other organizational capabilities. One such organizational capability that mediates the influence of IT-C on DPI performance is a firm’s DPI capabilities (DPI-C). DPI-C allow firms to deploy their digital resources for DPI purposes and, thus, are an important antecedent for DPI performance. To test our assumptions, we use partial least squares–structural equation modeling technique and analyze survey data collected from DPI projects across different industries in Germany, Austria, and Switzerland.     

Enabling agile adoption practices through network organizations

As distributed organizations increasingly rely on technological innovations to enhance organizational efficiency and competitiveness, interest in agile practices that enable adoption of information technology (IT) based innovations has grown. This study examines the influence of a network organization environment on the ability to develop agile adoption practices. An exploratory case study design was used to investigate the interactions between network structure, social information processing, organizational similarity (homophily), and absorptive capacity during the adoption of a large-scale IT system in two network organization environments within New York State. The data suggest that network organization characteristics and communication processes that reinforced social influence and supported knowledge transfer positively influenced adoption agility. We propose a model of agile adoption practices and discuss implications for the development of theory about network organization characteristics and capabilities to adopt IT-based innovations.     

The relationship between information technology acceptance and organizational agility in Malaysia

We examined the influence of information technology (IT) acceptance on organizational agility. The study was based on a well-established theoretical model, the Technology Acceptance Model (TAM). We attempted to identify the relationships between IT acceptance and organizational agility in order to see how the acceptance of technology contributes to a firm's ability to be an agile competitor. Structural equation modeling techniques were used to analyze the data. Results from a survey involving 329 managers and executives in manufacturing firms in Malaysia showed that actual system or technology usage had the strongest direct effect on organizational agility. Meanwhile, perceived usefulness and perceived ease of use of IT influenced organizational agility indirectly through actual systems or technology use and attitudes towards using the technology. The results have several implications for IS management.     

Enterprise agility and the enabling role of information technology

In turbulent environments, enterprise agility, that is, the ability of firms to sense environmental change and respond readily, is an important determinant of firm success. We define and deconstruct enterprise agility, delineate enterprise agility from similar concepts in the business research literature, explore the underlying capabilities that support enterprise agility, explicate the enabling role of information technology (IT) and digital options, and propose a method for measuring enterprise agility. The concepts in this paper are offered as foundational building blocks for the overall research program on enterprise agility and the enabling role of IT.     

IT-enabled knowledge ambidexterity and innovation performance in small U.S. firms: The moderator role of social media capability

This study examines the impact of information technology (IT)-enabled knowledge ambidexterity on innovation performance, and the potential moderator role of social media capability on a sample composed of 100 small U.S. firms. The empirical analysis suggests that IT infrastructure enables the firm to explore new knowledge and exploit existing/new knowledge to innovate more and better. We also find that social media capability has a positive moderator role in this equation: IT infrastructure and social media capabilities work together to enable knowledge ambidexterity.     

IOS drivers of manufacturer-supplier flexibility and manufacturer agility

In today’s hypercompetitive environment, it is critical for manufacturing firms to be agile in responding to ephemeral opportunities in the marketplace. This agility often requires the collaboration with supply chain partners. However, how a manufacturing firm collaborates with its suppliers to achieve agility remains an understudied issue. This study holds that manufacturing firms and their suppliers need to develop manufacturer-supplier flexibility accompanied with well-built integrated information systems and associated analytical systems (such as business intelligence) to enable manufacturer agility. To deepen our understanding of the roles of manufacturer-supplier flexibility and IOS technologies in facilitating manufacturer agility, we build and test a model based on the real options theory and bounded rationality. Based on 141 matched-pair samples of Taiwanese manufacturing firms, our findings demonstrate the importance of manufacturer-supplier flexibility in achieving higher manufacturer agility, wherein IOS integration enables better flexibility. We also show IOS-enabled analytical ability can strengthen the effect of such flexibility on manufacturer agility. Implications of the results for practices and academics are provided.     

Agility in responding to disruptive digital innovation: Case study of an SME

Disruptive digital innovation (DDI) often creates hypercompetitive market environment that forces firms to be agile to survive and remain competitive. Whereas most studies have focused on larger firms' effort to be agile, few have looked at how small‐ and medium‐sized enterprises (SMEs) respond to DDI. The study attempts to answer the research question of how SMEs achieve agility to respond to DDI. Drawing on a case study of an innovative SME, our study develops a framework on agility based on the processes of mitigating organizational rigidity, developing innovative capabilities, and balancing the tension of organizational ambidexterity. Specifically, our findings show that for SMEs, mitigating organizational rigidity is enabled by the mechanism of achieving boundary openness while developing innovative capability is enabled by the mechanism of achieving organizational adaptability. At the same time, given the inherent challenges of resource constraints, SMEs also need to balance the tension of organizational ambidexterity.     

The role of IT application orchestration capability in improving agility and performance

This paper investigates how IT application orchestration – a dynamic capability encapsulating a firm’s ability to refresh its application portfolio through a process of building, buying, and retiring IT applications – impacts firm performance. We propose a conceptual model in which the effect of IT application orchestration on firm performance is mediated by process agility. We further propose that a firm’s strategic orientation moderates the effect of IT application orchestration capability on process agility. Analysis of data from an international survey of IT executives supports our proposed hypotheses. This research contributes to the emergent literature on dynamic capabilities by proposing and testing a theory of how IT application orchestration capability affects agility and firm performance.     

Will cloud computing make the Information Technology (IT) department obsolete?

The rapid adoption and growth of cloud computing is creating unprecedented change in the manner in which IT services are procured, managed, and deployed. Cloud computing is forcing firms to rethink traditional IT governance practices while raising new and fundamental questions for scholars and practitioners. This paper identifies the major areas of change and highlights governance issues that arise with the adoption of cloud computing. The focus of this paper is on the organizational impact on IT governance under cloud computing. The paper posits (1) that successful IT departments under cloud computing will transform into new roles that address internal customer‐facing issues and external cloud‐facing issues, (2) firms that mitigate information asymmetry under cloud computing will show higher firm performance, and (3) firms that offer superior cloud‐sourced IT service attributes of internal prices, quality, variety, and competition in the cloud will show higher firm performance.     

Disruptive information technology innovations and the cost of equity capital: The moderating effect of CEO incentives and institutional pressures

Disruptive information technology (IT) innovations not only present opportunities, but also cause uncertain impacts on firm risk that affects the equity financing cost of a firm. This paper used longitudinal data from 146 U.S. listed firms that adopted radio frequency identification (RFID), a disruptive technology that enables supply chain process innovation. Results show that firms that adopted RFID significantly reduced their cost of equity capital, and the reduction was stronger for firms with greater CEO incentive-based compensation and coercive pressure. The findings help managers make strategies that maximize the benefits of disruptive IT innovations.     

How does the application of an IT service innovation affect firm performance? A theoretical framework and empirical analysis on e-commerce

Understanding the effects of IT-related innovations on firm performance is crucial for businesses. Extant research has investigated the implications of IT innovations and provided some important findings, but the varied theoretical approaches have produced results that are often ambiguous: thus there is a need to examine the process further. We attempted to provide a systematic, theoretically informed framework for understanding the conditions that may enhance (or hinder) the potential of IT innovations in a sample of firms. Our model included business and IT resources, both internal and external, that may influence the performance of firms which have applied a pervasive IT service innovation: e-commerce. Our empirical test of the model used a research design that takes into account time-lag effects. The model explained more than half of the variance in the performance of IT innovators and offered several explanations for why some firms succeeded in implementing IT service innovations while others did not. Several theoretical and managerial implications result from these findings.     

Constructing information technology (IT) portfolios to achieve enterprise strategic goals in multi-business unit firms

This study aims to develop a new methodology in IT Portfolio Management (ITPM) to address the impact of portfolio priorities on IT strategies in a multi-business unit firm. The methodology includes a new ITPM model and uses simulated scenarios to overcome limitations due to insufficient real-world organizational IT portfolio data. The weight scores generated by the proposed ITPM model can enable the firm to create a rational viewpoint to improve its IT investment efficiency while establishing IT priorities to achieve enterprise strategic goals. Such an approach would enable firms to reduce their reliance on CIO intuition in guiding firms’ technology portfolios.     

A meta-analysis of relationships between organizational characteristics and IT innovation adoption in organizations

Adoption of IT in organizations is influenced by a wide range of factors in technology, organization, environment, and individuals. Researchers have identified several factors that either facilitate or hinder innovation adoption. Studies have produced inconsistent and contradictory outcomes. We performed a meta-analysis of ten organizational factors to determine their relative impact and strength. We aggregated their findings to determine the magnitude and direction of the relationship between organizational factors and IT innovation adoption. We found organizational readiness to be the most significant attribute and also found a moderately significant relationship between IT adoption and IS department size. Our study found weak significance of IS infrastructure, top management support, IT expertise, resources, and organizational size on IT adoption of technology while formalization, centralization, and product champion were found to be insignificant attributes. We also examined stage of innovation, type of innovation, type of organization, and size of organization as moderator conditions affecting the relationship between the organizational variables and IT adoption.     

Strategy, IT applications for planning and control, and firm performance: The impact of impediments to IT implementation

Our study examined the association among strategy, the extent of IT applications to 12 planning and control functions, and firm performance. Special attention was paid to the moderating effect on these relationships of 15 technical, human, and organizational impediments to IT implementation. We analyzed survey data obtained from 296 Taiwanese companies, supplemented by financial data from publicly disclosed financial reports. Results indicated that strategy significantly influenced the extent of IT applications for planning and control. In turn, the extent of IT applications had a significant direct effect on firm performance, while the direct effect of strategy was insignificant. The relationship between strategy and the extent of IT applications, and between the latter and firm performance were both stronger when the level of impediments to IT implementation was low. The findings went beyond these general relationships to reveal systematic differences in the specific IT applications and impediments of firms pursuing different strategies.     

Information technology,the organizational capability of proactive corporate environmental strategy and firm performance: a resource-based analysis

The study of the relationships between information technology (IT), environmental organizational issues and firm performance is a cutting-edge research topic for the information systems (IS) community. However, at present we know very little about these relationships. Drawing on the perspective of IT-enabled organizational capabilities and the literature on organizations and the natural environment, our study introduces conceptually the construct organizational capability of proactive corporate environmental strategy to the IS field. We propose that IT capability may enable the implementation of a proactive environmental strategy and that this strategy could play a significant role in determining the business value of IT. Using structural equations modeling with data collected from 63 firms, we find that IT capability is an enabler of proactive environmental strategy and that this strategy plays a significant role in mediating the effects of IT on firm performance. Our study provides initial evidence on the role of IT in the implementation of proactive environmental practices. Our results suggest to IT executives that their decisions matter in shaping environmental sustainability, which in turn will generate business value from IT.     

Commodity or competitive advantage? Analysis of the ERP value paradox

A true e-business enabled firm needs the support from a well-tuned enterprise resource planning (ERP) system for providing real time data. However, many companies complain that after their huge investments in ERP systems, they found the ERP systems do not bring them new orders, new profits, or competitive advantage as ERP vendors claim. Academic studies also found mixed results regarding ERP’s payoff. In line with resource based view (RBV), the study proposes an integrated model to shed light on the ERP value paradox. We try to answer “With what organizational resources and by building what firm specific capabilities, the investment in ERP systems may bring firms competitive advantage”. Using a sample of 150 ERP and e-business adopters in the US, we found that (1) organizational resources such as managerial skills and organizational change management play a more important role than IT resources (ERP, e-Business technologies) in generating business integration capability. (2) However, neither IT resources nor organizational resources directly provide firms with competitive advantage. Instead, business integration capability built from the two resources plays a mediating role through which business achieves competitive advantage.     

Beyond the Generation of Ideas: Virtual Idea Campaigns to Spur Creativity and Innovation

Firms striving to maintain high rates of innovation need a continuous flow of new ideas. This is resulting in the establishment by large firms of IT platforms to generate ideas for innovation, and to encourage employees and customers to participate in innovation contests. However, there has been little published research on the use of IT platforms for idea generation by employees, and it is unclear whether they facilitate in‐house innovation. The purpose is to investigate how firms use IT platforms internally to generate ideas, and how their use contributes to the innovation process in large firms. We rely on data from two collaborative research projects in the automotive industry: Volvo Cars and Renault. We found that both firms used IT platforms as campaigns to promote innovation and to involve employees in the innovation process. The findings suggest that these virtual idea campaigns support innovation in large firms mainly by (1) encouraging employee creativity in idea generation and (2) involving employees and top managers simultaneously in the innovation process. This paper contributes to idea management systems theory by highlighting the importance of virtual idea campaigns for the firm's innovation process, and their dual role.     

Drivers and export performance impacts of IT capability in ‘born‐global’ firms: a cross‐national study

Past research focusing on large firms has argued that information technology (IT) capability enhances firm performance. However, these studies have seldom explored why firms develop IT capability, and have also left a void the understanding of the role of IT capability in Small‐ and medium‐sized enterprises (SMEs). This study attempts to fill that void by examining the effect of relevant environmental and firm‐level factors on IT capability, and the effect of IT capability on the export performance of Chinese and US born‐global firms, a special breed of export‐focused SMEs. Results indicate that environmental factors such as information intensity, and firm‐level factors such as international entrepreneurial orientation, prompt born‐global firms to develop IT capability. Further, our results also strongly emphasise the positive role that IT capability plays on the performance of born‐global firms. Finally, a comparative analysis of the Chinese and US born‐global firms revealed a lack of a cross‐cultural difference in the factors leading these firms to develop IT capability, therefore supporting the ‘convergence’ perspective in cross‐cultural research.     

Commoditization and IT Product Innovation Strategies from an IT Firm Perspective

Based on a survey (N = 248 business managers) this study confirms that different types of innovation in IT products have a direct positive impact on IT firms’ business performance. The commoditization level of IT markets acts as a moderator dampening this positive relationship. This implies that IT firms should take existing commoditization levels as well as a mix of IT product innovation types into account as part of their innovation strategy.