Revisiting the Concept of IT Capabilities in the Era of Digitalization

In the era of digitalization, companies review how to build competitive advantage drawing on their capabilities. In this context, the paper revisits the concept of IT capabilities. We summarize the “canonical” body of literature to characterize how leading scholars conceptualized and differentiated IT capabilities and then we show how new types of IT capabilities (for example, rising from SMACIT technologies) relate to this. We find that the resource-based view is still leading in how to conceptualize IT capabilities. However, an alternative perspective on IT assets is emerging, looking at it from the angle of digital technologies as stacks. Digital technologies form the foundation for a new technology-driven perspective on IT capabilities. This new view complements the established differentiation of IT capabilities considering IT infrastructure flexibility, IT management, and IT personnel capability. Both perspectives describe the explorative and exploitative nature of IT capabilities. This paper helps scholars and practitioners to clearly distinguish different perspectives of IT capabilities on how to build a competitive advantage from IT today.

[1]  Angappa Gunasekaran,et al.  IoT powered servitization of manufacturing – an exploratory case study , 2017 .

[2]  Eric T. G. Wang,et al.  A study of IS assets, IS ambidexterity, and IS alignment: the dynamic managerial capability perspective , 2019, Inf. Manag..

[3]  Dale Goodhue,et al.  Develop Long-Term Competitiveness through IT Assets , 1996 .

[4]  Kalle Lyytinen,et al.  The New Organizing Logic of Digital Innovation: An Agenda for Information Systems Research , 2011 .

[5]  Selim Zaim,et al.  Information system capabilities and firm performance: Opening the black box through decision-making performance and business-process performance , 2019, Int. J. Inf. Manag..

[6]  Kai H. Lim,et al.  How Does IT Ambidexterity Impact Organizational Agility? , 2015, Inf. Syst. Res..

[7]  Björn Niehaves,et al.  Reconstructing the giant: On the importance of rigour in documenting the literature search process , 2009, ECIS.

[8]  Thiagarajan Ravichandran,et al.  Exploring the relationships between IT competence, innovation capacity and organizational agility , 2017, J. Strateg. Inf. Syst..

[9]  Hung-Tai Tsou,et al.  Performance effects of IT capability, service process innovation, and the mediating role of customer service , 2012 .

[10]  Junichi Iijima,et al.  The Role of IT and Organizational Capabilities on Digital Business Value , 2019, Pac. Asia J. Assoc. Inf. Syst..

[11]  Richard T. Watson,et al.  Analyzing the Past to Prepare for the Future: Writing a Literature Review , 2002, MIS Q..

[12]  Kalle Lyytinen,et al.  Research Commentary - The New Organizing Logic of Digital Innovation: An Agenda for Information Systems Research , 2010, Inf. Syst. Res..

[13]  O. A. Sawy,et al.  Digital business strategy: toward a next generation of insights , 2013 .

[14]  Sonal Daulatkar,et al.  Causality in information technology business value: a review , 2015, Bus. Process. Manag. J..

[15]  Jongwoo Kim,et al.  Achieving dynamic capabilities with cloud computing: an empirical investigation , 2016, Eur. J. Inf. Syst..

[16]  Paolo Neirotti,et al.  On the contingent value of IT-based capabilities for the competitive advantage of SMEs: Mechanisms and empirical evidence , 2017, Inf. Manag..

[17]  J. Barney.  Firm Resources and Sustained Competitive Advantage , 1991 .

[18]  Vijay Gurbaxani,et al.  Gearing Up For Successful Digital Transformation , 2019, MIS Q. Executive.

[19]  Walter Brenner,et al.  How AUDI AG Established Big Data Analytics in Its Digital Transformation , 2017, MIS Q. Executive.

[20]  Joey F. George,et al.  Toward the development of a big data analytics capability , 2016, Inf. Manag..

[21]  Josée St-Pierre,et al.  IT capabilities for product innovation in SMEs: a configurational approach , 2017, Information Technology and Management.

[22]  Saji K. Mathew,et al.  Business analytics and business value: A comparative case study , 2018, Inf. Manag..

[23]  Rui Bi.  Building IT Capability to Increase Organizational Performance : A Path-Oriented Process , 2011 .

[24]  Pratim Datta,et al.  Balancing exploration and exploitation of IT resources: the influence of Digital Business Intensity on perceived organizational performance , 2017, Eur. J. Inf. Syst..

[25]  T. Baines,et al.  Digital servitization business models in ecosystems: A theory of the firm , 2019, Journal of Business Research.

[26]  Michail N. Giannakos,et al.  Big data analytics capabilities: a systematic literature review and research agenda , 2017, Information Systems and e-Business Management.

[27]  Walter Brenner,et al.  Stepwise Evolution of Capabilities for Harnessing Digital Data Streams in Data-Driven Industrial Services , 2016, MIS Q. Executive.

[28]  Jahangir Karimi,et al.  The Role of Dynamic Capabilities in Responding to Digital Disruption: A Factor-Based Study of the Newspaper Industry , 2015, J. Manag. Inf. Syst..

[29]  D. Teece.  Explicating dynamic capabilities: the nature and microfoundations of (sustainable) enterprise performance , 2007 .

[30]  Jose Benitez-Amado,et al.  How information technology influences opportunity exploration and exploitation firm's capabilities , 2018, Inf. Manag..

[31]  Christine Legner,et al.  A resource-based perspective of value generation through enterprise architecture management , 2021, Inf. Manag..

[32]  M. Taisch,et al.  The value of Big Data in servitization , 2015 .

[33]  Gang Kou,et al.  IT capabilities and product innovation performance: The roles of corporate entrepreneurship and competitive intensity , 2015, Inf. Manag..

[34]  Michael Meskon,et al.  The resource-based theory of competitive advantage : implications for strategy formulation , 2018 .

[35]  Luís Ferreira Pires,et al.  Modeling resources and capabilities in enterprise architecture: A well-founded ontology-based proposal for ArchiMate , 2015, Inf. Syst..

[36]  Rajeev Sharma,et al.  The role of IT application orchestration capability in improving agility and performance , 2017, J. Strateg. Inf. Syst..

[37]  Sia Siew Kien,et al.  How DBS Bank Pursued a Digital Business Strategy , 2016, MIS Q. Executive.

[38]  Adir Even,et al.  Business intelligence and organizational learning: An empirical investigation of value creation processes , 2017, Inf. Manag..

[39]  Xiaolin Zhu,et al.  How do IT capabilities support fast delivery of big data services to clients across industries? , 2018, PACIS.

[40]  Oscar F. Bustinza,et al.  Servitization, digitization and supply chain interdependency , 2017, Industrial Marketing Management.

[41]  Jeanne W. Ross,et al.  How Big Old Companies Navigate Digital Transformation , 2020, MIS Q. Executive.

[42]  Matthew B. Miles,et al.  Qualitative Data Analysis: An Expanded Sourcebook , 1994 .

[43]  Christina Soh,et al.  Aligning with new digital strategy: A dynamic capabilities approach , 2017, J. Strateg. Inf. Syst..

[44]  Eric van Heck,et al.  Producer-side Use Cases of Digitized Products: What's Best for Your Company? , 2019, ICIS.

[45]  A. Bharadwaj,et al.  IT Capabilities : Theoretical Perspectives and Empirical Operationalization , 2013 .

[46]  Thomas Hess,et al.  Digital Transformation Strategies , 2015, Business & Information Systems Engineering.

[47]  Torsten Eymann,et al.  Digitalization: Opportunity and Challenge for the Business and Information Systems Engineering Community , 2017, Business & Information Systems Engineering.

[48]  Ahad Zare Ravasan,et al.  The role of business analytics capabilities in bolstering firms' agility and performance , 2019, Int. J. Inf. Manag..

[49]  B. Wernerfelt,et al.  A Resource-Based View of the Firm , 1984 .

[50]  Sinan Aral,et al.  I.T. Assets, Organizational Capabilities and Firm Performance: Do Resource Allocations and Organizational Differences Explain Performance Variation? , 2007 .

[51]  D. Teece,et al.  DYNAMIC CAPABILITIES AND STRATEGIC MANAGEMENT , 1997 .

[52]  Jeanne W. Ross,et al.  Designing and Executing Digital Strategies , 2016, ICIS.

[53]  Kai H. Lim,et al.  IT-Enabled Organizational Agility and Sustainable Competitive Advantage , 2008, ICIS.

[54]  Nicola De Bellis,et al.  The Publish or Perish Book , 2011, J. Assoc. Inf. Sci. Technol..

[55]  Lihua Huang,et al.  The Role of IS Capabilities in the Development of Multi-Sided Platforms: The Digital Ecosystem Strategy of Alibaba.com , 2015, J. Assoc. Inf. Syst..

[56]  Paul A. Pavlou,et al.  Exploring the relationship between big data analytics capability and competitive performance: The mediating roles of dynamic and operational capabilities , 2020, Inf. Manag..

[57]  Guy Paré,et al.  A Knowledge Development Perspective on Literature Reviews: Validation of a new Typology in the IS Field , 2020, Commun. Assoc. Inf. Syst..

[58]  Louis Raymond,et al.  Enabling innovation in the face of uncertainty through IT ambidexterity: A fuzzy set qualitative comparative analysis of industrial service SMEs , 2020, Int. J. Inf. Manag..

[59]  Frederik Ahlemann,et al.  Beyond Business-IT Alignment - Digital Business Strategies as a Paradigmatic Shift: A Review and Research Agenda , 2017, HICSS.

[60]  Blake Ives,et al.  Review: IT-Dependent Strategic Initiatives and Sustained Competitive Advantage: A Review and Synthesis of the Literature , 2005, MIS Q..

[61]  Ting Li,et al.  Dynamic information technology capability: Concept definition and framework development , 2019, J. Strateg. Inf. Syst..

[62]  Jessica Braojos,et al.  How do social commerce-IT capabilities influence firm performance? Theory and empirical evidence , 2019, Inf. Manag..

[63]  M. Wade,et al.  Review: the resource-based view and information systems research: review, extension, and suggestions for future research , 2004 .

[64]  Yair Levy,et al.  A Systems Approach to Conduct an Effective Literature Review in Support of Information Systems Research , 2006, Informing Sci. Int. J. an Emerg. Transdiscipl..

[65]  Josée St-Pierre,et al.  The complementarity of IT and HRM capabilities for competitive performance: a configurational analysis of manufacturing and industrial service SMEs , 2018, Enterp. Inf. Syst..

[66]  Anandhi S. Bharadwaj,et al.  A Resource-Based Perspective on Information Technology Capability and Firm Performance: An Empirical Investigation , 2000, MIS Q..

[67]  Victor R. Prybutok,et al.  Information Technology Capability and Firm Performance: Contradictory Findings and Their Possible Causes , 2014, MIS Q..

[68]  Tiago Oliveira,et al.  Leveraging internet of things and big data analytics initiatives in European and American firms: Is data quality a way to extract business value? , 2020, Inf. Manag..

[69]  Samuel Fosso Wamba,et al.  IT capabilities, firm performance and the mediating role of ISRM , 2019, Bus. Process. Manag. J..

[70]  Varun Grover,et al.  Types of Information Technology Capabilities and Their Role in Competitive Advantage: An Empirical Study , 2005, J. Manag. Inf. Syst..

[71]  Gary Garrison,et al.  The effects of IT capabilities and delivery model on cloud computing success and firm performance for cloud supported processes and operations , 2015, Int. J. Inf. Manag..

[72]  Jose Benitez-Amado,et al.  IT-enabled knowledge ambidexterity and innovation performance in small U.S. firms: The moderator role of social media capability , 2018, Inf. Manag..

[73]  Michael R. Wade,et al.  The Resource-Based View and Information Systems Research: Review, Extension, and Suggestions for Future Research , 2004, MIS Q..

[74]  Chang E. Koh,et al.  Information technology capability and firm performance: Role of industry , 2017, Inf. Manag..