Information technology and business-level strategy: Toward an integrated theoretical perspective

Paul L. Drnevich, David C. Croson

Research output: Contribution to journalArticlepeer-review

160 Scopus citations

Abstract

Information technology matters to business success because it directly affects the mechanisms through which they create and capture value to earn a profit: IT is thus integral to a firm's business-level strategy. Much of the extant research on the IT/strategy relationship, however, inaccurately frames IT as only a functionallevel strategy. This widespread under-appreciation of the business-level role of IT indicates a need for substantial retheorizing of its role in strategy and its complex and interdependent relationship with the mechanisms through which firms generate profit. Using a comprehensive framework of potential profit mechanisms, we argue that while IT activities remain integral to the functional-level strategies of the firm, they also play several significant roles in business strategy, with substantial performance implications. IT affects industry structure and the set of business-level strategic alternatives and value-creation opportunities that a firm may pursue. Along with complementary organizational changes, IT both enhances the firm's current (ordinary) capabilities and enables new (dynamic) capabilities, including the flexibility to focus on rapidly changing opportunities or to abandon losing initiatives while salvaging substantial asset value. Such digitally attributable capabilities also determine how much of this value, once created, can be captured by the firm-and how much will be dissipated through competition or through the power of value chain partners, the governance of which itself depends on IT. We explore these business-level strategic roles of IT and discuss several provocative implications and future research directions in the converging information systems and strategy domains.

Original languageEnglish (US)
Pages (from-to)483-509
Number of pages27
JournalMIS Quarterly: Management Information Systems
Volume37
Issue number2
DOIs
StatePublished - Jun 2013
Externally publishedYes

Keywords

  • Competitive advantage
  • Information systems
  • Information technology
  • IT capability
  • IT strategy
  • Management theory
  • Performance
  • Technology management

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