TY - JOUR
T1 - Information technology and business-level strategy
T2 - Toward an integrated theoretical perspective
AU - Drnevich, Paul L.
AU - Croson, David C.
PY - 2013/6
Y1 - 2013/6
N2 - 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.
AB - 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.
KW - Competitive advantage
KW - IT capability
KW - IT strategy
KW - Information systems
KW - Information technology
KW - Management theory
KW - Performance
KW - Technology management
UR - http://www.scopus.com/inward/record.url?scp=84876868001&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84876868001&partnerID=8YFLogxK
U2 - 10.25300/MISQ/2013/37.2.08
DO - 10.25300/MISQ/2013/37.2.08
M3 - Article
AN - SCOPUS:84876868001
SN - 0276-7783
VL - 37
SP - 483
EP - 509
JO - MIS Quarterly: Management Information Systems
JF - MIS Quarterly: Management Information Systems
IS - 2
ER -