Information Technology and Strategy: Two Camps, Four Perspectives, One Elusive Goal

Information Technology and Strategy: Two Camps, Four Perspectives, One Elusive Goal

Paul L. Drnevich (The University of Alabama, USA) and David P. McIntyre (Providence College, USA)
DOI: 10.4018/jsita.2010040101

Abstract

A central argument in strategic management is that a firm’s resources or capabilities can be sources of competitive advantage, which may lead to superior firm performance. Investments in Information Technology (IT) resources and capabilities represent one of the largest recurring expenditures made by firms. However, despite the magnitude of these investments and their presumed strategic importance to firms, demonstrating a definitive link between IT resource investments and firm-level performance has remained elusive. A review of the last 25 years of the MIS and Strategy literatures, indicates that each of these ‘two camps’ has contributed important insights and a strong co-evolutionary relationships, yet the strategic importance of IT lacks clear theoretical grounding and consistent empirical support. To address this deficiency, in this paper we review the theoretical bases for economic value creation to develop taxonomy for the roles and performance implications of IT, which integrates strategic management theory to offer a contingency perspective for how the roles and value of IT will vary in different strategic and environmental contexts. We apply the taxonomy as a lens through which to examine a sample of prominent prior research on the topic. The authors conclude with a discussion highlighting directions for future research.
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Theory Development

Before proceeding with a discussion of the literature, several definitions merit clarification. First, the term ‘IT’ generally refers to any form of ‘computer-based’ information system, including mainframe, microcomputer, and intra/internet applications (Orlikowski & Gash, 1992; Powell & Dent-Micallef, 1997). The term IT resources has come to represent (1) the tangible resources that make up the physical IT infrastructure components, (2) the human IT resources that represent technical and managerial IT skills, and (3) the intangible IT-enabled resources such as knowledge assets and customer orientation (Bharadwaj, 2000, p. 171). These classifications reflect Barney’s (1991, p. 101) broader definition of firm resources as the “assets, capabilities, processes, information, and knowledge controlled by the firm.” IT resources may consist of human, relationship, and technology components, all of which interact with and can hold implications for the other (Ross, Beath, & Goodhue, 1996). Similarly, the term IT capability represents a firm’s ability to mobilize and deploy its IT-based resources in combination with other resources and capabilities (Bharadwaj, 2000, p. 171). IT capabilities may consist of categories of capabilities such as business and IT vision, design of IT architecture, and delivery of IT services (Feeny & Willcocks, 1998).

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