Designing Information Systems Capabilities to Create Business Value: A Theoretical Conceptualization of the Role of Flexibility and Integration

Abstract

Despite Internet success and the fact that software has become the factory in many businesses, questions remain concerning information technology (IT) business value, the IT payoff paradox, and why IT even matters. While numerous econometric studies have established that there is significant business value from IT investments at an aggregate level, it is often unclear how this value accrues specifically and how a particular IS design and specific IS capabilities contribute. Therefore, this article focuses on IT business value (ITBV) antecedents. It analyzes the role of two distinct key IS capabilities: integration and flexibility, which are widely considered central to IS analysis and design. This article is a necessary first step toward decomposing and measuring ITBV antecedents. Subsequent efforts can build on it by developing scales and survey instruments for quantitative-empirical evaluation. This article follows a tradition of theory development adapted and condensed into a four-step approach for IS literature by Zmud (1998), defines and clearly delineates the constructs, and evolves a model that links them with IT business value.