Theoretical Justification for IT Infrastructure Investments

Abstract

The strategic importance of building highly capable information technology (IT) infrastructure has become a crucial management issue of the 1990s and beyond. However, in spite of the numerous benefits attributed to IT infrastructure, these claims remain unsubstantiated. This problem is due, in part, to inadequate conceptualizations of IT infrastructure and its measurement as well as a lack of theoretical frameworks for explaining its impacts. To address these problems, this paper proposes a theoretical framework to justify the value-creating potential of IT infrastructure investments. First, we provide a conceptual framework that describes the nature of IT infrastructure and its related components. Next, we discuss the role of IT infrastructure as a competitive weapon and identify three areas where it may create strategic value for the firm: responsiveness, innovativeness, and economies of scope. For each area, specific theories are used and research propositions are developed to guide future infrastructure research.