In this paper, we examine how the competitive industry environment shapes the way that digital strategic posture (defined as a focal firm's degree of engagement in a particular class of digital business practices relative to the industry norm) influences firms' realized digital business strategy. We focus on two forms of digital strategy: general IT investment and IT outsourcing investment. Drawing from prior literature on determinants of IT activity and competitive dynamics, we argue that three elements of the industry environment determine whether digital strategic posture has an increasingly convergent or divergent influence on digital business strategy. By divergent influence, we mean an influence that leads to spending substantially more or less on a particular strategic activity than industry norms. We predict that a digital strategic posture (difference from the industry mean) has an increasingly divergent effect on digital business strategy under higher industry turbulence, while having an increasingly convergent effect on digital business strategy under higher industry concentration and higher industry growth. The study uses archival data for 400 U.S.-based firms from 1999 to 2006. Our findings imply that digital business strategy is not solely a matter of optimizing firm operations internally or of responding to one or two focal competitors, but also arises strikingly from awareness and responsiveness to the digital business competitive environment. Collectively, the findings provide insights on how strategic posture and industry environment influence firms' digital business strategy.
T his study investigates the effect of information technology (IT) architecture flexibility on strategic alliance formation and firm value. We first examine the effect of three dimensions of IT architecture flexibility (open communication standards, cross-functional transparency, and modularity) on formation of three types of alliances (arm's-length, collaborative, and joint-venture alliances, respectively). Then, we examine how capabilities in IT flexibility can enhance the value derived from alliances. Our sample includes data from 169 firms that are publicly listed in the United States and that span multiple industries. We find that adoption of open communication standards is associated with the formation of arm's-length alliances, and modularity of IT architecture is associated with the formation of joint ventures. We also find that IT architecture flexibility enhances the value of arm's-length, collaborative, and joint-venture alliances. The contribution of IT flexibility to value is greater in the case of collaborative alliances than in arm's-length alliances. Taken together, these findings suggest that appropriate investments in IT can help to facilitate reconfiguration of resources and modification of processes in collaboration-intensive alliances.
How should digital platforms engage with and invest in their online communities to shape innovation and knowledge contributions from members in their platform ecosystems? This is an important question because user contributions are important drivers of technological progress and business value. We examine the effect of platform sponsors' investments in online communities on user knowledge contributions, using fine-grained longitudinal data from a leading enterprise software vendor's community network. We focus on the sponsor practice of knowledge seeding, in which its employees provide free technical support by answering questions posted in discussion forums. We define user knowledge contribution as peer-evaluated, quality-weighted solutions that community members provide to help resolve the questions their peers raise. We show that the platform sponsor's investments in knowledge seeding have a positive, significant association with user knowledge contribution. We also find temporal and geographical variations in returns on the sponsor's knowledge investments. Specifically, returns (i.e., amount of user contribution that is stimulated) decrease with the age of the community, consistent with the observation that the most active contributors are lead users who tend to join the community early. In addition, returns vary across different countries, such that greater returns are realized when the investment is made in countries with higher levels of information technology (IT) infrastructure, partly because country-level IT infrastructure may be associated with greater absorptive capacity of these countries. We discuss the implications for research and practice.
This paper aims at exploring value creation from information technologies in governments. While the majority of studies in the information systems discipline have focused on discovering IT business value in for-profit organizations, the question of whether the performance effect of IT exists in the public sector has not been extensively studied so far in either the information systems or public administration literature. We examine whether IT improves administrative efficiency in U.S. state governments. Utilizing the IT budget data in state governments, the census data on state government expenditures, and a variety of information on public services states provide, we estimate technical cost inefficiency, an inverse proxy for administrative efficiency, with a stochastic frontier model. Our analyses provide evidence for a significantly negative relationship between IT intensity and cost inefficiency. Our results indicate that all others being equal, on
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