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Integrated bundles of products and services are gaining importance in various sectors and are reshaping the competitive landscape of many industries. They also pose new challenges to established firms, who need to reconfigure their capabilities. Drawing upon the resource-based view and contingency theory, we test a model of fit between environmental requirements and integrated solutions capabilities in the IT sector. We used the model to interpret the current industry structure and analyze its dynamics. The analysis suggests the existence of four different configurations and indicates that differences in fit between environmental variables and strategic choices partially account for performance differences among integrated solution providers. The results also suggest that, although the provision of bundled products and services confers some a priori advantages to IS providers over generic IT firms, these advantages are greater for firms that are able to align their capabilities to the characteristics of their operational environment. JEL classification: L22.

This paper investigates the way that firms' environmental context and organizational structure influence their strategic choices and lead to different capabilities configurations. Drawing on contingency theory and the resource-based view, we explore integrated solutions—an emerging business model in which firms bundle products and services—in the IT sector, which is a particularly appropriate context due to its novelty, high-technology characteristics and implications for capabilities development. This study contributes to research and practice by identifying how organizational and environmental/market factors co-evolve with firms' strategy and how firms' distinct strategic decisions lead to differences in capabilities configurations.Capabilities, integrated solutions, IT sector, contingency theory, resource-based view,

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