Resource Structuring or Capability Building? An Empirical Study of the Business Value of Information Technology

Wang, Nianxin; Liang, Huigang; Wang, Zhong; Xue, Yajiong; Xiao, Jinghua

doi:10.2753/mis0742-1222290211

Cited by 214 publications

(187 citation statements)

References 106 publications

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“…This procedure extends previous work which, despite including non-linear relationships among the variables proposed, remained unable to classify firms in within-class homogeneous groups that could explain firm capabilities [79]. Information Technology capabilities are more difficult to imitate than Marketing capabilities [47] and therefore it is not surprising that IT capabilities present stronger effects in the explanation of firm heterogeneity than Marketing capabilities. The effect of advertising and distribution strategies should be analysed using new approaches such as serial analysis [70].…”

Section: Discussionmentioning

confidence: 47%

“…Previous studies have shown that IT creates business value in certain circumstances while it fails to do so in other circumstances, and it is revealed that IT does not always lead to positive outcomes, which is because IT has a different utility in stable versus dynamic environments [47], and hence it is expected that IT capabilities capture firm heterogeneity over time [37]: Hypotheses 2 (H2). IT capabilities explain firms' heterogeneity with respect to their efficiency in adapting to the market and environmental changes.…”

Section: Hypotheses 1 (H1)mentioning

confidence: 99%

“…Firms can achieve a competitive advantage by using IT through the design of the appropriate IT structure and by building the capabilities needed for their management. On the one hand, IT resources include tangible, human-related, and relational resources, while, on the other hand, the concept of IT capability is defined as "a firm's ability to mobilize and deploy IT resources effectively to perform strategic IT planning, develop Information Systems (IS) and leverage, use these systems, and manage IT functions and IT assets" [47] (p. 329). In the study of IT capabilities, as part of the process of business value creation, two elements should be included: the resources used by the company, and the results achieved by their use, which are a reflection of the capabilities of the company.…”

Section: Hypotheses 1 (H1)mentioning

confidence: 99%

See 2 more Smart Citations

Capturing Firms’ Heterogeneity through Marketing and IT Capabilities in SMEs

Ramón-Jerónimo

Herrero

2017

Sustainability

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To achieve sustainability, firms capable of surviving economic recessions is of key relevance; the capabilities that firms need to face dynamic environments remain an open question. In this work, a new procedure is proposed to capture firms' heterogeneity with regard to the capabilities they possess in operating efficiently in dynamic environments. This approach enables the identification of the classes of firms that develop efficiency with a specific integration of resources. While the literature has most often measured firm capabilities using subjective measures, this study suggests the use of Data Envelopment Analysis to capture the ability to transform resources into outcomes and of Latent Class Regression to capture differences across firms that explain firms' heterogeneity in the way they perform. By combining these two techniques, this work presents a way to identify those firms that need to invest in and develop certain capabilities. This work analyses a large dataset of manufacturing Small Medium Enterprises (SMEs) extracted from the Business and Strategy survey provided by Fundación de la Sociedad Estatal de Participaciones Industriales( SEPI) in Spain. The dataset used enfolds 10,960 observations from 2048 firms during the period 1994-2011. The complete dataset has been employed to calculate manufacturing firms' efficiency. In a second step, data were cleaned to eliminate outliers, and to identify SMEs and observations with records of IT capabilities. As a result, 329 manufacturing SMEs were analysed to capture their heterogeneity. The results contribute to the current literature by explaining how manufacturing SMEs show a different need in their development of capabilities to be efficient and adapt to environmental changes. While approximately 20% of firms analysed really take advantage of recessions through their investment in R&D, the remaining 80% need to adjust their size or invest in IT capabilities to become competitive. The assumption shown in previous studies regarding the performance of SMEs to better confront recessions is discussed in this paper.

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Section: Discussionmentioning

confidence: 47%

Section: Hypotheses 1 (H1)mentioning

confidence: 99%

Section: Hypotheses 1 (H1)mentioning

confidence: 99%

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Capturing Firms’ Heterogeneity through Marketing and IT Capabilities in SMEs

Ramón-Jerónimo

Herrero

2017

Sustainability

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“…While the extant literature identifies IT business value as one of the key issues for IT academics and practitioners (Grover & Kohli, 2012;Kohli & Grover, 2008;Luftman & Kempaiah, 2008;Wang, Liang, Zhong, Xue, & Xiao, 2012) Increasingly fickle customer demands, pressures to shorten products lifecycle, and relentless cost pressures combine to place significant demands on the supply chain function. Thus, further research is required to investigate the dynamics of technology-based business networks and innovation ecosystems that can cope with the fast-changing world of the supply chain and logistics.…”

Section: Future Research Directionsmentioning

confidence: 99%

Guest editorial: information technology-enabled supply chain management

Wamba

Akter

Coltman

et al. 2015

Production Planning & Control

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It is widely accepted that advances in information technology (IT) will generate new opportunities when suppliers, business partners and customers work together to co-create and co-produce value. However, results from prior studies show that the mere possession of IT is unlikely to generate business value. Rather, IT creates value when information -frequently produced by IT infrastructure -is used to support complementary organizational and human resources. Still, the hypothesis that greater investment in IT will generate business value requires caution. The focus of this special issue is to extend our understanding of how firms in a supply chain create and capture business value with IT. Also, a review is provided of the IT business value literature in the journal Production Planning & Control: The Management of Operations. This literature is grouped into three types of business value: transactional, strategic, and transformational. The review justifies the importance of this special issue by highlighting the dearth of research on the topic in this journal. Lastly, future research directions are provided and this introduction concludes with a guide to the papers in this special issue.

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“…IT resources are IT investments in hardware, software applications and IT department skills, with the aim of achieving a specific business objective (Aral, Weill 2007, Wang et al 2012.…”

Section: Erp Resourcesmentioning

confidence: 99%

ERP benefits capability framework: orchestration theory perspective

Badewi

Shehab

Zeng

et al. 2018

BPMJ

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Purpose The purpose of this paper is to answer two research questions: what are the ERP resources and organizational complementary resources (OCRs) required to achieve each group of benefits? And on the basis of its resources, when should an organization invest more in ERP resources and/or OCRs so that the potential value of its ERP is realised? Design/methodology/approach Studying 12 organizations in different countries and validating the results with 8 consultants. Findings ERP benefits realization capability framework is developed; it shows that each group of benefits requires ERP resources (classified into features, attached technologies and information technology department competences) and OCRs (classified into practices, attitudes, culture, skills and organizational characteristics) and that leaping ahead to gain innovation benefits before being mature enough in realising a firm’s planning and automation capabilities could be a waste of time and effort. Research limitations/implications It is qualitative study. It needs to be backed by quantitative studies to test the results. Practical implications Although the “P” in ERP stands for planning, many academics and practitioners still believe that ERP applies to automation only. This research spotlights that the ability to invest in ERP can increase the innovation and planning capabilities of the organization only if it is extended and grown at the right time and if it is supported by OCRs. It is not cost effective to push an organization to achieve all the benefits at the same time; rather, it is clear that an organization would not be able to enjoy a higher level of benefits until it achieves a significant number of lower-level benefits. Thus, investing in higher-level benefit assets directly after an ERP implementation, when there are no organizational capabilities available to use these assets, could be inefficient. Moreover, it could be stressful to users when they see plenty of new ERP resources without the ability to use them. Although it could be of slight benefit to introduce, for example, business intelligence to employees in the “stabilizing period” (Badewi et al., 2013), from the financial perspective, it is a waste of money since the benefits would not be realised as expected. Therefore, orchestrating ERP assets with the development of organizational capabilities is important for achieving the greatest effectiveness and efficiency of the resources available to the organization. This research can be used as a benchmark for designing the various blueprints required to achieve different groups of benefits from ERP investments. Originality/value This research addresses two novel questions: RQ1: what are the ERP resources and OCRs required to achieve the different kinds of ERP benefits? RQ2: when, and on what basis, should an organization deploy more resources to leverage the ERP business value?

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Resource Structuring or Capability Building? An Empirical Study of the Business Value of Information Technology

Cited by 214 publications

References 106 publications

Capturing Firms’ Heterogeneity through Marketing and IT Capabilities in SMEs

Capturing Firms’ Heterogeneity through Marketing and IT Capabilities in SMEs

Guest editorial: information technology-enabled supply chain management

ERP benefits capability framework: orchestration theory perspective

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