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Facing a barrage of novel information technology (IT), organizations must invest on the basis of the impact of IT capabilities on the organization's performance. This research extends Bharadwaj's (MIS Quarterly 169-196, 2000) resource-based view of the relationship between IT capability and performance by introducing both the mediating and moderating effects of Digital Business Intensity (DBI). Empirical data collected from CIO's from US firms reveal that although IT capability positively influences organizational performance, this relationship may differ in strength at different levels of DBI. Our study also finds that IT capability is important in determining DBI, which in turn influences organizational performance. Findings highlight tensions between DBI exploration and IT capabilities exploitation. Results also suggest that companies that leverage their existing IT capabilities to drive DBI are more adept at securing performance returns. However, when DBI investments do not complement existing IT capabilities, DBI appears to dampen performance, further accentuated for high-DBI firms.

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Abstract:For decades, practitioners and scholars have focused on achieving optimal values in and benefits from enterprise resource planning (ERP) systems. Given that scholars have identified ERP systems as having option-like characteristics such as the capacity to create an information technology (IT) platform that enables the adoption of subsequent function-specific applications, we face a need to explore the linkage between post-ERP systems implementation and subsequent ERP-enabled technology adoption. We used real options theory to explore the underlying relationship between the initial ERP system implementation and subsequent technology adoptions. We surveyed 519 IT executives in the United States and found that the level of technology uncertainty, managerial flexibility, and formal real option analysis in ERP adoption decisions influenced the organizational relative advantage of subsequent non-ERP technologies. Our results also reveal that the level of uncertainty had a negative relationship with ERP-enabled technology adoption, while formal real option analysis in ERP adoption decisions positively influenced ERP-enabled adoption.

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