The use of information technology (IT) as a competitive weapon has become a popular cliché; but there is still a marked lack of understanding of the issues that determine the influence of information technology on a particular organization and the processes that will allow a smooth coordination of technology and corporate strategy. This article surveys the major efforts to arrive at a relevant framework and attempts to integrate them in a more comprehensive viewpoint. The focus then turns to the major research issues in understanding the impact of information technology on competitive strategy.

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In this paper, we propose a model of Information Technology (IT) impacts on innovation. We do not intend to generalize a specific model of innovation. Rather, the objective here is to explain how IT can facilitate innovation in a work group. Review of literature suggests that innovative ability of a work group is dependent on the capabilities of the individuals/group, the structure of the work group or organization, and the group/organizational environments. To explore this conceptual model, data were collected from 136 users who used well‐established information systems. The data supported that IT enhanced innovation significantly by augmenting individual/group capabilities through: 1) motivation support, 2) resource support, and 3) information support. Motivation support was shown to be the most important contributor of innovation. Group interaction variables, standardization, decentralization, and specialization, were shown to be positively related to innovation. However, the effect of group interaction was secondary in nature; the independent contributions to innovation of group interaction variables, controlling for other factors, were not significant. In addition, the data provided support that innovation was positively related to demand pull via motivation and resource support, and to technology push via information support.