Changing the Competitive Landscape: Continuous Innovation Through IT-Enabled Knowledge Capabilities

Abstract

W e theoretically and empirically investigate the relationship between information technology (IT) and firm innovation. Invoking absorptive capacity (ACAP) theory, we introduce and develop the concepts of three types of IT-enabled knowledge capabilities. Firm innovation is examined through two observable innovation outcomes: patents, and new product and service introductions. These innovation outcomes are often labeled as competitive actions aggressively undertaken by firms to gain market share or to achieve profitability. We use secondary data about IT-enabled knowledge capabilities and innovation outcomes of 110 firms. Our data results provide strong support for our main assertion that knowledge capabilities that are enhanced through the use of IT contribute to firm innovation. The study's findings suggest that the three types of IT-enabled knowledge capabilities have differential effects on firm innovation. This study substantially contributes to the information systems (IS) research, methodology, and practice in multiple ways.Key words: absorptive capacity; business value of IT; competitive impacts of IS; firm innovation; IT-enabled knowledge capability; knowledge management; strategic management of IT History: Rajiv Sabherwal, Senior Editor. This paper was received on June 1, 2008, and was with the authors 10 1 2 months for 3 revisions.

The impacts of information technology on total factor productivity: A look at externalities and innovations

“…Our study considers the role of IT in enhancing TFP through IT-induced externalities and ITleveraged innovations. While a few prior studies have examined the impacts of IT on new products and processes (Joshi et al, 2010), we take one step further and evaluate the complementarity of IT and innovations for synergies in terms of TFP.…”

“…As a consequence, IT facilitates the use of creative ideas embedded in knowledge-based assets and promotes innovative development of other products and processes (Calestous and Lee, 2005;Joshi et al, 2010). That is, IT can be a complement to innovations due to its capabilities and applications to product development and process improvement.…”

You'll Be Surprised - Digital Business Strategy as Driver of Organizational Innovativeness

“…In this research, we investigate organizational innovativeness as a result of profound knowledge about IT, similar to the concept of IT-enabled innovation [2,15,23], and consequently analyze the influence of IT knowledge on organizational innovativeness. Further, we contribute to the discussion on digital innovations, which concentrates on both IT as enabler for creating innovations as well as on technological aspects of digital or digitized products [1,53,54].…”

“…Knowledge, IT, and innovativeness are closely intertwined: IT represents a crucial component for organizational knowledge [3,30] whereas knowledge plays a crucial part in innovation processes [23,55]. Innovation requires to integrate heterogeneous knowledge resources from both external as well as internal sources to generate creative ideas, tasks, or procedures [53].…”

“…As especially IT contributes to understand, synthesize, and apply technical knowledge for developing innovations [23], this research concentrates on the role of the CIO as agenda setter, influencer, and distributer of IT knowledge within organizations [31]. Especially in service and knowledge intense industries, IT knowledge is a pivotal organizational resource [6,30,32,48] and becomes increasingly evident for the business-side due to forced business process digitization [13,52].…”