Digital systems and competitive responsiveness: The dynamics of IT business value

Dutta, Amitava; Lee, Hun; Yasai-Ardekani, Masoud

doi:10.1016/j.im.2014.05.005

Cited by 20 publications

(7 citation statements)

References 57 publications

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“…Despite the undeniable role of agility, a vast set of studies on ITrelated issues have overlooked agility as a potential outcome (Oh & Pinsonneault, 2007) and only highlighted firm performance (e. g., Devaraj & Kohli, 2003;Melville, Kraemer, & Gurbaxani, 2004;Mithas, Ramasubbu, & Sambamurthy, 2011;Rai, Patnayakuni, & Seth, 2006;Stoel & Muhanna, 2009). With some notable exceptions (Overby, Bharadwaj, & Sambamurthy, 2006;Sambamurthy et al, 2003;Tallon & Pinsonneault, 2011) previous research does not fully address the relationship between IT-related issues and firms' agility (Dutta, Lee, & Yasai-Ardekani, 2014). More directly, the relationship between IT-enabled business capabilities and agility has been seen as a 'black box' (Huang et al, 2014).…”

Section: Agilitymentioning

confidence: 99%

The role of business analytics capabilities in bolstering firms’ agility and performance

Ashrafi

Ravasan

Trkman

et al. 2019

International Journal of Information Management

277

224

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Many companies invest considerable resources in developing Business Analytics (BA) capabilities to improve their performance. BA can affect performance in many different ways. This paper analyses how BA capabilities affect firms' agility through information quality and innovative capability. Furthermore, it studies the moderating role of environmental turbulence, both technological and in the market. The proposed model was tested using statistical data from 154 firms with two respondents (CEO and CIO) from each firm. The data were analysed using Partial Least Squares (PLS)/Structured Equation Modelling (SEM). Our results indicate that BA capabilities strongly impact a firm's agility through an increase in information quality and innovative capability. We also discuss that both market and technological turbulence moderate the influence of firms' agility on firms' performance. 1. Introduction Business analytics (BA) are overhauling the way firms are generating and using data (Ramanathan, Philpott, Duan, & Cao, 2017). They attracted increasing attention from both academics and practitioners for their high operational and strategic potential across various industries, including financial services, insurance, retail, healthcare and manufacturing (Dubey, Gunasekaran, Childe, Wamba, & Papadopoulos, 2016; Fosso Wamba, Ngai, Riggins, & Akter, 2017). BA can be defined as a holistic approach to manage, process and analyse data, not only to create actionable insights (adapted from Fosso Wamba, Akter, Edwards, Chopin, and Gnanzou, (2015)) but also to enable organisations to predict changes based on market requirements and respond to them quickly (Işık, Jones, & Sidorova, 2013). BA systems involve the use of capabilities and technologies to collect, transform, analyse and interpret data to support decision-making (Santiago Rivera & Shanks, 2015). BA are known as 'competitive differentiators (Jeble et al., 2018),' and both professional press and academic research consistently demonstrate a positive relationship between BA and or

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Section: Agilitymentioning

confidence: 99%

The role of business analytics capabilities in bolstering firms’ agility and performance

Ashrafi

Ravasan

Trkman

et al. 2019

International Journal of Information Management

277

224

View full text Add to dashboard Cite

show abstract

“…Melville et al, 2004;Grover and Kohli, 2012;Dutta et al, 2014). One important theme emerging from the literature is that IT creates business value when IT is aligned with, or complementary to, organisational strategy (e.g.…”

Section: Introductionmentioning

confidence: 99%

Systemic capabilities: the source of IT business value

Duan¹,

Cadden

Minocha³

2016

Information Technology &Amp; People

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Purpose – The purpose of this paper is to develop, and explicate the significance of the need for a systemic conceptual framework for understanding IT business value. Design/methodology/approach – Embracing a systems perspective, this paper examines the interrelationship between IT and other organisational factors at the organisational level and its impact on the business value of IT. As a result, a systemic conceptual framework for understanding IT business value is developed. An example of enhancing IT business value through developing systemic capabilities is then used to test and demonstrate the value of this framework. Findings – The findings suggest that IT business value would be significantly enhanced when systemic capabilities are generated from the synergistic interrelations among IT and other organisational factors at the systems level, while the system’s human agents play a critical role in developing systemic capabilities by purposely configuring and reconfiguring organisational factors. Practical implications – The conceptual framework advanced provides the means to recognise the significance of the need for understanding IT business value systemically and dynamically. It encourages an organisation to focus on developing systemic capabilities by ensuring that IT and other organisational factors work together as a synergistic whole, better managing the role its human agents play in shaping the systems interrelations, and developing and redeveloping systemic capabilities by configuring its subsystems purposely with the changing business environment. Originality/value – This paper reveals the nature of systemic capabilities underpinned by a systems perspective. The resultant systemic conceptual framework for understanding IT business value can help us move away from pairwise resource complementarity to focusing on the whole system and its interrelations while responding to the changing business environment. It is hoped that the framework can help organisations delineate important IT investment considerations and the priorities that they must adopt to create superior IT business value.

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“…It certainly takes a huge investment in IT to face increased competition and the new added value of these major investments is not instantaneous which explains the negative relationship between ROA and DM. So, firms are investing heavily in information technology to reduce delays in competitive responses (Dutta et al, 2014). This is what literature has called Red Queen theory of competition.…”

Section: Interpretation and Implicationmentioning

confidence: 99%

The effect of digital transformation on firm performance: evidence from Swedish listed companies

Jardak

Hamad

2022

JRF

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PurposeThe objective of this research is to examine empirically the effects of digital maturity (DM) on the firm's financial performance as measured by return on assets (ROA), return on equity (ROE) and Tobin's Q.Design/methodology/approachThe authors use a panel data sample of 92 observations collected from 23 listed firms on Sweden's stock exchange over four years, 2015–2018. The authors hand collect DM from the digital leader's reports and collect financial data from DataStream. Using both static and dynamic panel (generalized method of moments (GMM) estimation) regression models to perform endogeneity problem, the authors explore the impact of the DM index on ROA, ROE and Q of Tobin.FindingsThe results show that DM has a negative effect on ROA and ROE but a positive effect on Q of Tobin. This negative relationship can be explained, by the fact that information technology (IT) investment and the DM could take years to be materialized and to be captured by performance indicators. Company investment in IT will increase and basically the ROA will be negatively affected because the higher value of IT assets is not amortized. Nevertheless, in the long term, company can maximize its performance. The positive effect on Q of Tobin captures the long-run effect of digital transformation.Research limitations/implicationsThis research can be helpful for firms in their process of digital transformation to succeed with the change, create value and to understand the challenges they have to face. In the short term, firms undertaking digital transformation will face some financial difficulties which affect negatively their ROA and ROE, but in the long term they can maximize their performance (captured by Tobin’s Q) and improve their market value.Originality/valueIn previous research, the impact of digital transformation on performance has been measured in terms of revenue growth, profit margins and in terms of earnings before interest and taxes (EBIT). Even if the authors have sufficient evidence of the positive effect of digital transformation on organizational performance, there is no support of the positive effect on financial performance. So, the authors try to fill this gap. This research has also the merit of examining this relationship empirically through a dynamic panel data estimation two-step system GMM, while the majority of previous studies are qualitative in nature based on interviews and questionnaires or simple correlations.

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Digital systems and competitive responsiveness: The dynamics of IT business value

Cited by 20 publications

References 57 publications

The role of business analytics capabilities in bolstering firms’ agility and performance

The role of business analytics capabilities in bolstering firms’ agility and performance

Systemic capabilities: the source of IT business value

The effect of digital transformation on firm performance: evidence from Swedish listed companies

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