Path Dependence of Dynamic Information Technology Capability: An Empirical Investigation

Journal of Management Information Systems, Vol. 28, No. 3, pp. 45-84, Winter 2011-2012

Posted: 4 Aug 2011 Last revised: 13 Jun 2014

See all articles by Jee-Hae Lim

Jee-Hae Lim

University of Hawaii, Manoa

Theophanis C. Stratopoulos

University of Waterloo - School of Accounting and Finance

Tony S. Wirjanto

University of Waterloo - School of Accounting and Finance; University of Waterloo, Department of Statistics & Actuarial Science

Date Written: February 24, 2012

Abstract

Organizations seek to differentiate themselves in the marketplace by deploying information technology (IT) to develop dynamic IT capabilities and resist competitors’ attempts to imitate or improve these capabilities. While this strategy has been justified on the grounds that dynamic IT capabilities are durably heterogeneous, there does not seem to be empirical evidence supporting or refuting this assumption. This study empirically validates the assumption of durable heterogeneity of dynamic organizational IT capability (ITC) due to path dependence. We capture ITC heterogeneity by introducing a framework in which firms try to achieve ITC leadership in their industry and we propose that durable ITC heterogeneity can be attributed to path dependence, and, hence, it can be tested using Heckman’s true state dependence of ITC leadership status. Using random and fixed effect dynamic logit models, we investigate true state dependence of ITC leadership on a sample of large US firms. Results, which are robust to alternative sample, dependent, and control variable specifications, show that achieving ITC leadership is a true state-dependent process suggesting durable heterogeneity of ITC due to path dependence. The study contributes to the dynamic capabilities literature and has important managerial implications. The proposed framework for conceptualizing durable resource heterogeneity due to path dependence is general and versatile thus providing a foundation for future research on dynamic capabilities. The findings provide empirical evidence to confirm that ITC is durably heterogeneous and should be managed as a potential source of competitive advantage.

Keywords: IT Business Value, Dynamic Organizational IT Capability, Path Dependence, True State Dependence, Dynamic Random Effects, Fixed Effects Logit Models

JEL Classification: L20, M15, C33

Suggested Citation

Lim, Jee-Hae and Stratopoulos, Theophanis C. and Wirjanto, Tony S., Path Dependence of Dynamic Information Technology Capability: An Empirical Investigation (February 24, 2012). Journal of Management Information Systems, Vol. 28, No. 3, pp. 45-84, Winter 2011-2012. Available at SSRN: https://ssrn.com/abstract=1904636

Jee-Hae Lim

University of Hawaii, Manoa ( email )

2404 Maile Way
Honolulu, HI Honolulu 96822
United States
(808) 956-8503 (Phone)
(808) 956-9888 (Fax)

HOME PAGE: http://shidler.hawaii.edu/directory/jee-hae-lim/soa

Theophanis C. Stratopoulos (Contact Author)

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1 N2L 3G1
Canada
519-888-4567 x35943 (Phone)

Tony S. Wirjanto

University of Waterloo - School of Accounting and Finance ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1
Canada
519-888-4567 x35210 (Phone)

HOME PAGE: http://https://uwaterloo.ca/statistics-and-actuarial-science/people-profiles/tony-wirjanto

University of Waterloo, Department of Statistics & Actuarial Science ( email )

200 University Avenue West
Waterloo, Ontario N2L 3G1
Canada
519-888-4567 x35210 (Phone)
519-746-1875 (Fax)

HOME PAGE: http://math.uwaterloo.ca/statistics-and-actuarial-science/people-profiles/tony-wirjanto

Register to save articles to
your library

Register

Paper statistics

Abstract Views
707
PlumX Metrics