Efficiency or Innovation: How Do Industry Environments Moderate the Effects of Firms’ IT Asset Portfolios

Published at: MIS Quarterly 36(2), 2012, pp. 509-528

47 Pages Posted: 11 Nov 2013

See all articles by Ling Xue

Ling Xue

Georgia State University

Gautamn Ray

University of Minnesota - Twin Cities - Department of Operations and Management Science

Vallabh Sambamurthy

Michigan State University - Department of Accounting & Information Systems

Date Written: November 10, 2013

Abstract

Firms invest in a variety of information technologies and seek to align their IT asset portfolios with two key performance outcomes: efficiency and innovation. Existing research makes the universalistic assumption that both outcomes will always be realized through firms’ IT asset portfolios. There has been limited research on the conditions under which firms’ IT asset portfolios should be more oriented toward efficiency or innovation. Here, we argue that the nature of the industry where a firm competes will have a significant moderating effect on the links between firms’ IT asset portfolios and efficiency or innovation outcomes. Using panel data that covers a wide range of industry environments, we find that at lower levels of dynamism, munificence and complexity, IT asset portfolios are associated with a greater increase in efficiency. In contrast, in environments with higher levels of complexity, IT asset portfolios are associated with a greater increase in innovation (i.e., development of new products and processes, and exploration of growth opportunities). These results provide insights about how firms could realize strategic alignment by tailoring their IT asset portfolios toward an efficiency or innovation focus.

Keywords: Efficiency, Innovation, Exploitation, Exploration, IT Asset Portfolio, IT Value, Competitive Environment, Dynamism, Munificence, Complexity

Suggested Citation

Xue, Ling and Ray, Gautamn and Sambamurthy, Vallabhajosyula, Efficiency or Innovation: How Do Industry Environments Moderate the Effects of Firms’ IT Asset Portfolios (November 10, 2013). Published at: MIS Quarterly 36(2), 2012, pp. 509-528. Available at SSRN: https://ssrn.com/abstract=2352448

Ling Xue (Contact Author)

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Gautamn Ray

University of Minnesota - Twin Cities - Department of Operations and Management Science ( email )

Minneapolis, MN 55455
United States

Vallabhajosyula Sambamurthy

Michigan State University - Department of Accounting & Information Systems ( email )

270 North Business Complex
East Lansing, MI 48824-1034
United States

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