How Does Information Technology Capability Enable Digital Transformation? Considering the Mediating Roles of Agility

JAIS Theory Development Workshop, International Conference on Information Systems (ICIS 2014), Auckland, New Zealand, December 14–17

41 Pages Posted: 31 Oct 2016

See all articles by Victor Dibia

Victor Dibia

IBM Research; City University of Hong Kong (CityUHK) - Department of Information Systems

Lele Kang

Independent

Ghazwan Hassna

Hawaii Pacific University - College of Business; City University of Hong Kong (CityUHK) - Department of Information Systems

Shaobo Wei

Independent

Paul Benjamin Lowry

Virginia Polytechnic Institute & State University - Pamplin College of Business

Date Written: December 14, 2014

Abstract

In turbulent business environments, the survival of firms hinges on their ability to speedily sense and react to environmental changes, which in turn leads to superior competitive positioning and improved firm performance. With the rapid development of digital technologies – such as social media platforms, smart mobile phones, cloud computing, and big data analytics – business and IT leaders are constantly exploring new opportunities that harness advances in digital technologies to transform their firms. In this paper, we investigate this phenomenon, which we call digital transformation. We draw on the organizational agility literature, IT capabilities literature, and the dynamic capabilities theory. Based on the dynamic capabilities theory and the hierarchy of capabilities, we distinguish between two types of processes: capability-building and competitive-action-generating processes. We propose that IT capability, a low-order capability, enables the higher-order capability of organizational agility, which in turn enables the firm to transform its products, processes, or business models radically. Our model also considers the important impact of leadership style on both capability-building and competitive-action-generating processes. More precisely, we argue that the process of successfully developing higher-order capabilities from lower-order capabilities is moderated by the presence of aligned transformational leadership. This paper contributes to the academic literature on IT and business strategy by determining why business organizations pursue and how they can achieve digitally enabled business transformations. Our theory extends the adopted overarching theory, the dynamic capabilities theory, by considering the influence of leadership style on both capability-building and competitive-action-generating processes. The paper provides important practical insights for business and IT leaders regarding how to build and utilize IT capabilities to generate competitive actions that contribute to success in turbulent business environments.

Keywords: Digital transformation, IT capability, Agility, Transformational leadership, Case studies, IT innovation, Strategy

Suggested Citation

Dibia, Victor and Kang, Lele and Hassna, Ghazwan and Wei, Shaobo and Lowry, Paul Benjamin, How Does Information Technology Capability Enable Digital Transformation? Considering the Mediating Roles of Agility (December 14, 2014). JAIS Theory Development Workshop, International Conference on Information Systems (ICIS 2014), Auckland, New Zealand, December 14–17, Available at SSRN: https://ssrn.com/abstract=2861425

Victor Dibia

IBM Research ( email )

T. J. Watson Research Center
1 New Orchard Road
Armonk, NY 10504-1722
United States

City University of Hong Kong (CityUHK) - Department of Information Systems ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Lele Kang

Independent

Ghazwan Hassna

Hawaii Pacific University - College of Business ( email )

900 Fort Street Mall
Suite 600
Honolulu, HI 96813
United States
(808) 687-7062 (Phone)
(808) 566-2403 (Fax)

HOME PAGE: http://www.hpu.edu/faculty/cob/ghazwan-hassna.html

City University of Hong Kong (CityUHK) - Department of Information Systems ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

Shaobo Wei

Independent

Paul Benjamin Lowry (Contact Author)

Virginia Polytechnic Institute & State University - Pamplin College of Business ( email )

1016 Pamplin Hall
Blacksburg, VA 24061
United States

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