Understanding the Relationship between IT Capabilities and Operational Agility: A Multi-Method Approach

Abstract

The pervasiveness of information technology (IT) forces organizations to develop capabilities in order to leverage IT-oriented resources and processes in operations. However, the system of IT-oriented resources and processes that organizations need to develop to achieve operational competency remains unclear. Using a multi-method approach that combines quantitative and qualitative data analyses, this paper presents a theoretical framework of IT-enabled operations strategy that conceptualizes the role of IT capability in leveraging resources and processes for operational agility. Drawing on operations and IT business value research, we advance that IT enables operational agility through two dimensions: resource leveraging and process enhancing. From the perspective of resourced-based operations strategy, we explore the role of IT in resource leveraging by investigating the nonlinear relationship between IT infrastructure and IT reconfiguration. From the perspective of process-oriented operations strategy, we explore the role of IT in process enhancing by investigating the nonlinear relationship between IT coordination and IT integration. Our PLS results, based on a sample of 113 organizations in Europe, Asia and North America, show that the interaction between IT infrastructure and IT reconfiguration positively influences operational agility, hence showing complementarity between the two constructs, while the interaction between IT coordination and IT integration negatively affects operational agility, hence indicating substitutability between the two constructs. A series of 56 interviews were further conducted to validate the PLS results, and to provide finer grained explanation of the research model and quantitative findings. Our findings offer an alternative explanation of the inconsistent relationship between IT capability and operational agility found in the literature.

Keywords: IT Strategy, Operational Agility, Operations Strategy, Multi-Method Approach