Stuck in the Middle: Overcoming Strategic Complexity through IT Flexibility

Abstract

Firms have reacted to a recent surge in environmental volatility by turning to mixed business strategies as a way to protect their existing markets and to establish new markets. Rather than choose a single focus for their strategy, these firms pursue operational excellence, customer intimacy, and product leadership at the same time. Research shows that mixed strategies — a characteristic of so-called stuck in the middle firms — lead to lower firm performance than single or pure-strategies. Mindful of the potentially conflicting goals and complexities found in firms with mixed strategies, in this paper, we assess the role of IT flexibility in helping firms to overcome such complexity and to ultimately thrive in a volatile environment that calls for increasingly mixed strategies. Using data from matched surveys of executives in 241 firms, we reveal that IT flexibility (hardware compatibility, software modularity, and network connectivity) is highest in mixed strategy firms and that such firms predominate in volatile settings where flexible IT is more apt to provide the means of responding to sudden or unexpected market change. These findings help explain why mixed strategy firms have higher IT business value than pure strategy firms, a result noted in prior research. For firms trying to prosper under mixed strategies, our results confirm the importance of IT flexibility and the broader implications of using IT to pursue multiple strategic goals, as defines stuck in the middle firms.