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Inside the adaptive enterprise: an information technology capabilities perspective on business process agility

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Abstract

Recent innovations in utility computing, web services, and service-oriented architectures, combined with a growing array of IT skills, have improved firms’ ability to be more agile in responding to change. Using the resource-based view of the firm, prior research suggests that IT resources, in isolation, are unlikely to yield superior performance and so as firms try to boost their agility, the question becomes how to configure IT resources to prepare for, or react to, change. In this paper, we posit that managerial IT capabilities based on IT-business partnerships, strategic planning, and ex-post IT project analysis lead to the development of technical IT capabilities associated with a flexible IT infrastructure which in turn drives agility or a firm’s ability to react to change in its products and markets. Using data from matched surveys of IT and business executives in 241 firms, we find that managerial and technical capabilities affect agility. In further testing, we reveal that in a stable setting, technical IT capabilities are more important to agility than managerial IT capabilities, while in a dynamic setting, the opposite is true. Thus, for firms operating in volatile markets, effective models of managerial IT governance are essential for delivering superior agility or adaptiveness.

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Notes

  1. The distinction between resources and capabilities is subtle but important. While, resources are the basic building blocks of capabilities, capabilities are the primary source of competitive advantage [12]. Rather than focus on web services or other IT resource innovations, capabilities asks what these resources enable the firm to achieve.

  2. Environmental flux has most often been measured on the basis of perceptions of heterogeneity (differences in competitive tactics, customer tastes, product lines, distribution channels), hostility (variations in product pricing, technology competition, regulation, unfavorable demographic trends), munificence (abundance or scarcity of key resources), and dynamism (amount and unpredictability of change in customer tastes, technologies and modes of competition) [46, 56].

  3. When using subgroup analysis to evaluate moderation in PLS, Carte and Russell [60] suggest the use of Box’s M to test if item loadings are similar in each group. Significant differences in item loadings could complicate efforts to interpret and compare the path coefficients within each group. We find no significant differences in this study between item loadings for firms in stable and unstable markets.

  4. We also tested an alternative model to the one indicated in Fig. 1 where interaction terms were used to model a moderation effect: managerial IT capabilities moderating the link between technical IT capabilities and agility or technical IT capabilities moderating the link between managerial IT capabilities and agility—product terms are identical in each case [45]. We then estimated this model for our entire sample and for both sub-samples. In each model, the moderator construct was insignificant, confirming that there is no interaction between both sets of IT capabilities and that they each influence agility independent of one another.

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  1. Boston College, 140 Commonwealth Ave., Chestnut Hill, MA, 02467-3808, USA

    Paul Patrick Tallon

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  1. Paul Patrick Tallon
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Correspondence to Paul Patrick Tallon.

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Tallon, P.P. Inside the adaptive enterprise: an information technology capabilities perspective on business process agility. Inf Technol Manage 9, 21–36 (2008). https://doi.org/10.1007/s10799-007-0024-8

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