The Development Strategy of IT Capability: A Contingency Perspective

TL;DR

This paper develops a contingency model linking IT capabilities, industry types, and value outcomes, providing strategic guidance on IT development based on industry value creation logic.

Contribution

It introduces a conceptual model and empirical analysis that specify which IT capabilities firms should develop based on their industry type to maximize value and performance.

Findings

Value network firms benefit from externally-focused IT capabilities.

Value chain firms improve performance with aggregate IT capabilities.

Empirical evidence supports the contingency model.

Abstract

This study proposes a conceptual model to link IT capabilities, industry types, and value implications. We attempt to use a contingency analysis to theorize that which types of IT capabilities (e.g., externally-focused, internally-focused, and aggregate IT capability) should a firm develop and then what benefits (e.g., firm value and firm performance) it will gain according to its industry's value creation logic (e.g., value chain-based, value shop-based, and value network-based industry). The empirical findings show that a value network-based firm should develop externally-focused IT capabilities to create its firm value and a value chain-based firm should develop aggregate IT capabilities to improve its firm performance and create its firm value.