Leveraging IT Capabilities and Competitive Process Capabilities for the Management of Interorganizational Relationship Portfolios

  • Authors:

  • Arun Rai;Xinlin Tang

  • Affiliations:

  • Center for Process Innovation and Department of Computer Information Systems, Robinson College of Business, Georgia State University, Atlanta, Georgia 30303;Department of Management, College of Business, Florida State University, Tallahassee, Florida 32306

  • Venue:
  • Information Systems Research
  • Year:
  • 2010

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Abstract

Firms are increasingly dependent on external resources and are establishing portfolios of interorganizational relationships (IRs) to leverage external resources for competitive advantage. However, the systems of information technology (IT) and process capabilities that firms should develop to manage IR portfolios dynamically are not well-understood. In order to theorize how key structural IT capabilities (IT integration and IT reconfiguration) and competitive process capabilities (process alignment, partnering flexibility, and offering flexibility) operate as systems of complements, we draw on the competitive dynamics perspective and resource dependency theory and on the literature for IT business value, interorganizational systems, and interorganizational relationship management. We also theorize how a firm's IR portfolio moderates the effects of structural IT capabilities on competitive process capabilities and why a firm's environmental turbulence moderates the effects of complementary process capabilities on competitive performance. We test our model using survey data from 318 firms in 4 industries. Our results provide broad support for the following: (1) structural IT capabilities and process capabilities operating as a system of complements, (2) the effects of structural IT capabilities on competitive process capabilities being contingent on IR portfolio concentration, and (3) the effects of complementary process capabilities on competitive performance being contingent on environmental turbulence. We discuss the theoretical and practical implications of how firms should develop complementary systems of structural IT capabilities and competitive process capabilities to manage IR portfolios dynamically and leverage external resources.