It Flexibility and Competitive Performance: the Mediating Role of IT-Enabled Dynamic Capabilities

A question of central importance for researchers and practitioners is whether Information Technology (IT) can help build a competitive advantage in constantly changing environments. One characteristic of a firm’s IT infrastructure in particular, flexibility, has been posited as being a critical enabler in attaining competitive performance gains. Yet, despite this suggestion, there is scarce empirical evidence to support this claim, and even more, a lack of understanding of the mechanisms through which flexible IT infrastructure add value. Grounded on modular systems theory and the dynamic capabilities view of the firm, the notion of IT-enabled dynamic capabilities is put forth which emphasizes the key areas in which IT investments must be leveraged. A conceptual model is then developed to explain how IT flexibility leads to competitive performance gains. To test our hypotheses, a PLS-SEM analysis in performed on a sample of 274 international firms. Outcomes suggest that IT flexibility acts as an antecedent of IT-enabled dynamic capabilities, and that this association is positively moderated by decentralizing IT governance. The formation of IT-enabled dynamic capabilities is found to be an important driver for competitive performance. Results are discussed, while theoretical and practical implications are highlighted.