When And How Does IT Service Matter? An Analytical And Empirical Analysis Of Heterogeneity Of IT Service Dimensions and the Impact of Non-IT Capability On Performance of Science Oriented Firms

Strategic use of IT has been the subject of considerable interest among researchers and practitioners, spurred by Carr(2003) and research about ‘IT productivity paradox’. The gist of debate is whether IT investment leads to competitive advantage or not. Even though IT is consist of multiple dimensions, previous studies consider the IT as one unit and oversimplify it. We examine how IT is strategically used in different IT dimensions by investigating the optimal IT investment decision of different dimensions in IT service competition. We consider IT conversion process as two steps. IT investment converts to IT service quality and, in order, service quality converts to financial performance. We refer to each step as ‘IT build’ and ‘IT use’ in this paper. We investigate the influence of non-IT capability on each step of conversion process. Our study shows that IT is strategic necessary and does not show strategic differences in some dimensions. And, in other dimensions, firms show strategic differences in IT investment and service quality decision. These are determined by trait of the non-IT capability required for generating IT service. This is consistent with ‘resource based view’. Also we show that firms have different capability in IT using. That is, firm’s capability of IT using moderates the effect of service quality on financial performance. These are investigated by analytical model and empirical test.