Organisational learning and core capabilities development: the role of IT

Abstract

The resource-based view of the firm (RBVF) focuses on the firm's resources and capabilities to understand business strategy and to provide direction to strategy formulation. This paper emphasizes the learning aspects of capability development and explores how information technology (IT) can contribute to it. As a standardized resource widely available, IT can participate in the fundamental process that transforms resources into capabilities and eventually into core capabilities. In this way, IT can become — embedded in core capabilities — an active component of the firm's competitive advantages. The process by which resources end up being components of core capabilities in firms is a learning process that can be described and understood using RBVF concepts. Furthermore, the development of IT strategic applications (also called ‘strategic information systems’, or SIS) follows patterns that closely parallel the structure of that learning process. For this reason we propose an organizational learning model based on the RBVF, and use it to derive guidelines for management action aimed at improving IT effectiveness in organizations. The paper is organized as follows: the RBVF framework is summarized, including the concepts of capabilities and core capabilities and the organizational processes that lead to them. Next, an organizational learning model is presented: an interpretation of capability development that emphasizes situated learning and knowledge accumulation. The model is then used to show how IT can contribute to core capability formation in a firm: management action can mold the process to some extent, although it often unfolds ‘naturally’ embedded in an organizational context that is both determined by and determinant of learning. Finally, guidelines are discussed to come up and build strategic IT applications, based on the previous analysis. Short conclusions follow.