Abstract
Recent studies on the business impacts of information technology (IT) have examined these impacts in the context of either other organizational resources or contingency factors. In this study we integrate these perspectives to develop a contingent interaction model. This model examines how a firm’s IT investment interacts differently with resources focusing on creating value (i.e., R&D) and resources focusing on value appropriation (i.e., advertising), depending on the environmental turbulence in the firm’s industry. The results indicate that a firm’s IT interacts differently with other organizational resources depending on (a) the resource’s focus on value creation through innovation or value appropriation in the market; and (b) the extent of turbulence in the firm’s industry. Thus, managers should consider IT’s interactions with other resources while making IT investments. In turbulent and stable environments, managers should seek ways to use IT to complement R&D investments and advertising investments, respectively. Managers should also recognize that IT may erode some of the benefits of R&D and advertising investments in stable and turbulent environments, respectively. They should therefore exercise caution when making concurrent investments in IT and R&D in stable environments and exercise similar caution when making concurrent investments in IT and advertising in turbulent environments.
Published Version
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