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Journal ArticleDOI

Enterprise agility and the enabling role of information technology

01 Apr 2006-European Journal of Information Systems (Taylor & Francis)-Vol. 15, Iss: 2, pp 120-131
TL;DR: The concept of enterprise agility is defined and deconstruct, the underlying capabilities that support enterprise agility are explored, the enabling role of information technology (IT) and digital options are explained, and a method for measuring enterprise Agility is proposed.
Abstract: In turbulent environments, enterprise agility, that is, the ability of firms to sense environmental change and respond readily, is an important determinant of firm success. We define and deconstruct enterprise agility, delineate enterprise agility from similar concepts in the business research literature, explore the underlying capabilities that support enterprise agility, explicate the enabling role of information technology (IT) and digital options, and propose a method for measuring enterprise agility. The concepts in this paper are offered as foundational building blocks for the overall research program on enterprise agility and the enabling role of IT.
Citations
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Journal ArticleDOI
TL;DR: The premise that organizations need to develop superior firm-wide IT capability to successfully manage their IT resources to realize agility is developed, and a possible resolution to the contradictory effect of IT on agility is suggested.
Abstract: Information technology is generally considered an enabler of a firm's agility. A typical premise is that greater IT investment enables a firm to be more agile. However, it is not uncommon that IT can also hinder and sometimes even impede organizational agility. We propose and theorize this frequently observed but understudied IT-agility contradiction by which IT may enable or impede agility. We develop the premise that organizations need to develop superior firm-wide IT capability to successfully manage their IT resources to realize agility. We refine the conceptualization and measurement of IT capability as a latent construct reflected in its three dimensions: IT infrastructure capability, IT business spanning capability, and IT proactive stance. We also conceptualize two types of organizational agility: market capitalizing agility and operational adjustment agility. We then conduct a matched-pair field survey of business and information systems executives in 128 organizations to empirically examine the link between a firm's IT capability and agility. Business executives responded to measurement scales of the two types of agility and organizational context variables, and IS executives responded to measurement scales of IT capabilities and IS context variables. The results show a significant positive relationship between IT capability and the two types of organizational agility. We also find a significant positive joint effect of IT capability and IT spending on operational adjustment agility but not on market capitalizing agility. The findings suggest a possible resolution to the contradictory effect of IT on agility: while more IT spending does not lead to greater agility, spending it in such a way as to enhance and foster IT capabilities does. Our study provides initial empirical evidence to better understand essential IT capabilities and their relationship with organizational agility. Our findings provide a number of useful implications for research and managerial practices.

913 citations


Cites background from "Enterprise agility and the enabling..."

  • ...The firm can use modular, reusable code to rapidly produce IT-based products and services that will respond to changes, enable supply-chain and production capabilities to accommodate unexpected changes, and allow quick reconfiguration of the platform (Overby et al. 2006)....

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  • ...However, researchers have also noted that IT may hinder and sometimes even impede organizational agility (Lucas and Olson 1994; Overby et al. 2006; Weill et al. 2002), partly due to the relatively fixed physical and technological artifacts of information systems (Allen and Boynton 1991; Galliers…...

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  • ...However, researchers have also noted that IT may hinder and sometimes even impede organizational agility (Lucas and Olson 1994; Overby et al. 2006; Weill et al. 2002), partly due to the relatively fixed physical and technological artifacts of information systems (Allen and Boynton 1991; Galliers 2007)....

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  • ...Real-time access to global information also supports extensive environmental scanning to gather, track, and disseminate information pertaining to changes in customer needs, competitors, and technology or regulatory developments (Kohli and Jaworski 1990; Overby et al. 2006)....

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  • ...Agility also extends the concept of strategic flexibility that handles unstructured changes (Overby et al. 2006; Volberda and Rutges 1999)....

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Journal ArticleDOI
TL;DR: This research extends and integrates the literature on strategic IT alignment and organizational agility at a time when both alignment and agility are recognized as critical and concurrent organizational goals.
Abstract: Strategic information technology alignment remains a top priority for business and IT executives. Yet with a recent rise in environmental volatility, firms are asking how to be more agile in identifying and responding to market-based threats and opportunities. Whether alignment helps or hurts agility is an unresolved issue. This paper presents a variety of arguments from the literature that alternately predict a positive or negative relationship between alignment and agility. This relationship is then tested using a model in which agility mediates the link between alignment and firm performance under varying conditions of IT infrastructure flexibility and environmental volatility. Using data from a matched survey of IT and business executives in 241 firms, we uncover a positive and significant link between alignment and agility and between agility and firm performance. We also show that the effect of alignment on performance is fully mediated by agility, that environmental volatility positively moderates the link between agility and firm performance, and that agility has a greater impact on firm performance in more volatile markets. While IT infrastructure flexibility does not moderate the link between alignment and agility, except in a volatile environment, we reveal that IT infrastructure flexibility has a positive and significant main effect on agility. In fact, the effect of IT infrastructure flexibility on agility is as strong as the effect of alignment on agility. This research extends and integrates the literature on strategic IT alignment and organizational agility at a time when both alignment and agility are recognized as critical and concurrent organizational goals.

905 citations

Journal ArticleDOI
TL;DR: It is revealed that digital transformation is an ongoing process of using new digital technologies in everyday organizational life, which recognizes agility as the core mechanism for the strategic renewal of an organization's business model, collaborative approach, and eventually the culture.

760 citations

Journal ArticleDOI
01 Feb 2013
TL;DR: A model to examine how IT capabilities affect firm performance through absorptive capacity and supply chain agility in the supply chain context is proposed and concludes with implications and suggestions for future research.
Abstract: Researchers and practitioners regard information technology (IT) as a competitive tool. However, current knowledge on IT capability mechanisms that affect firm performance remains unclear. Based on the dynamic capabilities perspective and the view of a hierarchy of capabilities, this article proposes a model to examine how IT capabilities (i.e., flexible IT infrastructure and IT assimilation) affect firm performance through absorptive capacity and supply chain agility in the supply chain context. Survey data show that absorptive capacity and supply chain agility fully mediate the influences of IT capabilities on firm performance. In addition to the direct effects, absorptive capacity also has indirect effects on firm performance by shaping supply chain agility. We conclude with implications and suggestions for future research.

562 citations


Cites background from "Enterprise agility and the enabling..."

  • ...Due to the growing need for a timely and cost-effective manner of product and service delivery, supply chain agility is considered a critical type of operational capability required for superior firm performance [46,47]....

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  • ...Therefore, supply chain agility is regarded as a critical source of superior firm performance [46,47]....

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Journal ArticleDOI
TL;DR: An assessment of absorptive capacity in the information systems literature is provided and a framework through which IS researchers can more fully leverage the rich aspects of absorption capacity when investigating the role of information technology in organizations is provided.
Abstract: Absorptive capacity is a firm's ability to identify, assimilate, transform, and apply valuable external knowledge. It is considered an imperative for business success. Modern information technologies perform a critical role in the development and maintenance of a firm's absorptive capacity. We provide an assessment of absorptive capacity in the information systems literature. IS scholars have used the absorptive capacity construct in diverse and often contradictory ways. Confusion surrounds how absorptive capacity should be conceptualized, its appropriate level of analysis, and how it can be measured. Our aim in reviewing this construct is to reduce such confusion by improving our understanding of absorptive capacity and guiding its effective use in IS research. We trace the evolution of the absorptive capacity construct in the broader organizational literature and pay special attention to its conceptualization, assumptions, and relationship to organizational learning. Following this, we investigate how absorptive capacity has been conceptualized, measured, and used in IS research. We also examine how absorptive capacity fits into distinct IS themes and facilitates understanding of various IS phenomena. Based on our analysis, we provide a framework through which IS researchers can more fully leverage the rich aspects of absorptive capacity when investigating the role of information technology in organizations.

497 citations

References
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Journal ArticleDOI
TL;DR: In this paper, the authors argue that the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities.
Abstract: In this paper, we argue that the ability of a firm to recognize the value of new, external information, assimilate it, and apply it to commercial ends is critical to its innovative capabilities. We label this capability a firm's absorptive capacity and suggest that it is largely a function of the firm's level of prior related knowledge. The discussion focuses first on the cognitive basis for an individual's absorptive capacity including, in particular, prior related knowledge and diversity of background. We then characterize the factors that influence absorptive capacity at the organizational level, how an organization's absorptive capacity differs from that of its individual members, and the role of diversity of expertise within an organization. We argue that the development of absorptive capacity, and, in turn, innovative performance are history- or path-dependent and argue how lack of investment in an area of expertise early on may foreclose the future development of a technical capability in that area. We formulate a model of firm investment in research and development (R&D), in which R&D contributes to a firm's absorptive capacity, and test predictions relating a firm's investment in R&D to the knowledge underlying technical change within an industry. Discussion focuses on the implications of absorptive capacity for the analysis of other related innovative activities, including basic research, the adoption and diffusion of innovations, and decisions to participate in cooperative R&D ventures. **

31,623 citations


"Enterprise agility and the enabling..." refers background in this paper

  • ...…to firm success in turbulent environments, including dynamic capabilities (Teece et al., 1997), strategic flexibility (Ansoff, 1980; Hitt et al., 1998), market orientation (Kohli & Jaworski, 1990; Narver & Slater, 1990), and absorptive capacity (Cohen & Levinthal, 1990; Zahra & George, 2003)....

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  • ...The term ‘agile’ is commonly used to describe firms that are able to adapt to and perform well in rapidly changing environments (Dove, 2001; Weill et al., 2002; Sambamurthy et al., 2003; Gartner, 2004)....

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  • ...This is consistent with the original conceptualization of absorptive capacity put forth by Cohen & Levinthal (1990), which suggests that firms must have a base of prior knowledge in an area in order to make sense of new developments in that area....

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  • ...…to firm success in turbulent environments, including dynamic capabilities (Teece et al., 1997), market orientation (Kohli & Jaworski, 1990; Narver & Slater, 1990), absorptive capacity (Cohen & Levinthal, 1990; Zahra & George, 2003), and strategic flexibility (Ansoff, 1980; Grewal & Tansuhaj, 2001)....

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Journal ArticleDOI
TL;DR: The dynamic capabilities framework as mentioned in this paper analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change, and suggests that private wealth creation in regimes of rapid technology change depends in large measure on honing intemal technological, organizational, and managerial processes inside the firm.
Abstract: The dynamic capabilities framework analyzes the sources and methods of wealth creation and capture by private enterprise firms operating in environments of rapid technological change. The competitive advantage of firms is seen as resting on distinctive processes (ways of coordinating and combining), shaped by the firm's (specific) asset positions (such as the firm's portfolio of difftcult-to- trade knowledge assets and complementary assets), and the evolution path(s) it has aflopted or inherited. The importance of path dependencies is amplified where conditions of increasing retums exist. Whether and how a firm's competitive advantage is eroded depends on the stability of market demand, and the ease of replicability (expanding intemally) and imitatability (replication by competitors). If correct, the framework suggests that private wealth creation in regimes of rapid technological change depends in large measure on honing intemal technological, organizational, and managerial processes inside the firm. In short, identifying new opportunities and organizing effectively and efficiently to embrace them are generally more fundamental to private wealth creation than is strategizing, if by strategizing one means engaging in business conduct that keeps competitors off balance, raises rival's costs, and excludes new entrants. © 1997 by John Wiley & Sons, Ltd.

27,902 citations

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TL;DR: In this paper, the authors have been observing for more than three decades that business performance is affected by market orientation, yet to date there has been no valid measure of market orientation.
Abstract: Marketing academicians and practitioners have been observing for more than three decades that business performance is affected by market orientation, yet to date there has been no valid measure of ...

8,812 citations

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TL;DR: In this paper, the authors identify key dimensions of absorptive capacity and offer a reconceptualization of this construct, and distinguish between a firm's potential and realized capacity, and then advance a model outlining the conditions when the firm's realized capacities can differentially influence the creation and sustenance of its competitive advantage.
Abstract: Researchers have used the absorptive capacity construct to explain various organizational phenomena. In this article we review the literature to identify key dimensions of absorptive capacity and offer a reconceptualization of this construct. Building upon the dynamic capabilities view of the firm, we distinguish between a firm's potential and realized capacity. We then advance a model outlining the conditions when the firm's potential and realized capacities can differentially influence the creation and sustenance of its competitive advantage.

8,648 citations

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TL;DR: The literature reflects remarkably little effort to develop a framework for understanding the implementation of the marketing concept as mentioned in this paper, and the authors synthesize extant knowledge on the subject and pro-pose a knowledge-based approach.
Abstract: The literature reflects remarkably little effort to develop a framework for understanding the implementation of the marketing concept. The authors synthesize extant knowledge on the subject and pro...

7,539 citations