The invisible weapon: A study of information technology infrastructure as a strategic resource in the insurance industry

Past research on the value of information systems technology has focused on either (1) total information technology (IT) investment and its impact on performance or (2) business benefits of isolated IS business applications. Yet recent ideas both in theory development and in practice suggest IT infrastructure may be a critical resource which may determine the effectiveness of information systems (IS) services in the firm, and consequently, may alter benefits in productivity, financial gains, or competitive advantage for the firm. The concept "flexible infrastructure" in particular has been identified as a set of IT resources which may uniquely affect sustainable competitive advantage.;This research explores the validity of this claim. To do this, it first had to establish both theoretic and operational definitions of the construct. Using the resource-based view of strategic advantage, this work proposes a model of the conditions under which infrastructure flexibility may demonstrate the qualities of a strategic resource. Specifically, it relates the practice of outsourcing IS services and the relationship between business general management and the IS organization to the quality of infrastructure flexibility. A survey instrument about infrastructure characteristics and related conditions was created to gather data specified in the model. To test the model the instrument was administered to members of the IT branch of the Life Office Management Association (LOMA).;Study findings include the identification of subconstructs relevant to infrastructure flexibility and measures of the predictive relationship of outsourcing and business value of IS value on those subconstructs. While the study was unable to test the complete model successfully, it did find that outsourcing negatively predicts some aspects of infrastructure flexibility, while business value measures are positively associated with the constructs.;The research described offers contributions to both the professional practice of IS management and to IS research. The work provides a basis for developing benchmarking tools for an aspect of information technology that has previously been viewed as impossible to evaluate. The findings are important to research as they contribute modestly to both IT value research methods and to our understanding of IS resource value.