Dynamic capabilities and organizational impact of IT infrastructure: A research framework and an empirical investigation

Information technology (IT) infrastructure is increasingly recognized as a strategic resource for firm competitiveness. Building a responsive IT infrastructure has recently been identified by top information systems (IS) executives as the most important IS management issue. Despite the strategic importance of and significant investment in IT infrastructure, little empirical research has been reported which studies the characteristics and the organizational impact of IT infrastructure. Research on IT infrastructure is still in its early stage. Empirical research is needed to provide a better understanding of the characteristics and impact of IT infrastructure.; This study develops an IT infrastructure grid that conceptualizes the characteristics of IT infrastructure capabilities. Drawing from the resource-based theory of the firm, IT infrastructure capabilities is defined in terms of technological resources and organizational capability components. Drawing from the real options concept, IT infrastructure capability is categorized into functionality and flexibility. Functionality represents the efficiency of the IT infrastructure in serving the intended design goals; flexibility refers to the ability of IT infrastructure to enable the firm to adapt to business and technological changes.; Based on an integration of the contingency theory and the literature on the business value of IT, a conceptual model was developed to depict the relationships among organizational context variables, IT infrastructure capabilities, and organizational performance. A research model and a set of hypotheses were developed to test the various linkages specified in the conceptual model. Organizational context variables that influence a firm's IT infrastructure capabilities include the firm's external environment (competitiveness, dynamism and heterogeneity) and internal environment (organizational size, information intensity, business synergy, the role of IT, and IT-business alignment). Organizational impacts of IT infrastructure were assessed at two levels. The first-order or direct impact was captured at the intermediate process level (the overall effectiveness of the IS function and the effectiveness of business value-chain processes). The second-order or indirect impact of IT infrastructure was examined through its effects on the organization's performance.; The data for the study were collected through a large-scale field survey. A senior business executive and a senior IS executive from the participating organizations responded to two separate questionnaires. The results of the data analysis revealed that IT infrastructure capabilities had positive and significant direct effects on the effectiveness of the IS function and the effectiveness of the business processes. More importantly, although IT infrastructure capabilities did not directly affect organization performance, it had a positive and significant indirect effect on organizational performance through business processes and the overall effectiveness of the IS function. Among all the dimensions of IT infrastructure capabilities, management competence of the IS function was found to be the most important factor determining the overall impact of IT infrastructure on the organization.; Among all the contingency variables, IT-business alignment, the role of IT and business synergy were found to be the most significant predictors of a firm's IT infrastructure capabilities. The characteristics of a firm's external environment were not found to be significant predictors of the firm's IT infrastructure capabilities. Therefore, a firm's IT infrastructure capabilities seemed to be influenced more by its internal environment than by its external environment.