Resource Structuring or Capability Building? An Empirical Study of the Business Value of Information Technology

Abstract

This paper examines two ways to create business value of information technology BVIT: resource structuring and capability building. We develop a research model positing that IT resources and IT capabilities enhance a firm's performance by providing support to its competitive strategies and core competencies, and the strengths of these supports vary in accord with environmental dynamism. The model is empirically tested using data collected from 296 firms in China. It is found that IT resources generate more business effects in stable environments than in dynamic environments, while IT capabilities generate more business effects in dynamic environments than in stable environments. The results suggest that the BVIT creation mechanism in stable environments is primarily resource structuring while the mechanism in dynamic environments is primarily capability building.