From IT Leveraging Competence to Competitive Advantage in Turbulent Environments: The Case of New Product Development

TLDR

Information systems scholars question whether IT can generate competitive advantage in turbulent settings. This study investigates how IT leveraging competence at the business process level can create competitive advantage in new product development. The authors conceptualize IT leveraging competence in new product development and test it with data from 180 NPD managers. IT leveraging competence indirectly boosts competitive advantage in new product development through functional competencies and dynamic capabilities, with stronger effects under higher environmental turbulence.

Abstract

A burning question for information systems (IS) researchers and practitioners is whether and how IT can build a competitive advantage in turbulent environments. To address this question, this study focuses on the business process level of analysis and introduces the construct of IT leveraging competence — the ability to effectively use IT functionalities. This construct is conceptualized in the context of new product development (NPD). IT leveraging competence is shown to indirectly influence competitive advantage in NPD through two key mediating links: functional competencies (the ability to effectively execute operational NPD processes) and dynamic capabilities (the ability to reconfigure functional competencies to address turbulent environments). Environmental turbulence is also shown to moderate the process by which IT leveraging competence influences competitive advantage in NPD. Empirical data were collected from 180 NPD managers. Through the construct of IT leveraging competence, the study shows that the effective use of IT functionalities, even generic functionalities, by business units can help build a competitive advantage. The study also shows that the strategic effect of IT leveraging competence is more pronounced in higher levels of environmental turbulence. This effect is not direct: It is fully mediated by both dynamic capabilities and functional competencies. Taken together, these findings suggest that IS researchers should look beyond the direct effects of firm-level IT infrastructures and focus their attention on how business units can leverage IT functionalities to better reconfigure.