• Posted Sept. 3, 2018

Study: Balancing exploration and exploitation of IT resources: the influence of Digital Business Intensity on perceived organizational performance

Problem:

Facing novel information technology (IT), organizations must invest in exploiting existing resources and assets to impact organizational performance. However, organizations must also invest in innovative, emerging technologies to strengthen their IT portfolios. Given the importance of both investments in IT capabilities and investments in digital-business intensity, the question concerning how the two types of investments interrelate arises.

How it was studied:

The authors surveyed 315 chief information officers (CIOs) regarding IT capability, digital-business intensity, organizational performance, number of employees, and firm size. They used partial least squares (PLS) to analyse the data.

Take away:

The study makes recommendations regarding investing in IT capabilities and digital-business intensity to improve organizational performance:

• Findings highlight the relationship between digital-business intensity (exploration) and IT capabilities (exploitation).
• Results suggest that companies that leverage their existing IT capabilities to drive digital-business intensity are more adept than other companies at securing performance returns.
• Under conditions of high digital-business intensity, the effect of IT capability on organizational performance is weakened.
• Firms should not embark on digital-business intensity in isolation but should consider existing IT capabilities first.