In this paper, we examine how the competitive industry environment shapes the way that digital strategic posture (defined as a focal firm's degree of engagement in a particular class of digital business practices relative to the industry norm) influences firms' realized digital business strategy. We focus on two forms of digital strategy: general IT investment and IT outsourcing investment. Drawing from prior literature on determinants of IT activity and competitive dynamics, we argue that three elements of the industry environment determine whether digital strategic posture has an increasingly convergent or divergent influence on digital business strategy. By divergent influence, we mean an influence that leads to spending substantially more or less on a particular strategic activity than industry norms. We predict that a digital strategic posture (difference from the industry mean) has an increasingly divergent effect on digital business strategy under higher industry turbulence, while having an increasingly convergent effect on digital business strategy under higher industry concentration and higher industry growth. The study uses archival data for 400 U.S.-based firms from 1999 to 2006. Our findings imply that digital business strategy is not solely a matter of optimizing firm operations internally or of responding to one or two focal competitors, but also arises strikingly from awareness and responsiveness to the digital business competitive environment. Collectively, the findings provide insights on how strategic posture and industry environment influence firms' digital business strategy.
Information technology enabled exchanges in electronic markets have significant implications for buyer--supplier relationships. Building on studies that emphasize the role of intangible assets in interorganizational relationships, this study argues that buyers are less likely to use reverse auctions for supplier relationships involving a high degree of non-contractibility. The argument complements traditional transaction cost economics arguments that focus on the impact of asset specificity and product specialization. We identify six dimensions of non-contractibility--quality, supplier technological investments, information exchange, responsiveness, trust, and flexibility--which encompass task-based and interaction-based non-contractibility. The study finds that, together with product specialization, these non-contractible elements of interorganizational relationships have greater explanatory power for reverse auction use than asset specificity. This result highlights the importance of supplier investments in non-contractible elements of exchange relationships in an increasingly dynamic service- and knowledge-based economy.