The Complementarity of Information Technology Infrastructure and E-Commerce Capability: A Resource-Based Assessment of Their Business Value.

Author List: Zhu, Kevin Xiaoguo;
Journal of Management Information Systems, 2004, Volume 21, Issue 1, Page 167-202.
This study seeks to assess the business value of e-commerce capability and information technology (IT) infrastructure in the context of electronic business at the firm level. Grounded in the IT business-value literature and enhanced by the resource-based theory of the firm, we developed a research framework in which both the main effects and the interaction effects of e-commerce and IT on firm performance were tested. Within this theoretical framework, we formulated several hypotheses. We then developed a multidimensional e-commerce capability construct, and after establishing its validity and reliability, tested the hypotheses with empirical data from 114 companies in the retail industry. Controlling for variations of firm size and subindustry effects, our empirical analysis found a strong positive interaction effect between IT infrastructure and e-commerce capability. This suggests that their complementarity positively contributes to firm performance in terms of sales per employee, inventory turnover, and cost reduction. The results are consistent with the resource-based theory, and provide empirical evidence to the complementary synergy between front-end e-commerce capability and back-end IT infrastructure. Combined together, they become more effective in producing business value. Yet the value of this synergy has not been recognized in the IT payoff literature. The "productivity paradox" observed in various studies has been attributed to variation in methods and measures, yet we offer an additional explanation: ignoring complementarities in business value measurement implies that the impact of IT was seriously underestimated. Our results emphasized the integration of resources as a feasible path to e-commerce value--companies need to enhance the integration between front-end e-commerce capability and back-end IT infrastructure in order to reap the benefits of e-commerce investments.
Keywords: electronic commerce; firm performance; information technology business value; resource complementarity; resource-based theory
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#59 0.293 capabilities capability firm firms performance resources business information technology firm's resource-based competitive it-enabled view study value infrastructure results organizational model
#285 0.165 effects effect research data studies empirical information literature different interaction analysis implications findings results important set large provide using paper
#176 0.106 e-commerce value returns initiatives market study announcements stock event abnormal companies significant growth positive using methodology investments period time initiative
#143 0.097 value business benefits technology based economic creation related intangible cocreation assessing financial improved key economics assess question created create understanding
#181 0.083 outcomes theory nature interaction theoretical paradox versus interpersonal literature provides individual levels understanding dimensions addition foundation various understand productivity work
#271 0.074 technology investments investment information firm firms profitability value performance impact data higher evidence diversification industry payoff return findings decisions greater
#124 0.058 validity reliability measure constructs construct study research measures used scale development nomological scales instrument measurement researchers developed validation discriminant results