Strategic Alignment Between IT Flexibility and Dynamic Capabilities

Abstract

Dynamic capabilities theory (DCT) emerged as a leading framework in the process of value creation for firms. Its core notion complements the premise of the resource-based view of the firm and is considered an important theoretical and management framework in modern information systems research. However, despite DCT's significant contributions, its strength and core focus are essentially in its use for historical firm performance explanation. Furthermore, valuable contributions have been made by several researchers to extend the DCT to fit the constantly changing IT environments and other imperative drivers for competitive performance. However, no DCT extension has been developed which allows firms to integrally assess their current state of maturity to derive imperative steps for further performance enhancements. In light of empirical advancement, this article aims to develop a strategic alignment model for IT flexibility and dynamic capabilities and empirically validates proposed hypotheses using correlation and regression analyses on a large data sample of 322 international firms. The authors conjecture that the combined synergetic effect of the underlying dimensions of a firm's IT flexibility architecture and dynamic capabilities enables organizations to cope with changing environmental conditions and drive competitive firm performance. Findings of this study suggest that there is a significant positive relationship between firms' degree of strategic alignment—defined as the degree of balance between all dimensions—and competitive firm performance. Strategic alignment can, therefore, be seen as an important condition that significantly influences a firm's competitive advantage in constantly changing environments. The proposed framework helps firms assess and improve their maturity and alignment of IT flexibility and dynamic capabilities. This article concludes with a discussion, suggestions for future research and managerial implications are also discussed.