A theory of information systems strategy : antecedents and performance impacts through the development of dynamic capabilities.
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Of central importance to the functioning of the IT department is its information systems (IS) strategy which delineates the perspective it takes toward IS and the general attitudes that reflect intentions regarding IS. While research attention has been copiously given to the arena relating to the strategic value of IS, much of it focuses on strategic IS planning, strategic alignment, and IS for competitive advantage. Fewer studies have assessed the impact of the IS strategy itself, which can be an important avenue through which firm performance may be realized. As such, we propose and test a theory of IS strategy that seeks to link IS strategy to IS’s contribution to firm performance. Drawing upon two major perspectives—the power and politics perspective and dynamic capabilities perspective—to formulate the research, we offer a model that includes antecedents and expected impacts of IS strategy. Responses from 271 CIOs were collected via an online-based survey to test the proposed model. Results suggest that the culture and power of the IT department are significantly associated with the type of IS strategy implemented. When departmental members are highly involved in the affairs of the department, the strategy is more likely to be defined, but not necessarily innovative; rather, a culture where creativity and risk taking abound is one in which innovative strategies seem to thrive. Further, departments with greater resource support and CIO expertise tend to implement more innovative strategies. Results also provide insights into the impacts of IS strategy. While innovative strategies reinforce dynamic capabilities development, undefined strategies tend to prove detrimental to capabilities development, and conservative strategies tend to neither help nor hurt capabilities development. The impact of strategy on performance is mediated through dynamic capabilities, with the IS Innovator leading in way of performance, followed by the IS Conservative, and lastly the IS Undefined, whose lack of strategy is harmful. Post-hoc analysis revealed a fourth possible IS strategy, one that strives for ambidexterity. Ambidextrous firms were associated with the most superior performance, leading to a potential extension of the existing IS strategy typology and a call for future research.