Inside the adaptive enterprise: an information technology capabilities perspective on business process agility

Recent innovations in utility computing, web services, and service-oriented architectures, combined with a growing array of IT skills, have improved firms' ability to be more agile in responding to change. Using the resource-based view of the firm, prior research suggests that IT resources, in isolation, are unlikely to yield superior performance and so as firms try to boost their agility, the question becomes how to configure IT resources to prepare for, or react to, change. In this paper, we posit that managerial IT capabilities based on IT-business partnerships, strategic planning, and ex-post IT project analysis lead to the development of technical IT capabilities associated with a flexible IT infrastructure which in turn drives agility or a firm's ability to react to change in its products and markets. Using data from matched surveys of IT and business executives in 241 firms, we find that managerial and technical capabilities affect agility. In further testing, we reveal that in a stable setting, technical IT capabilities are more important to agility than managerial IT capabilities, while in a dynamic setting, the opposite is true. Thus, for firms operating in volatile markets, effective models of managerial IT governance are essential for delivering superior agility or adaptiveness.