This paper examines how strategic posture in IT investment with respect to industry peers (i.e., level of IT investment compared to the industry norm for IT investments) and competitive environment influence IT investments of a firm. We synthesize prior literature on determinants of IT investments and competitive dynamics to develop our theoretical framework. Using archival data for about 380 firms for the 1999 to 2006 period, we find that firms increase their IT investments under higher competitive uncertainty and higher industry competition. The results also indicate that firms differentiate from the industry norm in IT investments under higher competitive uncertainty and higher industry competition but imitate the industry norm in IT investments under higher industry dynamism and higher industry growth. Collectively, these findings provide new insights on how the competitive environment of a firm shapes strategic actions related to IT investments.
Mithas, Sunil and Tafti, Ali, "How Strategic Posture and Competitive Environment Influence Firms' Information Technology Investments: Theory and Evidence" (2009). ICIS 2009 Proceedings. 123.