Abstract

Grounded in the theory of dynamic capabilities, our study offers a conceptualization of IS strategy that comprises two sets of dynamic capabilities: enterprise IT architecture dynamic capability and IT sourcing dynamic capability. We borrow from extant IS literature and define enterprise IT architecture dynamic capability as the capacity of an organization to purposefully extend, create or modify its IT competencies for tight alignment with the firm’s business strategy; and we offer the concept of IT sourcing dynamic capability that we define as the capacity of an organization to purposefully extend, create or modify its IT resource base to support the creation or modification of IT competencies for tight alignment with the firm’s business strategy. We theorize on how these two sets of capabilities combine to form the firm IS strategy, which either helps a firm respond to rapid changes in the environment or bring about changes in the business strategy, which may in turn provoke changes in the environment and thus provide a competitive advantage. Our theorizing will be informed by a case study of two business units facing rapid environmental change.

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