Strategic Dependence on the IT Resource: A Test of the Strategic Control Model

Using resource dependency theory (RDT), this study analyzes how organizations control their information technology resources to improve organizational performance. According to RDT, organizations must manage their dependency on external organizations and limit external dependencies when resources are considered critical. The current study proposes and tests a Strategic Control Model positing that managers seek to control important, strategic resources in order to create value for the firm and to avoid dependency on external entities. Utilizing a research design that captured extensive quantitative data on the control of IT functions and services, the research team gathered five years of data on 54 business units in 27 global companies located in seven countries. For data analysis purposes, the managers in these firms reported on several hundred different IT decisions. Firms with strategic investments in IT tend to locate control of their IT resources inside the firm. Locating the locus of control within the firm in cases where the firm depends on IT as a strategic resource proves to be a good explanation for effective decisions leading to higher performance. Viewing IT as a strategic resource alone does not lead to positive business unit outcomes, but the moderating influence of locus of control is found to establish the complex statistical relationship with business unit performance. For these reasons, it is critical that a theoretically-grounded firm-wide process for decisions on locating IT control is in place to capture business value.