Exploring the Role of IS in Dynamic Capabilities

Resource-based theory suggests that firms develop idiosyncratic capabilities that contribute to sustainable competitive advantage when they are valuable, rare, inimitable and non-substitutable. The successful use of information systems (IS) and information technology (IT) has been linked to improved firm performance. Recent literature suggests that a deeper understanding of what capability means in practice may be gained from a disaggregation into component competences and resources. A better understanding of the role of IS/IT in business level capability may be achieved through a fuller articulation, both of the capability itself, and the contribution of IS/IT, together with an evaluation of the effectiveness in delivering sustainable competitive advantage. A dynamic capabilities perspective explains the way firms adapt capabilities to changing market environments over time. This paper explores these propositions through an exploratory case study using a framework derived from a resource-based and systemic view of the firm. The analysis suggests a dynamic Capability Development Model through which the implications and potential for IS and IT over time may be understood. The paper addresses three issues. First, it offers a better articulation of what capability concepts mean in practice. Second, it takes a disaggregated understanding of capabilities, and third, it sheds light on the dynamics of capabilities.