Study of IT infrastructure capabilities : reach and range and business value
Lam, Kuo Yung
Date of Issue1998
College of Business (Nanyang Business School)
In recent years, firms' investments in information systems have escalated. Many firms started to discover that their IT applications can no longer offer competitive advantage as more and more firms possess them. IT Research reveals that a well built IT infrastructure provides flexibility in operations and long-term competitiveness for the firm. This is because IT infrastructure is difficult to built, and once in place, is difficult for competitors to imitate. In this study, one measure of IT infrastructure capabilities, Reach and Range (R&R) is being examined. R&R refers to the communication and coordination capabilities of the firm brought about by IT infrastructure. R&R measures where the IT infrastructure can be linked to, and what kind of transactions can be executed. This study proposed two conceptual frameworks using transaction cost economics. The first framework analyzed the relationship between R&R and firm performance. The second framework attempted to identify any distinct R&R configurations using firm uncertainty as the independent variable. Utilizing a sample of 54 business units that participated in the 1996 international study of IT infrastructure, we tested the propositions of the frameworks using analytical approaches like cluster analysis, analysis of variance, and chi-square test of independence. This study found evidences that the level of R&R is positively related to the intermediate level performance of the firm, like systems development efficiency. It is also found that there are certain R&R configurations that is characteristic to different levels of perceived need for new products, number of countries of operation, and number of industries involved in.