Deriving Business Value from IT Applications in Product Development: A Complementarities-Based Model - Information Technology and Product Development - page 40

Proposition 5b: Organizations with strong IT capabilities will have higher levels of
IT investment.
Proposition 5c: Organizations with a modern organizational architecture will have
higher levels of IT investment.
2.7 Contributions of the Model
In this chapter, we have developed a complementarities-based model of IT innova-
tion investments and business value and illustrated its application in the context of
PLM. In so doing, we join two robust streams of research - IT innovation and IT
business value - that despite important overlaps, have proceeded largely in parallel.
The IT innovation stream explains why firms make innovative investments in IT,
and how these investments can be translated into greater deployment; the business
value stream explains the conditions under which IT investments and deployment
lead to business value.
Our use of complementarities as the unifying logic allows us to do much more
than simply join existing models of IT innovation and business value “at the hip”
with a simple linear sequence from innovation antecedents to innovation deploy-
ment to business value. Rather, our approach focuses on variable interactions and
illustrates how many of the same variables that interact to increase the business
value flowing from IT deployment also have separate effects that increase the level
of IT deployment flowing from any given level of IT investment. Indeed, our model
goes even further to explain why some firms are more prone to invest in innovative
IT to begin with, a question not empirically examined in the business value litera-
ture. At a holistic level, our model provides an explanation of the otherwise puzzling
strength of the observed correlation between IT investment and business: Firms that
are best positioned to derive value from IT due to potential complementarities are
most likely to invest more aggressively; then these same potential complementar-
ities, when realized, serve to magnify the ability to translate both investment into
deployment and deployment into value. Prior work on IT complementarities and
business value has not always been precise about whether complementarities rein-
force business value directly, or indirectly by reinforcing IT deployment; we show
how they do both.
Another key contribution of our model is that it highlights the importance
of initiative-level complements . These complements have received comparatively
less attention from IT business value researchers owning the tendency to treat
IT as a monolith, yet at this level the richness and power of the complementari-
ties for informing managerial practice becomes especially apparent. This level of
the model allows us to move beyond generic (though no doubt, still very useful)
innovation deployment guidance (e.g., pertaining to the need for top management
support, innovation champions, attention to organizational learning) to develop rich,
technology-specific prescriptions for practice. For example, the model brings a
focus to specific product development strategies and capabilities that complement