Digital infrastructure, business unit competitiveness, and firm performance growth: The moderating effects of business unit IT autonomy

Abstract

This study examines the benefits that firms accrue from digital infrastructures that are effective in supporting corporate and business unit strategic objectives-which we term digital infrastructure effectiveness. We hypothesize that digital infrastructure effectiveness influences two types of performance outcomes-namely, business unit competitive performance and firm performance growth. We further hypothesize that these relationships are both moderated by the degree of business unit IT autonomy. Using data from an international survey of multi-business firms, we find that business unit IT autonomy exerts differential moderation effects on the relationships between digital infrastructure effectiveness and the two types of performance outcomes. As business unit IT autonomy increases, the effect of digital infrastructure effectiveness on business unit competitive performance gets stronger, while its effect on firm performance growth gets weaker. The primary contribution of this paper is explaining how and when digital infrastructures influence business unit performance and firm performance growth.