IT as a Resource for Competitive Agility: an Analysis of Firm Performance during Industry Turbulence

Abstract

In an increasingly fast-paced business context, agility is crucial to firm performance. Competitive agility, the ability of a firm to rapidly sense and respond to changes in its environment, is especially important during industry turbulence. This research examines whether investment in Information Technology (IT) enhances firms’ competitive agility using analysis of firm performance during industry growth and contraction. The research approach addresses the causality question faced by previous IT productivity studies by focusing on ex-ante IT investment and subsequent firm performance during periods of unanticipated industry shocks. Findings indicate that IT investment enhances competitive agility but only in industries with unanticipated growth, calling for further investigation into the use of IT during unanticipated industry downturn