Conditional paths to business unit agility: corporate IT platforms and the moderating role of business unit IT autonomy

ABSTRACT

Agility has long been recognised as a key determinant of organisational performance. The pursuit of agility within business units (BUs) is challenging as IT executives in multi-business organisations (MBOs) are tasked with balancing a need for organisation-wide IT synergies against a desire among BUs for local IT solutions that enable agility in their end markets. MBOs are increasingly turning to corporate IT platforms to respond to their BUs’ IT needs but doing so presents a challenge to BU IT autonomy and, in turn, to BU agility. In this paper, we posit that BU agility is determined by resource synergies based on the interplay between corporate IT platforms and local, BU-controlled, IT applications. These applications lead to greater BU process digitisation and, in turn, to expanded BU agility. We evaluate our model using data from an international survey of IT executives in MBOs. Our findings provide support for our model and, in so doing, identify different paths that MBOs can take to enhance BU agility. Our contribution affirms the value of corporate IT platforms for BU agility but suggests that MBOs should tread carefully when developing corporate IT platforms that coincide with mandatory use of shared IT applications.

KEYWORDS:

• Multi-business organisations
• agility
• business unit
• corporate IT platform
• IT autonomy
• IT applications

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. Corporate IT platforms refer to technology assets and services – applications, data, networks, hardware, and management services – that are shared across the organisation (Reynolds & Yetton, 2015; Ross et al., 2006).

2. Prior research has used the term “IT competence” to denote the capacity of the firm’s IT resource base to achieve organisational goals (Sambamurthy et al., 2003). In this paper, we focus specifically on the corporate IT platform.

3. We refer to key BUs as prominent/flagship BUs that have a significant impact on the firm’s performance outcomes.

4. Although corporate IT platforms may provide the basis for the platformization of infrastructures (Costantinides et al., 2018), they are distinct from the notion of digital platforms that enable innovation ecosystems (e.g., iOS).

5. The IT business value framework of IT resource investments → intermediate value → output value has been used in prior IT governance research to understand the benefits of IT resources (see, Wu et al., 2015, p. 500, footnote 3).

6. This is consistent with the moderated mediation assessment of conditional indirect effects. See, Lee et al. (2018) for an example, and Hayes (2017) for a discussion of moderated mediation.

7. We thank an anonymous reviewer for referencing this point. Getting the basics right – which is essentially what is happening when the MBO tries to balance the unique needs of its BUs with their desire for IT autonomy – sets the stage for further innovation and experimentation with technology. BUs are not just responding to change, they are innovating and driving change, and for an MBO to evolve, it must do so through its BUs.

8. We thank an anonymous reviewer for raising the issue of meshing of local and platform IT applications.