"Shaping agility through digital options: Reconceptualizing the role of information technology in contemporary firms." Sambamurthy, Vallabh, Anandhi Bharadwaj, and Varun Grover.  MIS quarterly (2003): 237-263.

1. "SHAPING AGILITYTHROUGH DIGITAL OPTIONS:
RECONCEPTUALIZING THE ROLE OF INFORMATION
TECHNOLOGY IN CONTEMPORARY FIRMS."
SAMBAMURTHY,VALLABH,ANANDHI BHARADWAJ,ANDVARUN GROVER. MIS QUARTERLY (2003): 237-263.

2. BACKGROUND
 Firms are facing intense rivalry , therefore their ability to sense and capture opportunities is considered as
important.
 IT offers firms opportunities to enhance their agility skills.
 Even though previous studies have shown that IT investment has effect on firm performance and productivity
along with theoretical framework,
 Limited knowledge is able to explain the ‘How’ and ‘Why’ IT investment can enhance firms’ performance.
To broaden understanding about
the strategic role of IT
to firm’s performance

3. THEORETICAL BACKGROUND
Performance
Entrepreneurship
IT
Management
Strategic
Management
The role of Strategy with
resources, capabilities and
processes
Processes related with agility and competitive actions
The role of IT in influencing agility

4. STRATEGIC MANAGEMENT LITERATURE
Positioning
Strategic Position &
Execution through
integrated activities
How to construct
inimitable activities?
dynamic environment?
Leverage
Procurement & possession
of rare resources that
might be distributed across
firms
Fast paced environment?
Opportunity
Relentless innovation and
competitive actions
 Theory’s boundary condition is firms operating in moderate to rapidly changing business environment in which
the strategy of logic opportunity is needed.
 Competitive advantage is short-lived, firms need to continuously innovate its competitive advantage to seize
greater advantage.

5. ENTREPRENEURIAL ACTION
Firms differ in knowledge availability on a certain products, customer preferences and preferred distribution
channels.
 Entrepreneurial action :The discovery and exploitation of market opportunities to create new products,
services, customers or distribution channels.
 It requires alertness to opportunities and occurs whenever a firm integrates its preexisting knowledge ,
detects an opportunity and acts upon the opportunity.
 Firms exhibiting high entrepreneurial alertness can sense product-market discontinuities and visualize how
organizational resources and capabilities can be orchestrated and exploited..

6. STRATEGICVALUE OF IT : PLATFORM FOR AGILITY
 IT can act as enabler of firms’ agility because of the difference between digital economy and traditional
economics of physical components. Ex : lower cost for coordination.
 In digital economy firms are now being able to deconstruct their value chain and inter-organizational relationship
by separating information from physical products and services.
 This will create new options for information-based products and services.While at the same time, it can also
facilitate the streamlining of work processes

7. THEORITICAL MODEL
 Firms’ success in generating more competitive actions is related to their IT competence, 3 dynamic capabilities
and 3 strategic processes.

8. 1.IT Competence
 IT competence is the organizational base of IT resources and capabilities and describes a firm’s capacity for
IT-based innovation by virtue of the available IT resources and the ability to convert IT assets and services into
strategic applications
 IT competence elements include the level of IT investment, quality of IT infrastructure IT Human capital and the
nature of IS/business partnership
2.Agility
 Agility encompasses the exploration and exploitation of opportunities , capabilities to interact with
customers, orchestration of internal operation and utilization of its ecosystem of external business partners.
 Agility involves 3 interrelated capabilities : customer , partnering and operational agility.
 Firms that have developed all 3 interrelated capabilities should be in a better position to engage in
competitive actions.
 More detailed explanation on these capabilities can be found in table 2.

9. Reach Richness
Digitized Process
IT-enabled inter- and intra-
organizational work processes
and creating a seamless flow of
information
Ex : ERP, SCM, CRM
The extent to which a firm
deploys common, integrated
and connected IT-enabled
processes
The quality of information collected and the
ability to use the information to adapt or re-
engineer the process (more timely, accurate,
relevant and customized information).
Ebay’s integrated system
Complex Aircraft virtual corporation.
Digitized Knowledge
IT enabled repository of
knowledge and the system of
interactions to generate
knowledge sharing
Ex: DSS,Tracking Technologies
the comprehensiveness and
accessibility of codified
knowledge that is available to
firm
IT can support firms sense-making,
perspective –sharing and development of tacit
knowledge
Accenture’s
KnowledgeXchange.
3-D Imaging room to help engineers
collaborate.
A set of IT-enabled capabilities in the form of digitized processes and knowledge systems along the dimensions
of reach (width of resources) and richness (quality of information).
3.Digital Options

10. 4. Entrepreneurial Alertness
 The capability of firms to explore marketplace , detect areas of marketplace ignorance and determine
opportunities for action.
 It has 2 specific capabilities : strategic foresight and systemic insight.
 Strategic foresight : the ability to anticipate and visualize market imperfections and opportunities through executive’s
intuition and experience, organizational intelligence and alertness.
 Systemic insight: the ability to visualize connections between digital options, agility and emerging market opportunities in
architecting competitive actions.
Strategic
Foresight
Systemic
Insight
Entrepreneurial
Alertness
anticipate changes , opportunities and
threat to business
recognize the complementarities between IT competence and
organizational processes and knowledge

11. 5. Competitive Actions
 Definition : Market-based moves that challenges the status quo of the market or industry through
innovations.
 Two characteristics :
 Number of competitive actions : total number of competitive innovations in new products, services,
distribution channels or market segmentation by a firm.
 Complexity of the action repertoire : the variety and richness of competitive actions
 Firms with higher level of competitive actions were successful in gaining market share.
 Example of competitive actions : launch of new product/ service ,introduction of new distribution
channel etc.

12. 6.The strategic processes of capability building and entrepreneurial action
 Represent the relationship between IT competence, digital options, agility and entrepreneurial alertness.
Capability-building processes integrate IT and business resources into organizational capabilities.
 This paper proposed that entrepreneurial action processes will moderate the impact of IT competence to
digital options, digital options to agility and impact of agility to the number of competitive actions and action
repertoire complexity.
Example
Cisco invested $15million for ERP to replace existing legal systems with an integrated system.
Cisco management realized the importance of speedy acquisition of supporting infrastructure despite a
prevailing assumption that application developments was one at a time. Management also didn’t constrain their
options for economic justification.
IT Competence Digital Options Agility
Competitive
Actions
Entrepreneurial
Alertness

13. IT Competence Digital Options Agility
Competitive
Actions
Entrepreneurial
Alertness
7.The strategic processes of entrepreneurial action
 Entrepreneurial action underlies the creative combinations of agility and entrepreneurial alertness
for the launch of competitive actions.
 Firms that acquire higher level of entrepreneurial alertness and agility are more superior in detecting and
exploiting opportunities.
 This way, firms will be able to exhibit a larger number of competitive actions.
Example
Ebay’s competitive actions originates from its ability to listen to customers and detect opportunities for
entrepreneurial action ahead of its competitor

14. 6. Co-evolutionary Adaption Processes
 Co-evolutionary adaptation: refers to the fact that firms learn over time and through experience as they develop
digital options and agility and launch a variety of competitive actions
 While capability-building and entrepreneurial action processes describe the unfolding sequence of effects from
IT competence to competitive actions, co-evolutionary adaptation describes the learning-by-doing sequence of
effects in the reverse direction.

15. IMPLICATION
 Direct attention to the role of IT as a digital options generator.
 The strategic role and value of IT should include the digital options, agility and competitive
actions perspective.
 Firms should assess their IT investment and capabilities in terms of overall quality of their
digital options and agility.
 This paper focus on the evolution of IT investment, organizational capabilities,
competitive actions and firm performance.
 This paper highlight an integrated perspective of business capabilities, actions and
strategies
 Entrepreneurial alertness is crucial in launching competitive actions.