Aurelio Ravarini

The study presented in this thesis investigates the influence of IT capability on the relationship between IT expenditures and long term business performance. To do so, the Resource Based View (RBV) has been used as the theoretical framework, and, within such a framework, the concept of sustainable competitive advantage has been used as a point of reference. IT capability, a term often mentioned in the scientific literature dealing with the applications of RBV in the IS field, has been the subject of this study. Within the IS discipline, IT capability is perceived to have considerable influence on the effect of IT expenditure on the long term results of an organization. However, few studies have identified the extent of this influence and indeed the very definition of IT capability has been so ambiguous that no measurement instrument has been developed and universally accepted. In this thesis we recognized this lack and carried out a multi-method study, to first identify a comprehensive definition of IT capability and then to develop and validate a measure of IT capability and evaluate its role on business performance. The empirical study was performed within the context of small-medium enterprises (SMEs), which implies a lower level of organizational complexity but in order to reflect the reality of modern business all such organisations were involved in inter-organisational networks within industrial aggregations in Italy. Eleven SMEs were involved in a multiple case study, and 77 SMEs (belonging to the textile and the mechanical industrial districts in Italy) were surveyed and these results analysed and aggregated to form some conclusions with respect to the meaning and influence of IT capability. The study was conducted over a number of stages to allow an initial definition of IT capability to be evaluated within a case study context and then expanded prior to the main survey. As such the literature review and analysis of previous studies was carried out in two different time periods as the scope of the study was refined. This empirical investigation led to the development of a comprehensive definition of IT capability comprising three main areas: Managerial Skills, Technical Skills and Relationship Assets, and further showed a positive influence of such capabilities on business performance. Finally it appears that a major requirement for realising the strategic potential of IT investments is to focus on the development of a business orientation in the development of competencies of the IT staff.