Benefits of IT-Enabled Flexibilities for Foreign versus Local Firms in Emerging Economies

Khuntia, J and Kathuria, A and Saldanha, TJ V and Konsynski, B R (2019) Benefits of IT-Enabled Flexibilities for Foreign versus Local Firms in Emerging Economies. Journal of Management Information Systems, 36 (3). pp. 855-892.

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Abstract

Emerging economies present attractive opportunities to foreign firms. However, internationalization risk faced by foreign firms can have significant implications for their performance relative to local firms. Information Technology (IT) and IT-enabled capabilities help firms overcome internationalization risk and compete globally. Marketing Capability and Relational Capability also mitigate this risk through access to information related to markets and the business environment. We examine how foreign firms and local firms compare in leveraging synergies between such IT and firm capabilities. We focus on two kinds of IT-enabled capabilities: IT-enabled Flexibility in Customer Services, and IT-enabled Flexibility in Partner Services, and develop hypotheses for their complementary effects with Marketing Capability and Relational Capability respectively, to positively influence firm performance. We then draw on the firm-specific advantages framework to argue that foreign firms face a comparative disadvantage relative to local firms in leveraging the synergy between IT-enabled Flexibility in Customer Services and Marketing Capability. In contrast, foreign firms enjoy a comparative advantage relative to local firms in leveraging the synergy between IT-enabled Flexibility in Partner Services and Relational Capability. Empirical analysis using matched-pair survey and secondary data of 182 foreign and local firms in India supports our hypotheses. Our findings highlight important differences in how foreign and local firms benefit from IT, thus contributing towards a better understanding of how context and contingencies influence IT implications in emerging economies.

Affiliation: Indian School of Business
ISB Creiators:
ISB Creators
ORCiD
Kathuria, A
UNSPECIFIED
Item Type: Article
Uncontrolled Keywords: Emerging Economies, Foreign Firms, Internationalization Risk, Firm Performance, Firm Capabilities
Subjects: Information Systems
Depositing User: Gurusrinivasan K
Date Deposited: 15 Apr 2021 09:20
Last Modified: 15 Apr 2021 09:20
URI: https://eprints.exchange.isb.edu/id/eprint/1447
Publisher URL: https://doi.org/10.1080/07421222.2019.1628906
Publisher OA policy: https://v2.sherpa.ac.uk/id/publication/8192
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