It’s a Dangerous Business, Going Out Your Door: Overcoming Institutional Distances Through IS

We examine how flexibility in IT-enabled business functions (customer services and transaction services) helps firms to overcome the deleterious effects of institutional differences (cultural, economic, and administrative) on two core organizational capabilities (marketing capability and relational capability). We posit that flexibility in IT-enabled customer services (FICS) mitigates the constraints of cultural distance and economic distance that firms face in leveraging their marketing capability. Further, we posit that flexibility in IT-enabled transaction services (FITS) mitigates the constraint of administrative distance that firms face in leveraging their relational capability. Our empirical analysis of primary and secondary data of 182 firms in India provides broad support for our hypotheses. The findings contribute to theory and practice by highlighting how flexibilities in specific IT-enabled business functions help firms to combat challenges in dissimilar national institutional environments.