Date of Award

8-2009

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Legacy Department

Management

Advisor

Grover, Varun

Committee Member

Klein , Richard

Committee Member

Mittelstaedt , John

Committee Member

Moore , DeWayne

Abstract

This dissertation studies how information technology (IT) facilitates customer agility and, in turn, competitive activity. Customer agility refers to the extent to which a firm is able to sense and respond quickly to customer-based opportunities for innovation and competitive action. As such, customer agility consists of two key dimensions: sensing and responding. We propose that IT plays a critical role in facilitating a firm's customer agility - in particular, its sensing and responding components.
The Internet has spawned a rich set of tools that allow firms to engage in rich, interactive dialogues with a broad and diverse customer base, thereby enhancing firms' ability to sense and respond to shifting customer needs and preferences. Although academics and practitioners suggest that IT is a key enabler of customer agility, we know little concerning how IT facilitates customer agility. Building on the dynamic capability literature, we propose that the 'knowledge creating' synergy derived from the interaction between a firm's web-based infrastructure and its analytical ability will enhance the firm's ability to sense customer-based opportunities, and the 'process enhancing' synergy obtained from the interaction between a firm's coordination efforts and its level of IT integration will facilitate the firm's ability to respond to those opportunities. Finally, we propose that the alignment between customer sensing capability and customer responding capability will impact the firm's competitive activity.
We test our model with a two-stage longitudinal research design in which we survey marketing executives of high-tech firms. Our results find that web-based (resource and user) infrastructure has a significant effect on customer sensing capability. Moreover, analytical ability positively moderates these relationships. We also find that interfunctional coordination and channel coordination both have a significant impact on customer responding capability. Furthermore, internal information systems (IS) integration positively moderates the interfunctional-response relationship, yet external IS integration does not moderate the channel-response relationship.
Our results also show that varying types of alignment between customer sensing capability and customer responding capability are related to different types of competitive activity. Specifically, a higher 'match' between sensing and responding results in actions which effectively meet or address customer needs. Furthermore, customer responding capability mediates the relationship between customer sensing capability and 1) number of actions executed and 2) the speed at which firms respond to changing customer needs. Finally, we also find that agility alignment is not related to action repertoire complexity.
Our results have implications for both research and practice. To our knowledge, it is the first study to conceptualize and test a comprehensive yet parsimonious research model which includes the role of IT, customer agility and competitive activity. In doing so, we contribute to the IT business value literature, dynamic capabilities research, competitive dynamics literature, and organizational innovation research. We also give managers greater insight into how they can effectively leverage IT resources when sensing and responding to their customers in turbulent environments.

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