The effect of IT ambidexterity and cloud computing absorptive capacity on competitive advantage
| Pages | 613-638 |
| Published date | 08 April 2019 |
| Date | 08 April 2019 |
| DOI | https://doi.org/10.1108/IMDS-05-2018-0196 |
| Author | Younghoon Chang,Siew Fan Wong,Uchenna Eze,Hwansoo Lee |
| Subject Matter | Information & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems |
The effect of IT ambidexterity
and cloud computing absorptive
capacity on competitive advantage
Younghoon Chang
School of Management and Economics,
Beijing Institute of Technology, Beijing, China
Siew Fan Wong
Department of Computing and Information Systems,
Sunway University, Subang Jaya, Malaysia
Uchenna Eze
Division of Business and Management,
BNU-HKBU United International College, Zhuhai, China, and
Hwansoo Lee
Department of Convergence Security,
Dankook University, Seoul, Republic of Korea
Abstract
Purpose –Founded on the concept of organizational ambidexterity and the competing value model, the
purpose of this paper is to develop an information technology (IT) ambidexterity frameworkto underscore the
importance of a balanced and harmonious IT environment in enterprise cloud adoption.
Design/methodology/approach –With survey responses from 165 IT executives in a managerial
position who are in charge of cloud computing implementation, partial least square method is used to test the
research model.
Findings –Cloud absorptive capacity plays an important role for firms to secure a competitive advantage.
The synergy of the two capabilities (flexibility and control), which have conflicting characteristics,
contributes to the enhancement of cloud absorptive capacity and leads to a firm’s knowledge accumulation
and performance.
Research limitations/implications –This study is the very first attempt that empirically establishes the
relationship between a firm’s competitiveness and cloud computing absorptive capacity. This study provides
a comprehensive framework that integrates ambidexterity theory with the competing value framework (CVF)
with extending the concept of absorptive capacity that is bounded within an organizational perspective into a
cloud computing context.
Practical implications –Firms should treat cloud computing as a strategic consideration to secure a
competitive advantage in the contemporary business environment. For a firm’s performance, a dual
governance structure, that encompasses flexibility and control, is required to achieve competitive advantage
from cloud computing adoption.
Originality/value –To facilitate organizational effort in achieving a harmonious cloud environment, the
authors propose a comprehensive ambidexterity framework integrating the CVF approach. This framework
maps IT ambidexterity onto the CVF. As CVF considers internal and external factors that ambidexterity
theory does not cover, integrating two theories can provide more comprehensive implications and discussions
regarding cloud computing adoption.
Keywords Cloud computing, Competitive advantage, Absorptive capacity, Competing value framework,
IT ambidexterity
Paper type Research paper
1. Introduction
Cloud computing is a disruptive technology (Choudhary and Vithayathil, 2013) that has
become an increasingly important element of the information technology (IT) ecosystem and
the strategies of many firms owing to its dynamic, scalable resources, and on-demand
Industrial Management & Data
Systems
Vol. 119 No. 3, 2019
pp. 613-638
© Emerald PublishingLimited
0263-5577
DOI 10.1108/IMDS-05-2018-0196
Received 3 May 2018
Revised 2 August 2018
Accepted 11 October 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
613
The effect of IT
ambidexterity
software application delivery using IT infrastructure and software applications from
cloud vendors (Lee et al., 2014). A cloud computing environment helps companies to achieve
business processes transformation, low IT expenditures, using real-time on-demand
applications, ubiquitous storage, and unlimited computing power (Oliveira et al., 2014).
As a result, companies have been considering IT investment in cloud computing adoption
because of its business efficiencies (Low et al., 2011). Goldman Sachs projects spending on
cloud computing infrastructure and platforms to grow at a 30 percent CAGR from 2013 to
2018 compared with 5 percent growth for the overall enterprise IT (Columbus, 2015).
Similarly, NJIT (2014) forecasts that over 90 percent of the companies around the world are
either considering or have already adopted cloud computing. Therefore, by 2016, 64 percent
of enterprise information systems (IS) traffic and 73 percent of data processing in
enterprises will take place on cloud (NJIT, 2014).
Moving to a cloud-centric environment has many challenges (Thompson, 2013) as it
requires changes in the traditional corporate governance structure and IT architecture as
well as the business models, routines, business processes, and organizational structures
(Lin and Chen, 2012; Loebbecke et al., 2012; Sultan and van de Bunt-Kokhuis, 2012).
Moreover, Prahalad (2004) emphasizes that a disruptive technology like cloud computing
challenges a firm’s dominant senses embedded in its established organizational knowledge
foundations. Further challenges are security and privacy issues, cost, performance,
cultural and political factors and infrastructure readiness (Thompson, 2013). Despite these
challenges, adopting cloud computing is a priority that ought to be assessed and
implemented because the technology allows firms to explore new business opportunities
and frontiers (Choudhary and Vithayathil, 2013). To fully embrace cloud computing and
optimize its value, firms need to have appropriate environment and business practices.
Thus, firms must continually explore the availability of new technologies and innovations to
reshape organizational survival in today’s fast-changing business environment, while also
firmly exploiting the firm’s core processes and business model to increase profit and
revenue. Moreover, in addition to exploration and exploitation, which are the two core
activities of ambidexterity, companies require the ability to identify, acquire, assimilate, and
implement new knowledge to create new opportunities. Ambidexterity focuses on a firm’s
management style and structural perspective, while absorptive capacity focuses on creating
knowledge bases for new business models (Kranz et al., 2016).
Previous studies have explored the determinants of cloud computing adoption. Cost
reduction, convenience, reliability, collaboration, and security are among the significant
factors influencing the adoption (Gupta et al., 2013). For governments, service quality,
usefulness, and security of cloud computing are important for their adoption decision
(Alsanea and Wainwright, 2014). For small and medium enterprises and small-medium
business, convenience is most crucial (Gupta et al., 2013). Although various empirical
studies have been conducted on cloud adoption, research gaps still exist. One gap is that
existing studies have mainly dealt with technological factors of the cloud service.
For successful adoption, investigating internal motivating factors of the adopters is
crucial, but this attempt is rare. Although Oliveira et al. (2014) have investigated the
determinants of cloud computing adoption in the manufacturing and services sector based
on the technology–organization–environment framework, the study does not provide a
guide for successful cloud adoption because the research model includes traditional
factors related to general IS environment.
To achieve successful innovation in the market, firms need to equip themselves with
both the ability to explore new competencies and exploit existing capabilities (Birkinshaw
and Gibson, 2004). This implies that firms have to allocate limited resources to two
potentially contradicting business strategies (Cameron and Quinn, 2011). Kranz et al. (2016)
suggest that a firm’s success in adopting cloud computing, which is a heavy driver of
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