How to be Good at Sensing and Responding: The Roles of Three Types of IT Infrastructure

Business agility has been considered as one of the key organizational capabilities in the modern business environment. The current research indicates that information technologies (IT) can help firms develop agility and in turn agility can improve firm performance, but how IT leads to agility and superior performance and under what circumstances is an ongoing consideration. In particular, while current research has examined higher-order latent capacities of IT resources and capabilities, they haven’t clearly specified what IT factors can enable organizational agility and how. In this study, we investigate the distinct values of two key capabilities of agility, i.e., sensing and responding capabilities, under the different levels of market competition. We also identify three types of IT infrastructure and explore the underlying enabling processes between these three infrastructures and sensing and responding capabilities. The model test results using a large-scale field survey data indicate that responding capability becomes more important as the level of market competition increases. The results also reveal that knowledge infrastructure and data service infrastructure are the key enablers of sensing capability and that standard application infrastructure is the key enabler of responding capability. This study helps understand underlying mechanisms of IT-enabled agile processes within a firm.