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260 GANESH D. BHATT AND VARUN GROVER ability to share information across different functions, innovate, and exploit business opportunities, and the flexibility to respond to changes in business strategy [79]. How- ever, the existence of open architectures and standardized enterprise packages sug- gest that this capability might not be heterogeneously distributed across firms—or, even if it is, that access to infrastructure is not restrictive [16]. Therefore, despite some contrary evidence [18] from data in the early 1990s, IT infrastructure is argued to be valuable but not a source of competitive advantage. Hypothesis I: The quality of the IT infrastructure will not be related to the com- petitive advantage of the firm. Competitive Capabilities The second category, which we call "competitive IT capabilities," includes IT man- agement capabilities. We include two capabilities here: the IT business experience (extent to which IT groups understand business) and the relationship infrastructure (extent to which there are positive relationships between IT and business managers). We argue that such capabilities are not only valuable but heterogeneously distributed and difficult to transfer. Mata et al. [48] provide two reasons why such managerial IT capabilities are likely to be the major source of competitive advantage. First, they evolve through history and "learning by doing," making these experiences very het- erogeneous across firms. For instance, friendship, trust, and interpersonal communi- cation take years to develop and to reach the point where IT and business functions can work together effectively. Second, the relationship between IT managers and tbose in other business functions develop over years, are socially complex, and in- volve a number of minor decisions over time. This makes it difficult to observe and imitate causal influences that might lead to positive outcomes. IT Business Experience Sambamurthy and Zmud [65] argue that IT business experience allows a firm the ability to integrate IT strategy and business strategy, develop reliable and cost-effec- tive systems for the business, and anticipate business needs sooner than the competi- tors. Keen [41] views the competitive advantage of firms as largely attributable to the business judgment and technical skills of IT groups and top management. Ross et al. [63] posit the importance of the IT groups that possess both technical and business problem-solving skills. Clark et al. [20] note that IT groups' business expertise, in combination with IT skills, directly determines the firm's ability to rapidly develop and deploy critical systems for the long-term competitive advantage. Kearns and
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