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"Resource Co-specialization, Firm Growth, and Organizational Performance: An Empirical Analysis of Organizational Restructuring and IT Implementations"

Sung Min Kim and Joseph T. Mahoney


First Author :

Sung Min Kim
Loyola University Chicago, School of Business Administration
Maguire Hall, 370
1 East Pearson Avenue
Chicago, IL 60611

312-915-6988 (Fax)

Second Author :

Joseph T. Mahoney
Business Administration
University of Illinois at Urbana-Champaign, College of Business
1206 S. Sixth Street
140C Wohlers Hall, MC 706
Champaign, IL 61820

217-244-7969 (Fax)

Abstract :
This paper examines the effects of co-specialized information technology (IT) on the growth and performance of IT-investing firms as a driver of competitive advantages. By adopting resource-based and dynamic-capability perspectives on firm-specific IT systems, we first identify the mechanisms of resource co-specialization strategy in the process of IT implementation as organizational restructuring and adaptive customization of IT applications into the context of adopting firms. Then, we examine impacts of the resulting co-specialized IT system on organizational performance. Testable hypotheses are developed to investigate how the co-specialization mechanisms of organizational restructuring and IT customization influence firm growth -- in terms of the number of employees, value-added, and revenue. We also examine how co-specialization mechanisms of organizational restructuring and IT customization influence project outcomes -- in terms of project referenceability and license extension measures. These empirical tests control for other contextual factors and the endogeneity of decision variables. Using a unique panel data on 334 firms adopting Advanced Planning and Scheduling (APS)applications, we find strong empirical support for the co-specialization hypothesis that strategic choices of using IT co-specialization mechanisms are positively associated with firm growth and with superior project outcomes in the sample firms.
Keywords :
adaptive customization, information technology, organizational restructuring, resource co-specialization
Manuscript Received : 2008
Manuscript Published : 2008
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