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Digital strategic posture (DSP) is defined as a firm's overall strategic stance toward investing in information technology (IT) initiatives relative to that of rival firms. This study examines how a firm's DSP affects firm performance. Drawing on the competitive dynamics perspective and contingency view, we demonstrate that DSP influences competitive actions through dual pathways. First, DSP enables firms to take competitive actions that are more appropriate given the level of environmental uncertainty (captured by industry dynamism). In particular, our findings suggest that a proactive DSP enables relatively more innovation-oriented actions in dynamic industries while enabling relatively more operations-oriented actions in less dynamic industries. Second, DSP plays a facilitating role in firms' execution of competitive actions such that a firm's value from its proactive DSP is enhanced when there is a fit between the type of the firm's competitive actions and its level of environmental uncertainty. Specifically, we find that firms with a more proactive DSP achieve superior firm performance from innovation-oriented actions in dynamic industries and from operations-oriented actions in less dynamic industries. Taken together, our findings suggest that a proactive DSP not only allows firms to take appropriate competitive actions that fit their environmental conditions but also contributes to firms' performance by facilitating the execution of these appropriate actions, thus enhancing their efficacy. [ABSTRACT FROM AUTHOR]

Implementation and maintenance of interorganizational systems (IOS) require investments by all the participating firms. Compared with intraorganizational systems, however, there are additional uncertainties and risks. This is because the benefits of IOS investment depend not only on a firm’s own decisions, but also on those of its business partners. Without appropriate levels of investment by all the firms participating in an IOS, they cannot reap the full benefits. Drawing upon the literature in institutional economics, we examine IOS ownership as a means to induce value-maximizing noncontractible investments. We model the impact of two factors derived from the theory of incomplete contracts and transaction cost economics: relative importance of investments and specificity of investments. We apply the model to a vendor-managed inventory system (VMI) in a supply chain setting. We show that when the specificity of investments is high, this is a more critical determinant of optimal ownership structure than the relative importance of investments. As technologies used in IOS become increasingly redeployable and reusable, and less specific, the relative importance of investments becomes a dominant factor. We also show that the bargaining mechanism—or the agreed upon approach to splitting the incremental payoffs—that is used affects the relationship between these factors in determining the optimal ownership structure of an IOS. [ABSTRACT FROM AUTHOR]