The effect of cloud-based IT architecture on IT exploration and exploitation: Enabling role of modularity and virtuality

Abstract

In today's turbulent business landscape, a firm's ability to explore new IT capabilities and exploit current ones is essential for enabling organizational agility and achieving high organizational performance. We propose IT exploration and exploitation as two critical organizational learning processes that are essential for gaining and sustaining competitive advantages. However, it remains unclear how the emerging cloud-based IT architecture affects an organization's ability to explore and exploit its IT capabilities. We conceptualize modularity and virtuality as two critical dimensions of emerging cloud-based IT architecture and investigate how they affect IT exploration and exploitation. We test our hypotheses using data obtained from our field survey of IT managers. We find that modularity is positively associated with both exploration and exploitation whereas virtuality is positively associated with exploration, but not with exploitation. We also find that the effect of modularity on exploitation is stronger than its effect on exploration. © 2018 Asia Pacific Journal of Information Systems.