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How Does IT Governance Improve Firm Performance? A Dynamic Capabilities Perspective

Authors:
Marie-Noëlle Forget
Pierre Hadaya
Maggie Manitta

Keywords: Governance (ITG); firm performance; Dynamic Capabilities.

Abstract:
While researchers agree that IT Governance (ITG) positively affects business performance, there is still a lack of consensus on how IT Governance improves firm performance. Many studies have used the Resource-Based View (RBV) to analyze and interpret this question. However, RBV offers a limited perspective on firm performance by associating it with static resources and does not capture the role of dynamic capabilities in enabling firms to adapt and succeed in evolving environments. This paper argues that ITG should be conceptualised as a combination of ordinary and dynamic capabilities, wherein dynamic capabilities improve and support ordinary ones, ultimately maximizing business performance. Based on a comprehensive literature review, this paper provides a deeper understanding of how ITG contributes to firm performance by breaking down ITG into specific capabilities rather than treating it as a single concept. The model extends RBV theory by demonstrating how combining dynamic and ordinary capabilities enhances an organization’s ability to both innovate and sustain competitive advantage.

Pages: 18 to 23

Copyright: Copyright (c) IARIA, 2025

Publication date: April 6, 2025

Published in: conference

ISSN: 2308-4391

ISBN: 978-1-68558-265-4

Location: Valencia, Spain

Dates: from April 6, 2025 to April 10, 2025