IMPACT OF SYNERGY BETWEEN IT AND BUSINESS PROCESS ON ORGANIZATIONAL PERFORMANCE: A PERSPECTIVE OF AMBIDEXTERITY THEORY

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1 Association for Information Systems AIS Electronic Library (AISeL) PACIS 2009 Proceedings Pacific Asia Conference on Information Systems (PACIS) Summer IMPACT OF SYNERGY BETWEEN IT AND BUSINESS PROCESS ON ORGANIZATIONAL PERFORMANCE: A PERSPECTIVE OF AMBIDEXTERITY THEORY Hong LING Fudan University, hling@fudan.edu.cn Fuchun ZHAO Fudan University, nclzhaofc@sina.com Youwei WANG Fudan University, ywwang@fudan.edu.cn Follow this and additional works at: Recommended Citation LING, Hong; ZHAO, Fuchun; and WANG, Youwei, "IMPACT OF SYNERGY BETWEEN IT AND BUSINESS PROCESS ON ORGANIZATIONAL PERFORMANCE: A PERSPECTIVE OF AMBIDEXTERITY THEORY" (2009). PACIS 2009 Proceedings This material is brought to you by the Pacific Asia Conference on Information Systems (PACIS) at AIS Electronic Library (AISeL). It has been accepted for inclusion in PACIS 2009 Proceedings by an authorized administrator of AIS Electronic Library (AISeL). For more information, please contact elibrary@aisnet.org.

2 IMPACT OF SYNERGY BETWEEN IT AND BUSINESS PROCESS ON ORGANIZATIONAL PERFORMANCE: A PERSPECTIVE OF AMBIDEXTERITY THEORY Abstract It is imperative for a firm to possess capability to pursue dual conflict goals simultaneously, i.e., ambidexterity capability, in turbulence market environment. As a result of synergy between IT and business process, a firm is able to build its ambidexterity capability, namely, alignment between them to gain organizational alignment capability which offers the firm short-term performance on the one hand, and modularization of business process enabled by IT to gain organizational adaptation capability which offers long-term performance on the other. The ambidexterity capability can lead to higher organizational performance. Furthermore, we find that the linkage between ambidexterity capability and organizational performance is moderated by environmental turbulence. To our knowledge, ambidexterity theory is firstly employed in IS field to explicate the debate on IT value. Theoretical and practical implications are discussed. Keywords: IT, Business Process, Ambidexterity theory, Alignment, Modularization.

3 1 INTRODUCTION With the development of economy and emergence of new technologies, market environment is getting increasingly turbulent. In order for an organization to survive, business process transformation is not uncommon any more. Nevertheless, the transformation is a process fraught with risks. Meanwhile, there is a dilemma in business process management, namely, a firm's focus on productivity gains inhibited its flexibility and ability to innovate (Adler et al. 1999; Benner & Tushman, 2003). For instance, in the automobile industry, a firm's economic decline was directly associated with its efficiency and productivity conflicts. In essence, the existence of this dilemma is mainly due to inability of firms to pursue dual conflict objectives simultaneously. This kind of capability, which is termed as ambidexterity by Tushman and O Reilly (1996), is getting increasingly crucial to market competition for a firm. Based on ambidexterity theory, we develop an Ambidexterity Capability Model based on synergy of IT& Process, and test it with data from 72 firms in China, and further implications are discussed. 2 THEORETICAL FOUNDATION Tushman and O Reilly(1996) analyzed the evolution history of a wide variety of enterprises and then concluded that the source of failure of some firms and success of others root from the same problem: whether enterprises possess the capability of operating in two different markets at the same time, i.e., the capability of competing in mature market segments through incremental innovation and in emerging markets through discontinuous innovation. For instance, due to an incapability to compete in the transistor and large-scale integrated circuit market simultaneously, RCA Corporation exited the semi-conductor market totally. In contrast, a dominant Japanese watch producer, Seiko, successfully transformed itself from being merely a mechanical watch firm into being both a quartz and mechanical watch company in the mid-1960s. As a result, it transcends Swedish rivals drastically in 1980s. Based on these observations, Tushman and O Reilly(1996) borrowed the concept of ambidexterity which is defined as the ability to simultaneously pursue both incremental and discontinuous innovation and change (1996: 24); Correspondingly, an organization with ambidexterity capability is called an ambidextrous organization. Gibson and Birkinshaw(2004) further divided ambidexterity into two types. They labelled one kind of ambidexterity as structural ambidexterity, in which organizations manage trade-offs between conflicting demands by putting in place dual structures, so that certain business units or groups within the business units focus on alignment, while others focus on adaptation (Duncan 1976). Despite the importance of structural ambidexterity, organizations might still necessitate contextual ambidexterity, which is defined as the behavioural capacity to simultaneously demonstrate alignment and adaptability across an entire business unit. The concept of contextual ambidexterity differs drastically from the concept of structural ambidexterity because the former is best achieved not through the creation of dual structures, but by building a set of processes or systems that enable and encourage individuals to make their own judgments about how to divide their time between conflicting demands for alignment and adaptability. By their nature, such capacities are complex, causally ambiguous, widely dispersed, and quite time-consuming to develop (Gibson and Birkinshaw 2004: 209). However, ambidexterity is by no means a construct easily understood. To be measured conveniently, it is typically divided into two or more lower-order construct in the extant literature. For instance, Gibson and Birkinshaw (2004) view alignment and adaptability as two basic components of contextual ambidexterity. Of which alignment refers to coherence among all the patterns of activities in the business unit, and they are working together toward the same aim, namely, organizational strategy, whereas adaptability refers to the capacity to reconfigure activities in the business unit quickly to meet changing demands in the task environment (2004: 209). As we can see the definitions here, they are also two kinds of firm capabilities. Specifically, alignment focuses on the efficiency of existing strategy implementation, so it tends to serve for existing customers and more exploitation-oriented. By contrast, adaptability pays more attention to the formulation of new strategy,

4 allocate more resources for the purpose of exploration. Consequently it tends to address the change of the environment. Given the resources constraint of a firm, it is clear that they are also two conflict yet equally critical organizational capabilities. 3 RESEARCH MODEL AND HYPOTHESES 3.1 Research model From above discussion, the impact of the synergy of IT and business process on its ambidexterity capability appears rather significant when we look at an organization from a process level perspective. On the one hand, the close linkage of IT and business process which facilitates collaboration of process activities leads to alignment capability; On the other hand, emerging IT can be utilized to modularize process as much as possible. IT could enable the activities composed various processes can be swapped, bought, and sold like parts of a machine (Merrifield et al. 2008), and hence enhance adaptation capability of an organization to fulfill the adaptation. In the meantime, due to the dynamic property of ambidexterity capability, according to Pavlou and El Sawy(2006), it would get more substantial in the context of turbulent environment. Therefore, we contend that the turbulence of environment moderates the effect of ambidexterity capability on organizational performance. These relationships are depicted in Figure 1. Synergy between IT& Process Alignment between IT& Process Process Modular effect enabled by IT Figure 1 H1 H2 Ambidextrous capability Alignment capability Adaptation capability Ambidexterity capability Environmental turbulence 1. Market turbulence 2. Technology turbulence H3 H4 Organizational performance Performance Effect of Synergy of IT& Process on Ambidexterity Capability Model Short-term indicators: 1. Speed 2. Quality 3. Cost Long-term indicators: 1. NPD 2. Innovation 3.2 Synergy of IT and Business Process Alignment between IT & Business Process In IS field, Henderson & Venketraman(1993) firstly establish strategic alignment model. Based on the model, Reich & Benbasat (1996) define linkage, which is viewed as the synonym of alignment, as "the degree to which the IT mission, objectives, and plans support and are supported by the business mission, objectives, and plans." In the same token, we define alignment between IT and business process as the degree to which IT support and are supported by organizational business process. Actually, according to Henderson & Venketraman(1993), alignment should involve two levels, one is at the strategic level and the other is at the operational level. Clearly, the latter will strongly support the former. What is more, alignment at the operational level is even able to limit the choice of new strategy. For example, Dell gained huge competitive advantage over all of its rivals. Two biggest PC giants in 1990s, IBM and Compaq, had attempted to mimic Dell s direct marketing model, yet they failed totally. Why? The reason is that the successful operating model of Dell is supported by high alignment of IT and business process which is fundamentally different with IBM and Compaq. When IBMs try to copy Dell s new business model, their old operating models fail to provide relevant

5 supports. Therefore, it is their old, well-established alignment at the process which hinders organizational alignment at the strategic level. This view coincides with that put forth by Tallon(2007), who claims that it is not whether alignment is tight in all processes but whether alignment is tight in areas such as operations that matter to the success of organizational strategy. Tallon(2007) suggests that business strategy is implemented using a series of processes or activities as a value chain or network, differences in strategic foci could mean that some processes are more important than others. For example, a low-cost firm may have little use for processes that treat each customer as a stand-alone market; instead, their focus is more on mass production or standardization as a way to reduce costs. In contrast, a niche provider may see customer-facing processes or marketing as key (2007:228). As we all known, the operation mode of a firm s value chain is determined by its strategy. In this meaning, the synergy of IT and business activities would promote the configuration of all resources like human resources, finance resources, etc., and thus strategic alignment. When alignment arises at both strategic and operational level, we conclude that alignment of total organization is reached. Along this logic, it is our contention that organizational alignment capability might result from IT and business process. Hypothesis 1: Alignment between IT and business process will have a positive impact on organizational alignment capability Modular Effect of IT on Business Process The effects of IT on business process have been manifested as reduced cycle times, improved responsiveness, and service enhancement as a result of reengineered processes and redesigned organizational structures. While the effects listed above might impact the adaptability of an organization in some sense, all of them focus on the role of IT on the management of existing processes. According to the definition of this study, adaptation capability indicates the ability of reconfiguring resource to adapt changing environment to embrace the challenge in the future. As a consequence, we contend that modular effect of IT on business process appears especially salient in this regard. In the early 1990 s, experts particularly emphasize the importance of process diagnosis prior to implementing business process reengineering, therefore they called for a fundamental rethinking and radical redesign of business processes (Hammer and Champy 1993). However, with the development of IT, it has become possible to design many business activities as Lego-like components that can be easily put together and taken apart. What s primarily responsible is the service-oriented architecture (SOA), a relatively new way of designing and deploying the software that supports a business activity. SOA concepts are often seen as built upon, and evolving from older concepts of distributed computing (Bell 2008) and modular programming. The beauty of SOA is that it allows activities - or processes built from such activities - to be accessed using the now-ubiquitous Internet in a standardized fashion (Merrifield et al. 2008). The outcomes of modularization are significant for an organization: In the first place, an organization merely need focus on the activities which lead to higher value and competitive advantage, and allocation more resources on them. Secondly, extremely personalized design of IT supplies the highly flexibility of business process, which unfetter technology constraints which keep the constituent activities of a process locked within it. Therefore, the activities could be readily shared across processes or businesses. It is especially true in a multi-business firm, where this sharing can lead to organizational economics of scope. Last but not the least, outsourcing noncore activities in business processes becomes extremely easy. In recent years, the phenomenon of offshore outsourcing spreading across the world illustrates the titanic advantage of process modularization. On the one hand, internet or other extranet connects the process of buyer with that of seller (i.e. supply chain) seamlessly, on the other hand, business partners operate independently and keep a relative loose linkage.

6 Hypothesis 2: The modular effect of IT on business process will have a positive impact on organizational adaptation capability. 3.3 The Effect of Ambidexterity Capability on Organizational Performance The synergy of IT and business process supplies organizations with alignment and adaptation capabilities simultaneously, which are two component of ambidexterity capability. Alignment activities are geared toward improving performance in the short term, and it is concerning with shortterm indicators like efficiency, speed, quality, and so forth. Adaptability activities are geared toward improving performance in the long term, and it is concerning with long-term performance like new product development, service and process innovation etc. Thus, if a business unit focuses on one of these at the expense of the other, problems and tensions will inevitably arise (Gibson and Birkinshaw 2004:212). From the analysis, ambidexterity led by the synergy of IT and business process is all the more conducive to sustainable performance. Hypothesis 3a: Organizational alignment capability will have a positive impact on organizational short-term performance. Hypothesis 3b: Organizational adaptation capability will have a positive impact on organizational long-term performance. 3.4 The Moderating Role of Environmental Turbulence Environmental turbulence describes the general conditions of uncertainty because of changes in consumer preferences and technology developments. Environmental turbulence arises from two primary sources (Jap 2001): First, market turbulence creates unpredictability in market demands, consumer needs, and competitor strategies. Second, technological turbulence creates uncertainty regarding new technological breakthroughs. According to Pavlou and El Sawy (2006), environmental turbulence reinforces the positive relationship between dynamic capability and organizational performance in the context of new product development. As stated above, whereas ambidexterity capability belongs to a kind of dynamic capability which can lead to competitive advantage, it is reasonably deduced that the linkage between ambidexterity capability and competitive advantage is moderated by environmental turbulence as well. Environmental turbulence increases the knowledge intensity of business processes, escalating the importance and emphasis on knowledge (Hitt et al. 1998). The increased knowledge intensity of the competitive landscape requires the effective use of IT functionality to support business processes. For instance, turbulent environments would require the use of IT to support rapid communications, the higher the rate of environmental turbulence, the greater the need for IT leveraging competence to support knowledge flows and process innovation. In sum, these suggest that IT leveraging competence should have a stronger effect on dynamic capabilities, specifically ambidexterity capability, in higher degrees of environmental turbulence. We contend that environmental turbulence is likely to moderate the ambidexterity capability competitive advantage relationship also because ambidexterity capability enhances the relative advantage of ambidexterity capability in contrast with those who gain their advantages from either exploiting existing ones or exploring new ones. Turbulent environment increases the possibility that ambidexterity capability would reconfigure varieties of organizational resources to form distinct competencies. Dynamic capabilities can be viewed as strategic options (Kogut and Zander 1996), which give a firm the choice to pursue new directions when the opportunities arise. The higher the environmental turbulence, the more likely these options will become valuable (Sambamurthy et al. 2003). In contrast, stable environments reward the efficient exploitation of existing functional competencies. Hence, environmental turbulence reduces the value of existing resources exploitation, while it enhances the value potential of exploration capabilities.

7 Hypothesis 4a: The positive relationship between organizational alignment capability and organizational short-term performance is positively moderated by environmental technological turbulence. Hypothesis 4b: The positive relationship between organizational alignment capability and organizational short-term performance is positively moderated (reinforced) by environmental market turbulence. Hypothesis 4c: The positive relationship between organizational adaptation capability and organizational long-term performance is positively moderated (reinforced) by environmental technological turbulence. Hypothesis 4d: The positive relationship between organizational adaptation capability and organizational long-term performance is positively moderated (reinforced) by environmental market turbulence. 4 RESEARCH METHODOLOGY The survey methodology was used to collect data for testing the research hypotheses. This methodology was chosen because it enhances generalizability of results (Dooley 2001). 4.1 Operationalization of Constructs Where available, the constructs were measured using questions adapted from prior studies to enhance validity. For new measures and for those that required significant changes, standard scale development procedures were used (Churchill 1979). We discuss these constructs below respectively Alignment between IT and business process Tallon(2007) measures alignment between IT and business process by using profile deviation and moderation. In this study, we follow Tallon(2007) s method primarily, yet conduct some adjustment. Firstly, we begin with identifying the strategic typology of firms. In this regards, we concur with the value disciplines typology posited by Treacy and Wiersema(1995), who argue that firms create value for their customers by using one of three unique value disciplines, namely, operational excellence(focus on offering customers a low-cost product or service), customer intimacy(refer to meet the needs of customers whose preference may change over time as much as possible), and product leadership(pay more attention to innovation of products and services). Based on different strategic focus, Tallon(2007) propose an ideal IT use profiles for the purpose of alignment between IT and business process, as shown in table 1. Take operational excellence (column 2) as an example, when a firm focuses on its operational excellence, we notice that the value of supplier relation (line 2) is 1, which means that it should pay more attention to the alignment between supplier relations and IT. By contrast, the facts that the value of sales and marketing support is -1 means that the misalignment of this process and IT may not impact the organizational performance. In present study, we adopt the profile deviation method to calculate the alignment between IT and business process. According to the result calculated, we allocate different scores (1-7) to each firm. Business Processes Operational Excellence Customer Intimacy Product Leadership Supplier relation Prod. & operation Product & service enhancement Sales & mark. supply Customer relations Notes: On a process-by-process basis, 1, 0, and 1 ratings denote above average, average, and below average use of IT, respectively, as each value discipline is compared in turn with other value disciplines.

8 Table 1. Ideal IT Use Profiles in Support of Business Process Activities Modular effect of IT on business processes A new measure was developed for IT modular effect of IT on business processes that aimed to assess the extent to which business process can be modified by IT. Our challenge was to specifically capture the effectiveness in using particular IT functionalities to facilitate the modularization of processes activities. Hence, the construct s measurement items were introduced with the following request: Please assess the modular effect of IT on business process activities. To emphasize the modularization in leveraging IT functionalities, some items focused on the adequacy of specific IT functionalities Organizational contextual ambidexterity capability Following Gibson and Birkinshaw(2004), we operationalize organizational contextual ambidexterity as two kinds of capability, that is, alignment capability and adaptation capability, Apart from the items provided by Gibson and Birkinshaw(2004), we add two items on each of them. Considering the specific context in which we study, the items we add are chiefly concerned with the function of IT, while the meaning of them are similar to the original items Organizational short-term and long-term performance In the present study, we use business manager s perceptions to assess the actual impacts of IT on organizational performance in contrast with their major competitors. It is not uncommon in IS field that the perception of performance is used as dependent variable(bhatt and Grover. 2005; Tallon et al. 2000). And Premkumar and King(1992) found that executives' assessment of how IT contributes to firm performance is closely related to the role of IT in their corporations. In the respect of organizational short-term performance indicators, such as efficiency, finance performance, quality, etc. are utilized as surrogates. Meanwhile, new product development and innovation ability are used as surrogates of organizational long-term performance Environmental turbulence We use Jaworski and Kohli s(1993) scales to measure the pace of customer and competitor changes and technological breakthroughs. Considering that firm size may influence organizational performance in some sense, we treat it as a control variable. Total revenue in 2007 is used as a measure of firm size. 4.2 Survey Administration The field study was conducted in Shanghai, China, from August to October All participators were all levels of managers from different size and types of businesses, many of which were Chinese office of fortune 500. Items associated with these constructs used a seven-item Likert type scale where respondents were asked to state their agreement with a given statement on a scale that ranged from "strongly agree" to "strongly disagree". About 200 invitation s were then sent, explaining the study s purpose and requesting participation. The body assured recipients that the responses would be treated confidentially and that the results would only be reported in aggregate. The respondents were asked to click on the URL link provided in the message that linked to an online instrument. No specific incentive was provided to participants for completing the survey other than promising them a copy of the report that summarized the study s results (more than 80% of the respondents requested this report).

9 Eventually, we received a total of 80 combined responses via return mail, Web, and . There were 72 usable responses received, resulting in about a 36 percent response rate. Our sample represented a wide range of companies. About thirty percent of firms were in IT and Communications; 23.6 percent were in manufacture; 16.7 percent in transportation and post industry; and the rest in finance, trade, retail and housing business, etc. In revenue regard, about 40 percent of the firms were under one hundred million US dollars, 36 percent ranged from $1 billion to $10 billion, and the rest were above 10 billion. 4.3 Scale Validation The scales were validated using the standard procedures recommended in the literature (Straub 1989). Items of scales in a related domain were pooled and factor analyzed to assess their convergent and discriminant validity. An iterative process of dropping items with high loadings on multiple factors or with loadings on factors other than the one representing the scale they pertain to, and reassessing the factor loadings, was followed in refining the scales. Overall, six items were dropped to yield a set of scales that had adequate convergent and discriminant validity (Table 2). Items MODUL MODUL MODUL MODUL ALIGN ALIGN ALIGN ALIGN ALIGN Component ADAPT ADAPT ADAPT ADAPT ADAPT TECH TECH TECH MARK MARK MARK PER_L PER_L PER_L PER_S PER_S

10 PER_S PER_S PER_S Table 2. Factor Analysis The reliability of these refined scales was then assessed. As shown in Appendix A, Cronbach's alpha values for all scales were found to be greater than 0.70, the threshold recommended by the literature. As such, variances among the items in this scale may not be as homogeneous as would be expected in the other scales, leading to a marginally lower alpha. 5 RESULTS Ordinary least squares (OLS) regression analysis was used to test the hypotheses, and Table 3 shows the results of the regression analyses. As shown in Table 3, organizational alignment is significantly impacted by alignment of IT and business process, while organizational adaptability is significantly impacted by process modularization. Hypothesis 1 and 2 are supported. As a result, we may safely draw a conclusion that organizational ambidexterity is significantly influenced by synergy of IT and business process. An assessment of the results in Table 3 reveals that Hypothesis 3a and 3b are also supported. In total, organizational ambidexterity will produce significant influence on performance, controlling for size. We have hypothesized environment turbulence would moderate the relationship between ambidexterity and performance, and environment is divided into market and technology environment. As illustrated in Table 3, technological turbulence moderate moderate the relationship between alignment and short-term performance at the 0.10 level. Market turbulence, by contrast, does not moderate both relationships. Consequently, Hypothesis 4a and 4b are supported and hypothesis 4c, 4d are not supported. Organizational size (measured by revenue in 2007) seems not to impact the performance according to Table 3. 6 DISCUSSION AND LIMITATIONS This paper investigates how synergy of IT and business process impacts organizational ambidexterity capability, which in turn impacts organizational performance, and ambidexterity theory is introduced to explicate the process. We posited that environmental technological turbulence moderates the ambidexterity and performance, which market turbulence does not. We use the survey data from 72 firms in China to test the model proposed. The outcome appears to be supported mostly. Firstly, we find that IT has the potential to improve firm performance when it is combined with business process which is also a critical resource of a firm. The synergy of IT and business produces organizational ambidexterity capability which is conducive to organizational performance. We may safely come to a conclusion that the two resources are complementary. Secondly, the results reveal that the alignment of IT and process is beneficial to the alignment capability of an organization, while the modularization of process enabled by IT makes an organization more adaptive. It enlightens us that different combination of IT and business process may result in different effect. Thirdly, we find that organizational alignment capability is positively related to short-term performance, and organizational adaptive capability is positively related to long-term performance. This is consistent with Gibson and Birkinshaw(2004) s findings. The alignment of organizational resources focus more on enhancing short-term efficiency and effectiveness, and the adaptability of an organization can cause long-term, more sustained performance.

11 Finally, contrary to our expectation, while we find that environmental technological turbulence moderates the ambidexterity and performance, market turbulence does not. The reason of this finding, we reckon, may lie in the fact that both organizational alignment and adaptability are fostered by IT, the role of market turbulence gets less significant as opposed to technological turbulence in the study. Hypothesis/Variabl e Shortterm perf. Long-term perform. Org. Alignment Org. Adapt. Shortterm perf. Long-term perform. Std. Esti. p value Std. Esti. p value Std. Esti. p value Std. Esti. p value Std. Esti. p value Std. Esti. p value Intercept *** 4.292*** 3.694*** 2.499*** 4.519*** 4.192*** Alignment of IT & Process (H1) 0.140*** Process Modularity (H2) 0.402***.001 Organizational alignment (H3a) 0.763*** 0.720*** Organizational Adaptability (H3b) 0.383** *** Size of Firms Org. Align. Tech. Turb. (H4a) *.057 Org. Align. market Turbulence (H4b) Org. Adapt. Tech. Turbul. (H4c) 0.552*** Org. Adaptability market Turb. (H4d) R Adjusted R F Model p value Max VIF *p <.10, **p <.05, ***p <.01 (All tests are two-tailed) Table 3. Results of Regression Analysis As with any research, this study does have some limitations. First, all the measures were self-report surveys. Therefore, the observed relationships may have been artificially inflated as a result of respondents tendencies to respond in a consistent manner. Second, a key informant method for data collection, while having its advantages, also suffers from the limitations that the data reflects the opinions of one person. However, more recent research indicates that although this problem continues to be commonly cited, the magnitude of inflation may be overestimated[14]. Third, the self-report measures for all constructs were obtained at the same point in time from the senior and medium managers, which may increase the potential for common method bias. Moreover, the cross-sectional nature of the study does not permit causality to be inferred from the results. Finally, the constructs used in our model are latent variables that are not directly observable. Hence, it is necessary to measure manifestations of constructs using indicators. Since a significant number of indicators could reflect a construct, we adopted a sampling approach where indicators well aligned with our conceptual definitions were included in the measurement scales for the constructs. Considering the constraints of survey length, it is possible that we are unlikely to have sampled all items from a construct's domain. 7 CONCLUSION In a market with increasingly tense and fierce competition, an organization typically faces up with the dilemma of perusing a couple of conflicting goals, such as manufacturing efficiency and flexibility,

12 capability exploitation and exploration, etc., consequently it needs own ambidexterity capability. Drawing on Ambidexterity Theory, the study develops an Ambidexterity Capability Model, which analyzes the source of organizational ambidexterity capability from a process level. And we posit that it is the synergy of IT and business process that leads to organizational alignment as well as adaptation capability. This research contributes to the growing body of conceptual and empirical literature on alignment and IT business value in three ways. First, to the best of our knowledge, this is the first time that ambidexterity theory is introduced to explicate IT business value creation, which supplies a new perspective for the topic. Second, we extend ambidexterity theory and deeply analyze and interpret the fundamental concepts from a process level. The concepts can be easily operationalized and tested by further survey study. Third, we stress the role of IT in ambidexterity capability building, especially the modular effect on business process give an insightful hint for further research. IT resources by itself can not lead to competitive advantage for an organization, however, the issue is how to utilize it in organizational process and how an organization makes it possible to produce organizational ambidexterity capability by the synergy of IT and business process. Of course, the synergy effect of IT and business process needs to be investigated in future study. With increased capital spending on IT in recent years by firms, this study is relevant to managers who are constantly seeking to leverage their IT investments. Firstly, a firm might be conscious of the possibility of ambidexterity capability. Too often success lies in creative and innovative action, some seemingly contradictive either-or problems might be translated into the outcomes of both-and. Secondly, this study provides helpful evidences that an organization is able to focus on the synergy of IT and business process to endeavor to build its ambidexterity capability gradually until becoming an ambidextrous organization. An organization that perceives and acts on these possibilities can gain sustainable competitive advantage in the turbulence marketplace. ACKNOWLEDGEMENTS This work was supported by a research grant from the Natural Science Foundation of China (Project No ) to the first author, and a 2008 research grant from Fudan University to the corresponding author. REFERENCES Adler, P. S., Goldoftas, B., & Levine, D. I. (1999), Flexibility versus efficiency: A case study of model changeovers in the Toyota production system, Organization Science, 10: Bhatt, Ganesh D. and Varun Grover. (2005), Types of Information Technology Capabilities and Their Role in Competitive Advantage: An Empirical Study, Journal of Management Information Systems, 22(2): Bell, Michael. (2008), Introduction to Service-Oriented Modeling, Service-Oriented Modeling: Service Analysis, Design, and Architecture, Wiley & Sons. Benner, M. J., & Tushman, M. L. (2003), Exploitation, exploration, and process management: The productivity dilemma revisited, Academy of Management Review, 28: Churchill, G. A. (1979), A paradigm for developing better measures of marketing constructs, J. Marketing Res., 16(1): Dooley, D. Social Research Methods, Prentice-Hall, Upper Saddle River, NJ, Duncan, R. B. (1976), The ambidextrous organization: Designing dual structures for innovation, In R. H. Kilmann, L. R. Pondy, & D. Slevin (Eds.), the management of organization, 1: New York: North-Holland. Gibson, C.B. & Birkinshaw, J. (2004), The antecedents, consequences and mediating role of organizational ambidexterity, Academy of Management Journal, 47(2): Hammer, M., J. Champy. (1993), Reengineering the Corporation: A Manifesto for Business Revolution, New York: Harper Business. Henderson, John C; Venkatraman, N. (1993), Strategic alignment: Leveraging information technology for transforming organizations, IBM Systems Journal, 32(1): 4:16.

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