In the IS capability perspective, the fundamental promise is that they are utilizing and combining
mechanisms that produce the firm’s strategic benefits; such mechanisms as managerial IT skills are firmspecific
and hard to imitate (Teo & Ranganathan, 2003). Peppard and Ward (2004) suggested that these
are a firm’s process, roles, and structure that produce and shape those mechanisms. Accordingly, they
proposed that IS capability has three attributes: business and IT knowledge fusion, flexible IT
infrastructure, and effective utilization process.
The Position of IT Capability Among Other Organizational Capabilities: A Knowledge Perspective
The organizational capability theory is based upon the integration of specialized knowledge of
organizations’ members, in which efficiency of the knowledge acquisition needs individuals’
specialization in a specific knowledge, and knowledge application requires accumulation of several areas
of expertise knowledge (Grant, 1996). Knowledge application to production – that is, value creation
through input into output transformation – requires many specialized knowledge areas to be brought
together (Demstez, 1991) to shape organizational capability.
From an organizational perspective, organizational capabilities have been described as a hierarchy by
Grant (1996), where functional capabilities are the result of specialized capabilities’ combination.
Likewise, functional capabilities’ integration forms a higher level of capabilities that are cross-functional
capabilities (see Figure 2). For example, new product development capability as a cross-functional
capability derives from operations, R&D and design, and marketing and sales capabilities.