Need for Speed in the Sharing Economy: How IT capability drives Innovation Speed?

Abstract

Though innovation is considered to be the lifeblood of business, speed of innovation is more critical than innovation itself. IT plays a critical role in the process of open innovation as it is based upon collaborating with suppliers and customers. IT enables increased collaboration and generation of insights across the firm’s partner network. We examine the role of IT-enabled capabilities in determining the speed of innovation. We hypothesize that collaboration with customers is more effective than collaboration with suppliers for firms to speedily innovate. Further, a firm’s digital collaboration with customers is more effective when Business Intelligence systems are used. Econometric analyses of data from 249 U.S. firms yields strong support for our hypotheses. While both customer-side and supplier- side digital collaboration are positively associated with innovation speed, the effect of customer-side digital collaboration on innovation speed is stronger. Furthermore, Business Intelligence systems use amplifies the effect of customer-side digital collaboration.