While information technology is being adopted, organizational structure is often reexamined and adjusted to improve performance via pooled resources, innovation and collaboration across organizational boundaries (Dewett Jones 2001). Individual learning, for the organization to effectively take advantage of information technology, both end-users and information technology personnel must acquire new information technology-related skills and knowledge (Grover et al.
1997; Palmer Markus 2000). Companies can be successful in aligning their information technology and business strategies by balancing internal and external factors as well as business and information technology domains (Henderson Venkatraman 1993). As many innovation activities involve adding new services, expanding existing ones and/or improving the service delivery process, the success of an organization hinges on how well it implements its service innovation (Berry et al. 2006) to create new markets. Good innovation practices help enhance a firm's competitive advantage (e.g., Afuah 1998; Bharadwaj et al. 1993). However, there is little theoretical work on the development of nomological relationships among information technology, service innovation and competitive advantage. 1989). Almost two-thirds of the information technology budget of an organization is spent on information technology infrastructure (Weill Broadbent 1998 not only to enable the sharing of information across different departments but also to provide flexibility to respond to changes in business strategy (Weill et al.
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