Information technology and partnership dynamic capabilities in international subcontracting relationships

•We examine the relationship of IT-related investments and partnership value in international subcontracting relationships.•Dedicated IT assets and IT alignment enhance partnership dynamic capabilities, that in turn enhance partnership performance.•Enriched RSK stores and effective joint actions manifest the performance of the partnership.•Partnership dynamic capabilities mediate the relationship between IT-related investments and co-created value.

Previous studies have noted the positive impacts of information technology (IT) investments on firm performance. The purpose of this paper is to show that IT investments also improve the joint performance of partners in a relational setting. We argue that IT investments enhance the partnership dynamic capability, which in turn, increases the partnership value. With a higher partnership value, the joint performance of the partners improves. Partnership dynamic capability refers to the ability of partners to coordinate actions in pursuit of market opportunities or in response to threats. Partnership dynamic capability plays the role of a catalyst in transforming the IT-related investments into partnership value which is the strategic value co-created by the partners and can only be exploited jointly by the partners. We test this argument in the international subcontracting business of the personal computer industry. The working hypotheses were developed by drawing on the resource-based view (RBV) and the dynamic capability perspective of the firm. Partnership dynamic capability is captured by three constructs in the empirical study: information exchange, relationship-specific knowledge (RSK) stores, and joint actions. The data, which were collected from 126 Taiwanese personal computer firms, substantiate the hypotheses.