Achieving dynamic capabilities with cloud computing: an empirical investigation

Cloud computing enables convenient and on‐demand access to a shared pool of configurable computing resources. While cloud computing‘s ability to improve operational efficiency has gained much attention in the literature, there has been limited research on how it can help organizations achieve dynamic capabilities. Drawing from dynamic capabilities theory, we conducted a field study using a multiple case study design to examine the following research question: How do organizations achieve dynamic capabilities by using Cloud Computing? We develop a framework that explains how organizations respond to market dynamism by developing sense‐and‐response strategies that enable them to achieve dynamic capabilities using business process redesign, business network redesign, and business scope redefinition. We discuss how these transformations, in turn, improve organizational outcomes such as service effectiveness and efficiency. Our study also identifies factors that support and hinder the development of dynamic capabilities. Our study contributes to the literature on dynamic capabilities by examining how IT capabilities like cloud computing may accelerate the ability of an organization to achieve dynamic capabilities. We also identify transformational changes of business processes and inter‐organizational networks that are enabled by cloud computing. Further, we identify how the essential characteristics of cloud computing support sense and respond strategies.