Journal of Business & Management Volume 3, Issue 1 (2014), 01-12 ISSN 2291-1995 E-ISSN 2291-2002 Published by Science and Education Centre of North America ~ 1 ~ Impact of Information Technology Infrastructure Flexibility on the Competitive Advantage of Small and Medium Sized-Enterprises Seongbae Lim 1* & Silvana Trimi 2 1 Bill Greehey School of Business, St. Mary’s University, San Antonio, TX, USA 2 College of Business Administration, University of Nebraska, Lincoln, NE, USA * Correspondence: Seongbae Lim, Bill Greehey School of Business, St. Mary’s University, San Antonio, TX, USA. Tel: 1-210- 431-2035; E-mail: slim1@stmarytx.edu DOI: 10.12735/jbm.v3i1p1 Abstract The purpose of this study is to investigate the impact of information technology infrastructure flexibility (ITIF) on competitive advantage (CA) of small and medium-sized enterprises (SMEs). For this purpose, this paper conducted multivariate analysis of covariance by using ITIF as an independent variable and four dependent variables for CA: production cost, fast and reliable delivery, product quality, and flexibility of product design, which are also essential factors in IT buying decision making for organizations. The results of this study show that having a flexible IT infrastructure positively influences all four variables of CA. Moreover, the result of the univariate analysis indicates that the SMEs’ highest benefit of having ITIF is the improvement of product quality and an increased flexibility of product design. These results emphasize the importance of ITIF for SMEs and cloud computing, as a means for achieving this flexibility. JEL Classifications: M11, M15 Keywords: IT, IT infrastructure, IT flexibility, cloud computing, product quality, product design 1. Introduction In today’s rapidly changing global economy, many organizations have adopted and leveraged advanced IT to gain competitive advantage over competitors. Several studies have been conducted for the purpose of identifying and measuring the relationship between IT and competitive advantage (CA) in organizations. However, most of these studies focused only on a single competitive advantage construct and did specify why the specific construct was used while other CA related dimensions were left out (Gebauer & Schober, 2006; Chung, Byrd, Lewis, & Ford, 2005; Palanisamy & Sushil, 2003; Weill, Subramani, & Broadbent, 2002). In addition, most assumptions about IT in these studies might not be appropriate anymore due to the fast-advancing IT environment. There have been major changes especially in terms of IT infrastructure flexibility (ITIF) due to many web based technologies such as XML, ASP, service oriented architecture (SOA), software-as-a-service (SaaS), virtualization, co-location, grid computing and cloud computing, to name a few. ITIF infrastructure provides organizations with the ability to pursue dynamic inter-organizational relationships (IORs), business process reengineering (BPR), diversification of products and services, and scalability. ITIF has become essential for improving strategic flexibility