Information lies at the heart of the modern enterprise and the Information Systems (IS) and broader business management literatures have long recognized information as a vital resource. Indeed, the vast information resources of global giants such as Google, Facebook, Amazon, and Uber clearly undergird their market dominance. Recent developments in associated information capabilities, such as advanced analytics, automated decision-making, digital platforms, and strategic information alliances, all appear to be instrumental in how modern firms competitively leverage their digital information resources. These developments call out for richer theorizing of the dynamics of information resources, information capabilities, and competitiveness in the digital era. How do we explain, both fundamentally and precisely, digital information-based competitive advantages? The capabilities view (exemplified by theories such as RBV or the Resource-Based View of the Firm) and the information asymmetries view are two of the major theory bases that explain profit-generating mechanisms. In this research we integrate, elaborate, and situate concepts from the capabilities view and information asymmetries, formulating a novel digital information asymmetry theory (DIAT) to explain how organizations can best develop and exploit information asymmetries in an era of pervasive digitalization. We explicate those digital information asymmetries and associated information capabilities required to generate, preserve, and exploit asymmetries. DIAT predicts that the development of digital information asymmetries and concomitant digital information capabilities drive Ricardian competitive advantage.
