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Information Systems and e-Business Management

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01.09.2007 | Original Article

The linkage between IOS use and competitive action: a competitive dynamics perspective

verfasst von: Lei Chi, Clyde W. Holsapple, Cidambi Srinivasan

Erschienen in: Information Systems and e-Business Management | Ausgabe 4/2007

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Abstract

The use of interorganizational systems (IOS) for competitive advantage has been the topic of much writing and research. As a successful example, American Airlines’ aggressive use of its computer-based reservation system, SABRE, has often been cited for improving operational efficiency, increasing organizational flexibility, and altering interorganizational relationships. Yet, little attention has been given to a series of competitive actions that were generated through the use of SABRE along this system’s evolutionary trajectory. These competitive actions enabled American to disrupt competitive forces and remain as a market leader in the airline industry for decades. Stimulated by American’s case and today’s widespread use of IOS, this study asks two interesting questions: “Is there a systematic link between IOS use and competitive action?” “If so, how do they relate to each other?” In addressing these questions, we adopt research from the field of competitive dynamics to examine roles of IOS in influencing firm behavior and resultant firm performance. Competitive dynamics research has shown robust relationships between measures of competitive action and firm competitiveness, but technological antecedents of competitive action have been little studied. Collecting and analyzing 12 months of data for the year 2003 from multiple secondary data sources, this study empirically investigates links between IOS uses and competitive actions for nine major sports car makers. Our findings suggest a strong link between IOS uses and competitive actions. Also, there are larger implications for information technology (IT) researchers. The novel adoption of competitive dynamics suggests the development of a new kind of IT value measure, going beyond limitations of traditional measures by recognizing competitive actions as specific moves that are first observed after undertaking initiatives aimed at enhancing competitiveness. Additional implications for IT research, methodology, and practice are discussed.

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The reason that we focus on the link between IOS use and competitive action stems mainly from three factors: (1) motivation from American Airlines’ IOS story portrayed at the beginning of this paper; (2) the growing predominance and importance of IOS in today’s networked economy (firms increasingly digitize their business processes and rely on IOS-mediated interorganizational relations to develop and deploy capabilities); (3) the postulation that IOS use (simply, use of IT in interorganizational settings), as externally-oriented IT use, may be more directly transformed into externally-oriented, observable competitive actions in the product-market space compared to internally-oriented IT use.

The terms of techno-economic, socio-political, and trust perspectives originated from Kumar et al. (1998). The techno-economic perspective sees IOS as instruments for increasing organizational efficiency. It emphasizes positive roles IOS play in interorganizational relationships. Examples include: easier and faster data manipulation and analysis (Johnston and Vitale 1988); faster order response and just-in-time delivery by shortening order cycles and reducing ordering costs (Johnston and Vitale 1988; Iacovou et al. 1995); faster problem identification and enabling more accurate diagnosis (Johnston and Vitale 1988; Venkatraman and Zaheer 1994); fast information sharing (Kaufmann 1966; Barret and Konsynski 1982; Cash and Konsynski 1985; Johnston and Vitale 1988; Venkatraman and Zaheer 1994).

The socio-political perspective does not presume a technological imperative or economic rationality for IOS use, but instead assumes that interconnected environments within which firms operate represent negotiated areas characterized by information asymmetry and manipulation (Kling 1980; Kumar et al. 1998). This perspective views IOS as competitive weapons for power control among the IOS participants. In the drive to optimize its self-interest for competitive advantage, a firm seeks to minimize its dependence on other firms and maximize dependence of other firms on itself (Reekers and Smithson 1995). For example, a firm that owns and controls configurability of an IOS may achieve a competitive edge by dictating its function – network architecture, communications protocols, message standards, product coding and information processing procedures (Webster 1995); IOS may increase control over more dependent partners by biasing information display and creating information asymmetry; providing customized IOS may also increase partner dependence and switching costs (Johnston and Vitale 1988; Mutch 1996; Hart and Saunders 1997).

IOS studies began to focus more on a trust perspective, which assumes that trust and cooperation (not domination and control) are key values underlying socio-economic behavior. This perspective emphasizes roles of IOS in enhancing trust and cooperative behaviors among the IOS participants to achieve collaborative advantage (Holland 1995; Kumar and van Dissel 1996; Hart and Saunders 1997; Kumar et al. 1998; Li and Williams 1999; Gallivan and Depledge 2003).

A major reason for choosing the sports car segment is that focusing on one car segment allows to examine a relatively complete automotive network in depth and to exclude confounding factors related to different industry characteristics. Defined as small low vehicles with high-powered engines that usually seat two persons, sports cars are distinct from other vehicles like sedans and SUVs. This distinction between sports cars and other vehicles can remove ambiguities in identifying sports car makers and their relevant competitors in the data collection.

A primary reason for choosing the automotive industry is that this industry possesses characteristics particularly desirable to this study. The first characteristic is its predominant interorganizational collaboration. Collaboration spans a wide range of dimensions from procurement through to marketing and sales. A second characteristic is its widespread use of IOS. The automotive industry was among the earliest industries to adopt IOS, such as EDI for purchasing, inventory management, and production scheduling (Cash and Konsynski 1985). Many major automakers are aggressive IOS users. They are trying to digitize their core business processes and link suppliers, dealers, logistics partners, and customers on common computing platforms.

Actual use refers to the manner in which IOS are implemented and, in effect, used

In Fig. 2, values of competitive action and IOS use do not represent their original values, but are their canonical variates scores determined by taking linear combinations of action volume, complexity of action repertoire and action heterogeneity, and those of IOS reach, IOS range and diversity of IOS use.

In the ANCOVA, time (expressed as 12 integers ranging from 1 through 12) was controlled because of its significant effect on competitive action. As shown in Figure 2, time effects on competitive actions display a distinct sinusoidal-wave shape. We thus used cos(Time) as the covariate in our analysis to satisfy the assumption of ANCOVA that covariates and dependent variables must be linearly related (assumptions of homogeneity of variance of covariates and homogeneity of covariate regression coefficients were satisfied).

Firm size (measured as employee number or sales revenue), which may be related to competitive action, is not controlled here due to the unavailability of this data on a monthly basis.

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Titel: The linkage between IOS use and competitive action: a competitive dynamics perspective
verfasst von: Lei Chi
Clyde W. Holsapple
Cidambi Srinivasan
Publikationsdatum: 01.09.2007
Verlag: Springer-Verlag
Erschienen in: Information Systems and e-Business Management / Ausgabe 4/2007
Print ISSN: 1617-9846
Elektronische ISSN: 1617-9854
DOI: https://doi.org/10.1007/s10257-007-0050-4

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