The role of information technology (IT) in creating business value has been a hot topic over the past decade. Previous research already showed relationships between, for instance, IT investments and productivity and improvement of business processes. However, significant benefits and increases of efficiency have been shown, can we really attribute this to the role of IT as a competitive advantage?
Let’s first look at the definition of a competitive advantage: “a competitive advantage is rooted in the deployment and use of idiosyncratic, valuable, and inimitable resources and capabilities (Ghanesh, 2005). With this competitive advantage, firms can gain advantage from resources in the marketplace, do better on acquiring resources and increase the ability to build unique competencies and capabilities that can leverage their resources. The concept of competitive advantage can be explained through the Resource Based View (RBV). This view emphasizes the importance of building unique, inimitable, and heterogeneously distributed capabilities. As IT is a strategic resource, it could be used to obtain a competitive advantage.
BUT! A man named, Nicholas Carr, drastically changes the view of IT as a source of competitive advantage in his article: “IT doesn’t matter” (Carr, 2003). And not to forget, Micheal porter also states that IT will become enhanced by all competitors, neutralizing its advantages compared to competitors (Porter, 1985).
I cite: “As information technology’s power and ubiquity have grown, its strategic importance has diminished. The way you approach IT investment and management will need to change dramatically”. Basically, what Carr means is that IT has become more something that you have to implement into your company, rather than it being an opportunity. What’s more, you are not even in the game if you do not have IT. The question that you could then ask is: what is then the basis of a truly competitive advantage and what makes a resource strategic? Carr answers this, by stating that resource is not competitive in ubiquity but when it is scarce. You can say that IT is not a scarce resource, as it can be replicated infinitely, not complex to implement and knowledge about it is wide spread. At least, the costs of replicating are close to zero.
Nevertheless, firms can gain a competitive advantage when they have or do something that rivals can’t have or do. Again, when all firms have a certain IT infrastructure, can they then gain competitive advantage? I don’t know the exact answer, but at least I can say that firms should protect their IT infrastructure to the best they can, to prevent competitors from imitating it. However, which such interesting technologies, such as Machine learning and AI, in the pipeline, I think it should be able to have an advantage compared to your competitors. As a firm, you should “just” be as quick as possible and make sure you capture the value before anyone else does.
Bibliografie
Carr. (2003). IT doesn’t matter. Harvard Business Review, 5-17.
Ghanesh, G. (2005). Types of information technology and their role in competitive advantage: an empirical study. Journal of Management Information Systems, 253-277.
