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Whence Competitive Advantage? Resource Based Theory of the Firm

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Title: GSU Presentation, presentation version Author: Goodhue Last modified by: Terry College Created Date: 10/10/1996 2:52:46 PM Document presentation format – PowerPoint PPT presentation

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Title: Whence Competitive Advantage? Resource Based Theory of the Firm


1
Whence Competitive Advantage? Resource Based
Theory of the Firm
  • Prior Theories Porters Competitive Forces,
    Value Chain, Customer Resource Life Cycle models,
    et.
  • Problem Sustained competitive advantage only
    comes from assets that cant be duplicated, not
    homogeneous and not mobile.
  • Computer Technology, if not homogeneous, is
    certainly mobile.
  • Strategic Resources are
  • Valuable, Rare, Inimitable,Without Available
    Substitutes

2
IT and Competitive Advantage
  • Spectacular Examples ASAP SABRE
  • Porter and Millar -- Five competitive forces
  • Vitale -- non-sustainability
  • Clemons and Row -- Competitive necessity
  • Perhaps IT cannot provide sustained competitive
    advantage!

3
Research Questions
  • How can IT managers contribute to business value?
  • What are impacts of new IT management practices
    on
  • business value?
  • How do new practices create value over time?

4
Research Design Selecting Cases
And Entering the Field
Interviews with 50 CIOs
new management practices
1-day of interviews in 12 firms
3 more days of interviews over
18 additional months in 7 firms
Generalization to Theory
5
What We Expected to Find
New IT
Management
Practices
Production
Business
Process

Value
6
What We Found
New IT
Management
Practices
Production
Business
Asset
Process

Value
Feedback Additions or Subtractions to Asset Base
7
What Makes an Asset Tough to Imitate? (ala
Dierickx and Cool)
  • requiring long time to develop, or
  • dependent upon unique historical conditions, or
  • link to advantage not understood, or
  • socially complex

8
Mgmt Practices Only Slowly
Increase Such Assets
Policies that
increase the level
of the asset
IS / User Relationship
Policies leading to
asset decay, attrition
9
Three Key IS Assets
IS Human Res.
IS Technology
IS / User

Relationship
10
IT Processes
IT Assets
Strategically Aligned Planning
Leveraging
Building
Leveraging
Fast, Low Cost Delivery
Business Value
IS Technology
IS Human Res.
Building
IS / User
Relationship

Cost Effective Operations and Support (Of
Systems That Fit Strategy)
Leveraging
Building
11
Synergies Heighten Inimitability of 3 Asset
Bundle (Interconnnectedness of asset stocks, ala
Dierickx and Cool)
  • Need history of fast, cost effective, delivered
    benefits for strong relationship
  • Need good infrastructure and good business
    knowledge for fast, cost effective systems
  • Need strong relationship to obtain investment
    dollars to build strong infrastr.
  • Need good relationship to build bus knowl.

12
Conclusions
  • A new way of thinking about managing IS
  • for short run value, leverage existing asset base
  • for long run value, build appropriate asset base
  • Potential management actions should considered in
    light of the impacts on the asset base
  • Puts management of IT infrastructure in
    theoretical context.
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