Information Systems Capabilities and Their Effects on Competitive Advantages: A Study of Chinese Companies

Information Systems Capabilities and Their Effects on Competitive Advantages: A Study of Chinese Companies

Ganesh D. Bhatt (Morgan State University, Department of Information Science & Systems, Baltimore, MD), Ziping Wang (Morgan State University, Department of Information Science & Systems, Baltimore, MD) and James A. Rodger (Indiana University of Pennsylvania, Eberly College of Business & Information Technology, Indiana, PA)
Copyright: © 2017 |Pages: 17
DOI: 10.4018/IRMJ.2017070103
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Abstract

Over the past three decades, business managers and academic researchers have shown considerable interest in understanding how information systems (IS) can lead to competitive advantages for firms. Although in the United States researchers have found that IS competences lead to competitive advantages, it remains unknown whether firms working in emerging economies can capitalize on IS competence for competitive advantages. This article examines the moderating effect of the learning intensity of organizations on the relationship between IS competence and competitive advantages in 122 Chinese firms. Data were collected from a mailed survey of 122 information-technology (IT) managers. The results indicate that flexibility of IT infrastructure, IT business skills, and learning intensity have significant effects on competitive advantages. The learning intensity of organizations positively moderates the relationship between IS business skills and competitive advantages, but has no moderating effect on the relationship between the flexibility of IT infrastructure and competitive advantages.
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Introduction

A central concern in information systems (IS) strategy is understanding how organizations create value with information technology (IT) (Bakos & Treacy, 1986; Cash & Konsynski, 1985; Galliers & Leidner, 2014; Jarvenppa & Ives, 1991; Leidner, Lo, & Preston, 2011; Porter & Miller, 1985; Seddon, 2014). In the 1980s, a growing body of literature argued that IT can be used to raise barriers to entry, increase bargaining power with suppliers and customers, offer new products and services, or change the rules of competition (McFarlan, 1984; Porter & Miller, 1985). Over the years, however, a number of scholars have noted that sustaining advantages through IT applications may be difficult, because such applications are eventually imitated and appropriated by competitors (Chae, Koh, & Prybutok, 2014; Clemons & Row, 1991; Mata, Fuerst, & Barney, 1995; Sambamurthy & Zmud, 1997). Thus, strategic IT applications eventually become strategic necessities for the continued existence of firms.

The recent popularity of the resource-based view (RBV) of firms has shifted the focus toward the internal resources and competences of firms. A growing body of research in this arena suggests that IT per se may not be the main source of firm-level competitiveness (Mata, Fuerst, & Barney, 1995; Powell & Dent-Micallef, 1997); it is, rather, the management of information and technology (Sambamurthy & Zmud, 1997) and complementary resources (Clemons & Row, 1991; Dutta, 2015; Nevo & Wade, 2011) that determine the competitiveness of firms. In other words, how a firm utilizes its information systems, in combination with other firm-level resources, determines the competitive strength of the firm.

Using the RBV of firms, IS scholars indicate that firms are heterogeneous in developing and nurturing IS competences; therefore, they are likely to have a different potential in leveraging information systems for competitiveness (Barney, 1991, 1997; Onetti, Zucchella, Jones, & McDougall-Covin, 2012; Peteraf, 1993). For example, Mata, Fuerst, and Barney (1995) note that for sustaining and capitalizing IT benefits, a firm must possess managerial IT skills. Ross, Beath, and Goodhue (1996) posit the importance of IT groups that possess both technical and business problem-solving skills. Keen (1991) acknowledges the role of the commitment of top management in leveraging IT for competitiveness. Clemons and Row (1991) argue the benefits of complementary resources for long-term advantages.

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