Business Value of Information Technology: Measuring Performance and Sources of Profitability

Business Value of Information Technology: Measuring Performance and Sources of Profitability

Jorge A. Romero (Towson University, USA)
DOI: 10.4018/978-1-4666-4983-5.ch005
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Abstract

This chapter begins with a discussion of the business value of information technology and then goes on to discuss productivity paradox studies and the different types of benefits of information technology, including operational, tactical, and strategic. It also discusses when to intensify competition or leverage advantages in a timely manner.
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2. It Investments And Firm Performance

Mata, Fuerst, and Barney (1995) suggested that using IT to gain sustained competitive advantage was not likely to be easy for firms. If it were relatively simple for firms to copy and use IT in this way, then IT would not be a source of sustained competitive advantage. But when IT is used in an innovative and strategic way, then it will be difficult to imitate by competitors (Clemons and Row, 1991). The fact that it is often difficult and time consuming to develop IT managerial skills, implies that other firms will have a difficult time imitating these IT skills, and therefore they can be a source of sustained competitive advantage.

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