The Role of Information Technology in Securing a Competitive Advantage

Date of Submission

1993

Document Type

Dissertation

Degree Name

Doctor of Science in Management Systems (Sc.D.)

Department

Management

Advisor

Edward George

Committee Member

Robert Rainish

Committee Member

Louis Mottola

LC Subject Headings

Information storage and retrieval systems--Corporations, Competition--United States

Call No. at the Univ. of New Haven Library

AS 36 .N290 Mgmt. Syst. 1993 no.1

Abstract

A ten parameter model of competitive advantage based on information technology using Bakos and Treacy's formulation of Porter's competitive advantage theory is discussed and operationalized. This model is tested for its ability to predict a firm's self-assessed competitive advantage due to information technology, against Sethi's eleven parameter model based on both competitive advantage concepts and on characteristics of the information technology application. The proposed model comes directly from competitive advantage theory; whereas, the established Sethi model is based partly on competitive advantage theory and partly on application factors, such as user functionality, synergy, technical sophistication, user education and riskiness.

Data was obtained through a written field survey. One thousand surveys were sent to top MIS executives from the Fortune 1000 companies. 108 usable surveys were returned and analyzed. Competitive advantage correlated well with user environment variables concerning participatory strategic planning and sophisticated management of information technology. There was no relationship found between competitive advantage and data processing reporting structure.

The predictive power of the new model and Sethi's established model were tested using discriminant analysis for their ability to distinguish between low (< the median) and high (> median) self-assessed competitive advantage due to information technology . Although the proposed model could predict self-assessed competitive advantage due to information technology with over 55% reduction in classification error, the established model could do so with over an 80% reduction in classification error.

Factor analysis was performed on the responses to the survey questions drawn from both models to see if reduced sets of factors could be found that paralleled the parameters in the models. "Bargaining power over suppliers" was the component from the Bakos and Treacy model that stood out from the factor analysis of all the Bakos and Treacy related questions. "Observable technical sophistication" was the most important factor derived from the questions relating to the Sethi model. Factor scores were calculated both by forming a direct sum and a weighted sum. These scores were used to again run discriminant analyses to test the prediction power of the factors found. Again, the established model outperformed the proposed model. A reduced factor version of the established model had only four factors. Interestingly, this reduced version had about the same predictive power (about 82% reduction in classification error) as Sethi's full eleven factor model for this study.

The conclusion reached is that while the Bakos and Treacy model performed well at predicting self-assessed competitive advantage due to information technology applications, the established Sethi model performed significantly better.

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