Whence Competitive Advantage? Resource Based Theory of the Firm Prior Theories: Porter’s Competitive Forces, Value Chain, Customer Resource Life Cycle models, et. Spectacular Examples: ASAP; SABRE Problem: Sustained competitive advantage only comes from assets that can’t be duplicated, not “homogeneous” and not “mobile”. Computer Technology, if not homogeneous, is certainly mobile. IT may be non-sustainable, a competitive necessity vs. a competitive advantage.

Resource Based Theory of the Firm Strategic Resources are: –Valuable –Rare –Inimitable –Without Available Substitutes

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

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?

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

What We Expected to Find: Production Process Business Value New IT Management Practices

What We Found: Production Process Asset Base Business Value Feedback: Additions or Subtractions to Asset Base New IT Management Practices

Three Key IS Assets IS Technology IS / User Relationship IS Human Res.

Strategically Aligned Planning Cost Effective Operations and Support Leveraging Fast, Low Cost Delivery Business Value Systems In Use IS Technology IS / User Relationship IS Human Res. IT Processes Building Leveraging Building Leveraging Building IT Assets

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

Mgmt Practices Only Slowly Increase Such Assets Policies that increase the level of the asset Policies leading to asset decay, attrition IS / User Relationship

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 a strong relationship to identify the systems that bring the most business value 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.

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 be considered in light of the impacts on the asset base Puts management of IT infrastructure in theoretical context.