A resource-based analysis

Question 1

How does IT add value

Answer 1

reducing firm s cost

Question 2

create-capture-keep paradigm

Answer 2

as long as cost of switching is less than the extra value, when switching, customers will continue purchasing from supplier

Question 3

why is the paradigm unlikely to be a source of sustained competitive advantage (CA)?

Answer 3

1. customers usually able to anticipate the risk (only do investment when they receive some guarantee)
2. IT suppliers that exploit gain untrustworthy reputation
3. number of options to obtain IT has increased

Question 4

Resource based view, based on two underlying assertions

Answer 4

Heterogeneity= resources possessed differs
Immobility= Differences are long-lasting (competitors face cost disadvantage in developing)

Question 5

Other factors of the resource based view

Answer 5

• casual ambiguity
• role of history
• social complexity

Question 6

five attributes of IT that are sources of competitive advantage

Answer 6

1. customer switching cost
2. Access to capital
3. Proprietary technology
4. Technical IT skills
5. Managerial IT skills

Question 7

customer switching cost

Answer 7

not sustained, only for firms that are already monopoly

Question 8

Access to capital

Answer 8

capital per se is no source of CA, rather the special resources that enable firms to manage the technical and market risks

Question 9

Proprietary technology

Answer 9

unlikely to be a source of CA
IT applications are difficult to patent- only alternative is secrecy (also hard)

Question 10

Technical IT skills

Answer 10

the know-how needed to build IT applications (usually not heterogeneously distributed, and if then highly mobile)

Question 11

Managerial IT skills

Answer 11

Management’s ability to exploit IT applications
- if managerial IT skills are valuable and heterogeneously-> source of sustained CA