Abstract

The Year 2000 problem spurred companies to rethink investments in information and communication technologies (ICT). Many used the Y2K problem as an opportunity to renew ICT infrastructures, to install integrated enterprise packages, and to pursue new opportunities for ICT-enabled value such as e-commerce, supply chain management, and customer relationship management. Some evidence suggests that these efforts have had substantial payoffs in terms of shareholder value. But can such firm-level benefits persist when competitors catch up or when the success of leaders drives inefficient producers out of business? This panel features NSF-funded researchers whose studies have examined the impacts of ICT at the industry-level of analysis. They show significant industry-level ICT-enabled impacts with potentially negative implications for the firms competing within industries. In the Information Systems field, the ability to gain competitive advantage with ICT has long been an important theme. Although some researchers warned that ICT might contribute to the destruction of competitive advantage, by far the majority of the discourse has centered on how individual firms should invest in ICT. When taking an industry-level view of ICT-enabled competitive advantage, however, we can see its potential dark side. Among the risks ICT poses to the firms in an industry are these: • Fundamentally reducing the cost structure of an industry such that some firms can no longer compete and that others experience squeezed margins • Destruction of in-house competencies (e.g., through radical process change or business process outsourcing) • Investments in ICT are required as a condition of doing business without providing any bottom-line benefits • Increased dependency on external ICT providers leading to business inflexibility and lack of ICT knowledge

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