Commodity or competitive advantage? Analysis of the ERP value paradox

A true e-business enabled firm needs the support from a well-tuned enterprise resource planning (ERP) system for providing real time data. However, many companies complain that after their huge investments in ERP systems, they found the ERP systems do not bring them new orders, new profits, or competitive advantage as ERP vendors claim. Academic studies also found mixed results regarding ERP’s payoff. In line with resource based view (RBV), the study proposes an integrated model to shed light on the ERP value paradox. We try to answer “With what organizational resources and by building what firm specific capabilities, the investment in ERP systems may bring firms competitive advantage”. Using a sample of 150 ERP and e-business adopters in the US, we found that (1) organizational resources such as managerial skills and organizational change management play a more important role than IT resources (ERP, e-Business technologies) in generating business integration capability. (2) However, neither IT resources nor organizational resources directly provide firms with competitive advantage. Instead, business integration capability built from the two resources plays a mediating role through which business achieves competitive advantage.     

Exploring the relationship between big data analytics capability and competitive performance: The mediating roles of dynamic and operational capabilities

A central question for information systems (IS) researchers and practitioners is if, and how, big data can help attain a competitive advantage. To address this question, this study draws on the resource-based view, dynamic capabilities view, and on recent literature on big data analytics, and examines the indirect relationship between a firm’s big data analytics capability (BDAC) and competitive performance. The study extends existing research by proposing that BDACs enable firms to generate insight that can help strengthen their dynamic capabilities, which, in turn, positively impact marketing and technological capabilities. To test our proposed research model, we used survey data from 202 chief information officers and IT managers working in Norwegian firms. By means of partial least squares structural equation modeling, results show that a strong BDAC can help firms build a competitive advantage. This effect is not direct but fully mediated by dynamic capabilities, which exerts a positive and significant effect on two types of operational capabilities: marketing and technological capabilities. The findings suggest that IS researchers should look beyond direct effects of big data investments and shift their attention on how a BDAC can be leveraged to enable and support organizational capabilities.     

Resources,state ownership and innovation capability: Evidence from Chinese automakers

Promoting innovation has been a major task for both business practitioners and governments in emerging markets. Based on the resource‐based view, this study examines the contributing factors of firms' innovation capability and the contingent role of state ownership. Utilizing data on 102 Chinese automobile firms, we found that financial resources, R&D human capital, innovation leadership, collaborative culture, and government support positively relate to firms' innovation capability. Moreover, the firm's ownership type serves as a boundary condition for the resource–capability relationship. The significance of different resources in developing innovation capability vary for firms with different ownership types. In particular, government support and R&D human capital have stronger effects in promoting non‐state‐owned enterprises' innovation capability. From a practical standpoint, developing innovation capability should consider the critical role of ownership. Specifically, while state‐owned enterprises can capitalize on organizational and financial resources to enhance innovation capability, it is also important for them to transform bureaucratized systems into more market‐orientated ones and facilitate the effective utilization of R&D human capital and government support.     

Toward the development of a big data analytics capability

The era of big data has begun such that organizations in all industries have been heavily investing in big data initiatives. We know from prior studies that investments alone do not generate competitive advantage; instead, firms need to create capabilities that rival firms find hard to match. Drawing on the resource-based theory of the firm and recent work in big data, this study (1) identifies various resources that in combination build a big data analytics (BDA) capability, (2) creates an instrument to measure BDA capability of the firm, and (3) tests the relationship between BDA capability and firm performance. Results empirically validate the proposed theoretical framework of this study and provide evidence that BDA capability leads to superior firm performance.     

Generating and exploiting customer insights from social media data

Previous research has emphasized the virtues of customer insights as a key source of competitive advantage. The rise of customers’ social media use allows firms to collect customer data in an ever-increasing volume and variety. However, to date, little is known about the capabilities required of firms to turn social media data into valuable customer insights and exploit these insights to create added value for customers. Based on the dynamic capabilities perspective, in particular the concept of absorptive capacity (ACAP), the authors conducted multiple case studies of seven mid-sized and large B2C firms in Switzerland and Germany. The results provide an in-depth analysis of the underlying processes of ACAP as well as contingent factors – that is, physical, human and organizational resources that underpin the firms’ ACAP.     

Radical Innovation with Limited Resources in High‐Turbulent Markets: The Role of Lean Innovation Capability

How do firms radically innovate with limited resources in high‐turbulent environments? We examine this question via in‐depth comparative case studies of ten start‐up firms in diverse high‐turbulent markets. Evidence shows that the perceived value of resources depends on two contextual factors: market type and business model type. More interestingly, firms that see resource limitation as an enabler rather than an inhibitor seem to have a distinct capability that we call lean innovation capability. It is defined as a distinct capability that reflects a firm's ability to experiment with ideas that meet core customer needs by constantly iterating the initial offering with the purpose of validating the learning through continuous market feedback to achieve sustainable performance. The three main qualities of these companies are (1) adopting abductive reasoning, (2) embracing a validity‐driven approach, and (3) operating in the overlapping spaces of fundamental customer needs, business viability and technological feasibility. Lean firms adopt design‐thinking methodology and act like bricoleurs, such as make‐do by applying combinations of the available resources through rapid prototyping to new problems and opportunities in an experimental way. Briefly, lean innovation capability enables firms to manage limited resources by reconfiguring and reallocating existing resources, and, thereby, helps empower resource‐limited radical innovation.     

Strategic aspirations for net-enabled business

The net-enabled business innovation cycle (NEBIC) model describes a path by which firms employ dynamic capabilities to leverage net-enablement. Some firms strategically aspire to follow this path in a more gradual fashion striving for business process improvements (incremental strategy) while others aspire to exploit rapidly net-enablement to achieve business innovation (leapfrogging strategy) that offers completely new market opportunities. Study results suggest that firms adopt accelerated leapfrogging strategies when faced with more severe external competitive pressures. This combined with strong leadership, a propensity to embrace internal user involvement, IT maturity, and an accommodating firm structure, as indicated by path accelerators, result in higher aspirations for business innovation. Firms shying away from leapfrogging strategies tend to protect existing customers and employees from more radical changes. These firms sometimes lacked the internal capability to enact more aggressive strategies and thus had to acquire the necessary capabilities before aspiring for business innovation.     

Towards a theoretical framework of strategic decision, supporting capability and information sharing under the context of Internet of Things

The effective strategy of Internet of Things (IoT) can help firms to grasp the emerging opportunities from the IoT and then improve their competitive advantage. In this article, based on organizational capability perspective, we provide a theoretical framework which classifies IoT strategies into four archetypes from two dimensions of managers’ strategic intent and industrial driving force, and propose that market-based exploratory capabilities play a more important role for firms adopting get-ahead strategy, and market-based exploitative capabilities play a more important role for firms adopting catch-up strategy in market. The technology-based exploratory capabilities play a more important role for firms adopting get-ahead strategy in technology, and technology-based exploitative capabilities play a more important role for firms adopting catch-up strategy in technology. Especially, external industry information sharing more efficiently contributes to the enhancement of both market-based and technology-based exploratory capabilities, and internal industry information sharing more efficiently contributes to the enhancement of both market-based and technology-based exploitative capabilities.     

Developing Innovation Capabilities: A Longitudinal Study of a Project at Volvo Cars

Many large firms are struggling to alter and develop their organizational capabilities. There are several discussions in the literature on what these capabilities comprise, and that there is a need to develop them. However, less attention has been paid to how companies can develop these capabilities in practice. The purpose of this paper is to contribute to organizational capability theory by providing insights derived from an empirical study of how organizational capabilities for innovation are developed in large firms, and how these findings compare to the theory. The paper is based on a longitudinal study of Volvo Cars conducted as a long‐term collaborative research project. The authors were involved in a project called Vision 2020, which extended over a period of two and a half years, the findings from which highlight several activities that enabled the changes required for the development of organizational capabilities. The need to develop ‘management capability’ in terms of both cognition and the propensity to act is especially highlighted.     

Information technology as a facilitator for enhancing dynamic capabilities through knowledge management

Research on dynamic capabilities is an emerging field: it studies the activities of firms during turbulent administrative environments. Current management interests are also focused on knowledge management as a major determinant of business excellence and competitive advantage. Our motivation for this paper was to answer the research question: Does knowledge management (KM) contribute to the enhancement of dynamic capabilities and thus to the enhancement of business excellence and competitive advantage? Our effort examined the use of KM in enhancing dynamic capabilities. Based on results from a survey of major Taiwanese firms, we tested a set of hypotheses with regression models. Empirical findings suggest that management of both endogenous and exogenous knowledge through IT applications significantly enhances dynamic capabilities.     

Information systems strategies in knowledge-based SMEs: the role of core competencies

Research into the sources of competitive advantage identifies two competing views. The first concerns industry structure, and the role of information systems (IS) in enabling competitive advantage is to lower cost, build barriers to entry and tie in customers and suppliers. The second view is resource-based. This argues that competitive advantage arises from the ability to accumulate resources and capabilities that are rare, valuable, non-substitutable and difficult to imitate. This paper discusses the role of IS as firm resources and the role of such resources in small firms (SMEs). It uses as a vehicle, the identification and development of an information systems strategy (ISS) in a knowledge-based SME. The use of core competencies or capabilities, a key aspect of resources, as a basis for an ISS is contrasted with the use of a structural approach exemplified here by the value chain. Using participant observation research in a not-for-profit organisation that provides consultancy in social housing, this paper investigates these approaches. The paper concludes by identifying a number of areas for further research including the operationalisation of the core competence perspective in developing an ISS.     

Design Contribution to the Competitive Performance of SMEs: The Role of Design Innovation Capabilities

The strategic role of design‐driven innovation is being increasingly recognized. Many studies show that investments in design positively influence the innovative capacity of firms and consequently their competitive performance. However, few researchers have explored how this relationship comes about. The studies that over the years have contributed to the understanding of design have identified two main barriers: the lack of a common language on design, and poor analysis of the dynamics that characterize the relationship between investment in design and competitive performance. In this paper, we investigate six small and medium‐sized enterprises (SMEs) located in the Lombardy region of Italy that have received funding from a policy aimed to develop design innovation capabilities. We identify and discuss five different design innovation capabilities and we analyse their role in mediating the relationship between investment in design and competitive performance.     

The Organizational Innovation Laboratory

Organizational ‘innovation laboratories’, dedicated facilities for encouraging creative behaviours and supporting innovative projects, have received scant academic attention despite their increasing popularity with a range of different practitioners. This paper develops an initial theoretical explanation of the phenomenon, based upon notions of organizational learning and dynamic capabilities. This framework is then used as the basis for analysing the structure, infrastructure, benefits and dis‐benefits of three UK‐based laboratory facilities (mass service, government department, academic institution). Preliminary conclusions suggest that the ‘innovation laboratory’ can offer real benefits for organizations: reinforcing corporate commitment to innovation and creativity by providing a physical manifestation of dynamic capability and double‐loop learning concepts. Although the physical design of the space is central to its functionality – emphasizing dislocation from day‐to‐day activity, eliminating hierarchy, encouraging participation – direct facilitation remains critical to successful operation. There are also dis‐benefits associated with what can be substantial financial investments and there is some evidence that such facilities can have a relatively short useful lifespan. Given the limited nature of the empirical base, the paper concludes with some specific suggestions for further work.     

How Resource Challenges Can Improve Firm Innovation Performance: Identifying Coping Strategies

Researchers recently suggested that challenges in the form of adversities and constraints can actually promote individuals, teams and firms. However, it remains unclear how such challenges elicit positive innovation performance. Moreover, we still cannot distinguish between the conditions under which challenges enhance or hinder firm innovation performance. In this paper, we review the literature on coping with a specific and central type of challenge – resource challenge, such as a lack of financial or human resources – and propose an underlying mechanism through which firms can benefit from resource challenges. The paper presents an integrative conceptual framework and looks at the key constructs that explain the effects of resource challenges on firm innovation performance. Further, it proposes two key strategies for coping with resource challenges: simplification‐focus and compensation.     

Design‐Driven Innovation in Retailing: An Empirical Examination of New Services in Car Dealership

The paper focuses on innovation in the automotive retail industry. Innovation in service has been acknowledged as a critical source of competitive advantage and retail firms are looking for innovations that can increase their competitiveness. This notwithstanding, there are no studies that focus on whether and how design‐driven innovation (DDI) can be pursued by retail firms as an innovation strategy. In the attempt to close this gap in our understanding of innovation in retail firms, this paper discusses 104 examples of strategic innovation projects identified by automotive retail firms which operate in the UK, Germany, Italy, Serbia and Spain. The exploratory empirical analysis shows that a certain number of automotive retail firms (although not the majority) choose DDI as a strategy embodied in strategic innovation projects designed to achieve superior performance. Moreover, by following the typology proposed by Sawhney and colleagues, the analysis suggests that these projects are elicited by spatial reconfiguration and expansion, whereas temporal innovation does not seem to provide a fertile ground for DDI.     

The synergistic effects of IT-enabled resources on organizational capabilities and firm performance

Computing the value of IT investments and clarifying how the portfolio of IT/IS resources affect a firm's performance and sustainable competitive advantage are critical issues today. We attempted to develop an effective measurement technique and use organizational theory to discover the strategic role of IT-enabled resources in the firm's competitive agenda. Based on a resource-based view of the firm, we proposed a way to evaluate the synergistic effect of such resources on the firm's capabilities, as they, influence the firms’ strategic objectives and improve its financial performance. The technological, human, and organizational resources work together to generate sub-additive cost and super-additive value synergies. Operations, R&D, and marketing capabilities allow firms to implement a business strategy that reflects its customer needs. A survey was conducted to check our framework. Our findings should provide valuable decision guides for practitioners when choosing a portfolio of IT/IS resources for implementing business strategies.     

Capabilities and Radical Changes of the Business Models of New Bioscience Firms

The paper analyses the development of newly started bioscience firms in terms of their capabilities and changes in their business models. The study consists of eight retrospective case studies stemming from their foundation over a period of 5–15 years. Empirically the paper finds that all the firms quickly develop a technological capability at the time of their foundation, and over time all firms added distinctly new business capabilities. Seven firms radically changed their business models by identifying and exploiting new opportunities by drawing on their existing business capability combined with a new, different technological capability. The initial technological capability – the firms' ‘ticket to entry’– does not seem to be relevant to explain the process of firm development. These initial technological capabilities are surprisingly seldom leveraged within the cumulative process of opening up additional opportunities and business models. The paper concludes by creating a model and discusses some reasons for the findings.     

Building capabilities for software development firm competitiveness: The role of intellectual capital and intra-firm relational capital

Software is critical to nearly every organization's performance and can create value for all organizational functions. Given that software development firms that create solutions for client organizations are by necessity constantly seeking competitive advantage, the central objective of this research was to investigate the impact of capability building on software development firm competitiveness. Developing software is a knowledge-intensive and often complex process that requires internal exchanges among knowledgeable and capable employees within the firm. Accordingly, for software development firms, capability building is critical for competitive advantage. This research draws from capability, intellectual capital, and relational capital research streams and develops an intra-firm relational capital to intellectual capital model of capability building for software development. Analyses of data from key informants of 200 software development firms provide strong support for our model. We discuss the implications of our research for the competitiveness of software development firms for capability, intellectual capital, and relational capital theories and for firm practices.     

Capability and efficiency of intellectual capital: The case of fabless companies in Taiwan

It is important to increase their value by managing intellectual capital (IC), since fabless firms face an intensely competitive environment. The aim of this paper is develops a two-stage production process including IC capability and IC efficiency to characterize the IC performance of the fabless firms using a non-parametric frontier method – data envelopment analysis (DEA). The IC performance rating should be considered as a key element for achieving greater innovation and competitive advantages. The results show that IC efficiency is better than IC capability for these fabless firms; 15.8% of fabless firms perform well in both models and these firms can be treated as benchmarks for others; most firms operate at decreasing returns to scale, indicating that firms are facing a highly competitive environment; further mergers and acquisitions among firms should be considered so as to achieve economies of scale; the critical input/output measures will also help firms improve their performance and identify the key factors that impact a firm’s performance.     

Effects of information technology on corporate social responsibility: Empirical evidence from an emerging economy

The recent history shows that computers have a significant effect in society. The benefits from Information Technology (IT) reach both enterprises and people. When small firms use IT resources to create unique capabilities, even indirectly they improve their conditions to meet Corporate Social Responsibilities (CSR). Considering this scenario, the aim of this paper is to analyze the effect of IT use on the CSR of small firms. We tested the relationships between the constructs using confirmatory factor analysis and structural equation modeling, with a database comprised of 173 Brazilian small firms. Our results showed a positive and significant relationship between IT use and the four categories of CSR. In this way, we observed that IT contributes to companies, and also affects people that work in these enterprises. Corporate social obligations of firms and IT investments should be combined to generate unique capabilities, improving competitive advantage through the interaction of technology and people. The results of the paper extend the discussion about IT benefits to companies and to society.