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Posted on Nov 25, 2010 in Research summaries

Nevo and Wade 2010: The Formation and Value of IT-Enabled Resources: Antecedents and Consequences of Synergistic Relationships

Nevo, Saggi & Wade, Michael R., 2010. The Formation and Value of IT-Enabled Resources: Antecedents and Consequences of Synergistic Relationships. MIS Quarterly, 34(1), pp.163-183.

I read this as an exemplar literature review paper; however, it is not a review paper; it is a theory development paper. It was well-worth my time, though.

  • Rationale: It has been challenging to empirically demonstrate the firm-level impact of IT assets, which has led some to conclude that IT assets in themselves have no strategic value. The authors believe that the relationship between IT assets and strategic organizational resources can have competitive benefits, and hence adopt a systems approach to address this research challenge.
  • Objectives: The authors synthesize systems theory with the resource-based view of the firm to come up with a combined model that clearly demonstrates how IT-related firm resources can be converted into competitive advantage.
  • Theoretical background: There are two main theoretical frameworks employed: First, the resource-based view of the firm (RBV) theorizes that sustained competitive advantage is obtained by firm resources that are valuable, rare, inimitable, and non-substitutable. Second, systems theory examines the world from the point of view of systems that are composed of interacting things with properties of varying values.
  • Key questions: How can systems theory fill the missing link between IT-enabled resources and competitive advantage?
  • Methodology: This is a theory-building study, that analyzes two theory bases and attempts to synthesize them to solve a theoretical problem.
  • Theoretical concepts: From the RBV, the relevant concepts are Value, Rarity, Inimitability and Non-substitutability of a resource, which lead to Sustainable Competitive Advantage. From systems theory, the Integration Effort and Compatibility of IT resources lead to Synergy in their organizational usage; this synergy affects the RBV variables.
  • Key findings: Arguing from systems theory, the potential synergy between IT assets and organizational resources, in the presence of the enabling conditions of compatibility and integration effort, result in realized synergy. This synergy increases the value, rarity and inimitability of the IS resource. (Rarity also enhances inimitability.) Thus, when the resource is additionally non-substitutable, sustained competitive advantage is attained.
  • Key contribution to knowledge: The authors convincingly argue that it is the synergistic marriage between IT assets and an organizational's particular resource set that contributes to sustained competitive advantage. Without considering this synergy, studies of the competitive value of IT are bound to give inconclusive results.
  • Key implications: For practitioners, the authors have given very concrete focuses for enhancing the competitive value of IT assets: they need to assure the compatibility between the assets and their own organization, and also make a concerted integration effort, which itself enhances compatibility. For researchers, this untested model provides opportunities to both verify its validity, and to revisit past findings on the competitive value of IT assets, especially when results have been inconclusive or contradictory.
  • Comments: This paper introduced and educated me on systems theory. Their detailed introduction with numerous examples is very enlightening. Their theory development is step-by-step, clear, and convincing; their final result is simple to understand and intuitive after their development and explanations. Overall, an excellent piece of work.

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