The linkage between IOS use and competitive action: a competitive dynamics perspective

Abstract

The use of interorganizational systems (IOS) for competitive advantage has been the topic of much writing and research. As a successful example, American Airlines’ aggressive use of its computer-based reservation system, SABRE, has often been cited for improving operational efficiency, increasing organizational flexibility, and altering interorganizational relationships. Yet, little attention has been given to a series of competitive actions that were generated through the use of SABRE along this system’s evolutionary trajectory. These competitive actions enabled American to disrupt competitive forces and remain as a market leader in the airline industry for decades. Stimulated by American’s case and today’s widespread use of IOS, this study asks two interesting questions: “Is there a systematic link between IOS use and competitive action?” “If so, how do they relate to each other?” In addressing these questions, we adopt research from the field of competitive dynamics to examine roles of IOS in influencing firm behavior and resultant firm performance. Competitive dynamics research has shown robust relationships between measures of competitive action and firm competitiveness, but technological antecedents of competitive action have been little studied. Collecting and analyzing 12 months of data for the year 2003 from multiple secondary data sources, this study empirically investigates links between IOS uses and competitive actions for nine major sports car makers. Our findings suggest a strong link between IOS uses and competitive actions. Also, there are larger implications for information technology (IT) researchers. The novel adoption of competitive dynamics suggests the development of a new kind of IT value measure, going beyond limitations of traditional measures by recognizing competitive actions as specific moves that are first observed after undertaking initiatives aimed at enhancing competitiveness. Additional implications for IT research, methodology, and practice are discussed.