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Bharadwaj , A. S. Goizueta Business School, Emory University MISQ, 2000

A Resource-Based Perspective on Information Technology Capability and Firm Performance: An empirical investigation. Bharadwaj , A. S. Goizueta Business School, Emory University MISQ, 2000. Key Idea.

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Bharadwaj , A. S. Goizueta Business School, Emory University MISQ, 2000

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  1. A Resource-Based Perspective on Information Technology Capability and Firm Performance: An empirical investigation Bharadwaj, A. S. Goizueta Business School, Emory University MISQ, 2000 Yen-Chun Chou

  2. Key Idea • The author takes a resource-based view of a firm, and argues superior financial performances are derived from firm-specific IT-based resources and IT capability, the ability to integrate and deploy IT-based resources in combination with other resources effectively. • According to resource-based view, corporate resources are unique, valuable, and hard to imitate  IT investments are not resources, but IT-based resources and IT capability are

  3. IT-based Resources • The integrated IT infrastructure which provides the platform to launch innovative IT application faster than the competition • The human IT resources that enable firms to conceive of and implement applications faster than competition • IT-enabled intangibles that enable firms to leverage pre-existing organizational intangibles such as customer orientation and synergy

  4. IT Capability • The organizational ability to deploy those IT-based resources, with other organizational resources, effectively • Investments in IT systems are imitable, but IT capability is hard to copy because of resource isolation mechanisms, such as time needed to acquire firm-specific knowledge, and advantages to accrue unique resources

  5. Results • Compare financial performances of firms listed as IT leaders in InformationWeek as the treatment group for superior IT capabilities with those of firms in the same industry with similar sales but not listed in InformationWeek as the control group IT leaders have higher profit ratios and lower cost ratios (with exception of SG&AR&D)

  6. Conclusion • Managers should do much more than investing in IT. Building IT capability on the basis of IT systems is the key to face competition, leading to profitable performances. • Future research is needed to provide guidance on how to build IT capability, and types of IT capability in different business functions

  7. Critique • Unnecessarily distinguish IT resources from IT capability just in order to fit the name of “resource-based” view. What the author defines as IT-based resources is essentially IT capability. • Ex. We can interpret integrated IT infrastructure as a firm’s capability to integrate various IT components and leverage the platform to develop key applications rapidly.

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