Does the market recognize IT-enabled competitive advantage?

  • Authors:
  • Lewis Davis;Bruce Dehning;Theophanis Stratopoulos

  • Affiliations:
  • Department of Economics, Smith College, Northampton, MA;Argyros School of Business and Economics, Chapman University, One University Drive, Orange, CA;Department of Decision Sciences, University of New Hampshire, Durham, NH

  • Venue:
  • Information and Management
  • Year:
  • 2003

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Abstract

There is a belief that the payoffs from investments in information technology (IT) are difficult to recognize, and therefore a sustained competitive advantage from an IT-enabled strategy is difficult to distinguish from a temporary competitive advantage. We develop a model to test whether market participants are able to recognize a sustained competitive advantage due to an IT-enabled strategy, and test the model empirically. We find that a competitive advantage due to an IT-enabled strategy is discernable by market participants, and as apparent as a competitive advantage obtained through other means.