«Researchers have endeavored to increase understanding of the relationships between investments in information systems (IS), competitive advantage, ...»
A lot of what it takes to make decisions can‘t come directly out of [the ERP system] or off of a report. A big part of what goes in to making a decision on whether we are going to offer a new product comes from the experience we have here. It may come from knowing something about the specific skills of a person or knowing how you can set up a specific machine or knowing right away we will have to invest in a new machine or some piece of technology. If you don‘t take this into consideration, you‘re going to end up making the wrong decision about what we can do. (FCI manager, new product development) Within the context of this firm, explicit and tacit firm knowledge exists within individuals of the firm. Therefore, organizational learning take place through the members of the firm (Simon, 1991), who become firm-specific knowledge-based resources. From the viewpoint of the managers, knowing is a vital resource in FCI and is a consistent theme throughout their discourse. It is largely the aspect of knowing that sets this organization apart from the competition in their industry (Kogut & Zander, 1992). Information systems are used not only as repositories of historic information related to tacit and
possesses those tacit knowledge and skills.
Managers at FCI use the modern information system as a repository of both current and historical information that can be easily accessed and made available to key organizational participants. The interpretation in this dissertation of organizational information resources is distinguished from the prevalent knowledge based view by its incorporation not only of the knowledge held by individuals, but the organizational knowledge held in historic files and the documentation of processes that have been continued over time. FCI, as predicted by Levitt and March (1988) has organizational memory. Organizational members learn through encoding history into routines, which include forms, strategies and technologies around which the organization is constructed.
Historic files have been kept over the years that explain processes, unique setups on
manufacturing equipment, and even results of historic product testing:
Some of what is necessary to formulate a new product may come from the files we have kept on testing over the years. (FCI Manager) Knowledge of proprietary manufacturing processes is kept unavailable to other organizations within the industry by legal contracts. Knowledge of organization-specific manufacturing practices and techniques is being passed from one generation of engineers
and production managers to the next through observation and on-the-job training:
A lot of what I do is just out and out education. I have absorbed so many things over the years that I have worked here. Part of my job is to impart that to the younger ones who are coming along now. (FCI Manager)
The information resources held within FCI contribute largely to its competitive position as a dominant firm in its industry. The managers at FCI largely attribute their success to the knowledge, experience, and proprietary practices and processes inherent in their own organization. One manager states: ―When we combine what we have here in our own organization with what we know about that‘s going on in the industry, none of our competitors can touch us.‖ This quote illustrates the significant role of information systems in facilitating a connection between what is known and captured as part of the organizational memory and what is currently transpiring in the industry. In the absence of an effective information system, organizational memory and organizational routines and processes even though a potent source of competitive advantage (Barney, 1991) cannot be fully utilized in crafting competitive actions. As so succinctly stated by Mintzberg (1976), ―To my mind, organizational effectiveness does not lie in that narrow minded concept called ―rationality;‖ it lies in a blend of clearheaded logic and powerful intuition‖ (p. 58). There must be a proper mix of knowing with the current information on the state of the industry, which is external to the organization. In short, information systems in this firm play a vital role in providing the connection between organizational memory and dynamic developments in the competitive environment of the firm thus helping the key decision makers in formulating the correct set of competitive actions.
confluence of four factors: Internal/External Information Sources, Tacit and Explicit Knowledge Resources on Competitive Actions, the Information on Drivers of Competitive Action, and Information Flexibility Related to Competitive Actions.
Managerial interpretations characterize Information Flow as a distinct concept (Knight & McDaniel, 1979), which constitutes the sharing and diffusion of a culmination of information sources and organizational information resources in the context of this study.
Managers believe that the progression of a competitive action decision is unlikely in the
event of ineffective information flow:
Like going after this [particular customer], we can‘t make effective decisions if we can‘t get the right information and get it to the right people at the right time.
(FCI Manager, new customer acquisition).
As integral to the context of this study, managers define information flow as
embedded in the effective use of the organization‘s information systems:
One way we try to get new customers is to provide samples of what they want.
But we have to get all of the spec information entered into the [ERP system] by salespeople. Sometimes they just call us or email us with it or even just say something in passing in the hall! That just doesn‘t work. It all boils down getting all of the information entered, not just bits and pieces. (FCI Manager, new customer acquisition).
The embeddedness of information systems in the context of information flow in the formulation and enactment of competitive actions is emphasized when disconnects occur in the chain of events. As emphasized in the manager‘s quote, new customers are dependent upon timely samples. Timely samples are dependent upon complete product
this breakdown in the formulation of information flow creates a situation where the
competitive action decision process cannot begin:
This information has to flow throughout the organization, to the customer service reps, the engineers, maybe R&D. The quicker we can get all of the information the quicker we can begin to make the decision about creating the product. (FCI Manager, new customer acquisition) The quote above emphasizes the importance of comprehensive and effective Information Flow in the context of managerial decision making toward competitive actions. Studies utilizing organizational information processing theory (Galbraith, 1974) have tended to incorporate information flow into the concept of information processing capabilities (Smith et al., 1991; Bento & Bento, 2006). However, the importance of information flow is emphasized as one manager at FCI stated, ―We are a manufacturing company, but everything we do stems from information.‖ Similar to the concept of organizational information processing that explains management decision-making by the information flows throughout the organization (Knight & McDaniel, 1979), effective information flow enabled by information systems is the first step in facilitating and enacting competitive actions. Information flow allows organizational participants to connect, share and develop a common conceptualization of specific organizational actions.
Conceptually, organizational information processing includes the transfer and analysis of sensory data from the boundary of the organization to the key decision makers and enables these decision makers to select and emphasize the information in their decisions (Huber & Daft, 1987; Knight & McDaniel, 1979). One key role of the modern IS is that
distribution of the sensory data from the boundary to specific key decision makers in a more efficient and organized manner. As stated by the Network Administrator, ―Without this [a particular information system] no one can do their jobs,‖ implying the dependence on information flow with regard to activities that enable competitive actions.
4.3.4. Information on Drivers of Competitive Actions. Ferrier (2001) suggests that within their competitive environments firms compete for market share, use aggressive pricing techniques, and implement advertising campaigns. Other techniques include competition through innovation (Banbury & Mitchell, 1995), and differentiation (Caves & Ghemawat, 1992). Similarly, in competitive actions are driven by customer product inquires, innovation, pricing, new end-uses for products, and advertising.
However, managers discover unique avenues for competitive action within their own organization. The quality of FCI‘s products goes unrivaled throughout its markets.
Managers use the quality inherent within the organization‘s processes as a competitive weapon to pursue new customers and markets. Furthermore, managers find the knowledge and history held within FCI‘s own information systems a driver toward
We have history kept here in files on some rudimentary testing that was done years ago on [substitute product]. We are finding that having access to that history is providing new product ideas. They didn‘t have the technology to do these things effectively then. We do now. (FCI Manager, new product development).
The concept Information on Drivers of Competitive Action can be examined in the context of the Need construct inherent in prevailing organizational information processing theory (Galbraith, 1974; Thompson, 1967), where uncertainty creates the need for increased information processing capability in firms. While conventional information processing theory would suggest that information processing capabilities increase in response to increasing levels of organizational uncertainty, we find that FCI‘s managers invest in systems to facilitate reduction in uncertainty related to competitive activity rather than to reduce uncertainty in general. They interpret their organization as a first mover and market leader (Ferrier, Smith, & Grimm, 1999; Makadok, 1998; Smith, Ferrier & Grimm, 2001) and managers are not concerned with generic uncertainty, rather
they focus on uncertainty related to visible (i.e., ―big‖) actions undertaken by rivals:
We are the major player in our industry. We don‘t really pay a lot of attention to what the competitors are doing unless it is something big. We are big enough that it doesn‘t really matter to us very much at this stage. (FCI Manager, new product development) Managers have strong assumptions about their own organization and about their rivals in the industry (Zajac & Bazerman, 1991) which may potentially influence their competitive strategies or create ―blind spots‖ or situations where managers do not have a realistic view of competitive situations (Grimm, Lee & Smith, 2006). However, we find
of the consequences of actions and awareness of rivals‘ actions within the competitive landscape. The speed at which the competitive action/response process can be addressed is immediately relevant to the speed and flexibility of information provided, shared and disseminated through information systems among managers. In fact, the firm migrated from a traditional module-based ERP system to a Software-as-a-Service ERP system as well as Blackberry communications system among others due to the capabilities these technologies afforded in overcoming temporal and spatial limitations and hastening the completion of the competitive action or response process followed by FCI. Managers interpret the firm‘s dominant position as a factor that reduces uncertainty, which may be addressed by the speed by which competitive action decisions can be made by the managers. Building upon research which has examined speed in the context of competitive actions (Chen & Hambrick, 1995; Eisenhardt, 1989; Ferrier, 2001; Smith & Grimm, 1991), information systems address the concept of speed in terms of reducing uncertainty. Additionally, managers interpret their organization as a first mover and market leader versus challengers (Ferrier, Smith, & Grimm, 1999; Makadok, 1998;
Smith, Ferrier & Grimm, 2001) and aggressive in their markets (Ferrier & Lee, 2002).
Finally, building upon Ferrier (2001), the data suggests that managers choose to engage in a simultaneous attack of multiple actions carried out over some time duration to intimidate rivals into non-response. FCI‘s managers interpret that information systems facilitate idea generation and collaborative decision-making; thus, their firm is able to undertake a greater number of competitive actions, a wider array of competitive actions,
One of the most interesting findings from the data is that managers of a dominant firm see information systems not only in the context of reducing uncertainty but as a provider of opportunities for competitive actions. This set of notions point to the idea that the relationship between information systems investments and competitive actions might be circular. Certain competitive actions may prompt a firm to invest in new information systems but at a later period the very availability of the information provided and distributed by the information system may allow key decision makers to conceive, enact and execute competitive actions that might not have been possible in the absence of
the information system:
We have the capability here now to analyze the data in our R&D department so we need to put it to good use and start investigating new ways to create and offer new products to our existing market and develop products that will open up new markets altogether. (FCI Manager, new product development).
Managers construe the availability of their information systems as a weapon toward new competitive actions. Information systems are available; therefore, information systems drive competitive action through enabling innovation.