«Researchers have endeavored to increase understanding of the relationships between investments in information systems (IS), competitive advantage, ...»
We find that managers at FCI perceive their organization as a leader in its markets. This collective perception or awareness has largely dictated its competitive moves. The competitive dynamics literature indicates that the actions firms take largely depend upon the characteristics of a firm and its position in its competitive environment (Miller & Chen, 1996). Firm managers interpret FCI as an innovator (Banbury & Mitchell, 1995), a first-mover (Ferrier, Smith, & Grimm, 1999; Makadok, 1998), with competitive differentiation (Caves & Ghemawat, 1992), and the actions taken by this firm support
each of these characterizations:
We are the leader. We aren‘t usually concerned about what the competitors are doing. We are more concerned with doing our own thing. There is such a big spread between us and the competitors, we can‘t really be compared to them.
They will always be trying to copy what we do, but the quality just isn‘t there.
Additionally, similar to findings by MacMillan et al. (1985), Smith et al. (1989), and Chen et al. (2007), managerial perception at FCI will moderate the choice to move ahead
If I think that an action should be carried out, I will push for us to carry it out and carry it out quickly. (FCI Manager) If I think some action is going to be good for us, be profitable for us, I will drive production on this. (FCI Manager) Management style is also a major factor in influencing choice of competitive action in FCI. Managers tend to agree that FCI has evolved toward a flat organization, which
influences the decision-making process:
Under past ownership, there was an extremely authoritarian management style here. There was little tolerance for allowing people to think outside of what they had been told to do. That has really changed. I think now we have a pretty flat organization that really facilitates the decision-making process. (FCI Manager) The current growth strategy at FCI is largely at the forefront of competitive
actions considered by managers:
We want the industry to know about our growth strategy. We make sure we communicate our growth strategy to the financial markets. We are attracting major interest from the financial markets. We recently had some analysts do investment reports of the company that were very positive for us in terms of our growth outlook. (FCI Manager, new market entry).
We keep our quality, our product at the level it needs to be to set the precedent for the market. We have quality superior to our competitors worldwide. (FCI Manager) Similar to Mintzberg and Waters (1985), FCI‘s strategy is embodied in patterns or consistencies in streams of behavior by the managers. Patterns relative to quality and firm dominance are central to most actions taken. In the context of competitive actions, (Ferrier, 2001) strategy at FCI can be seen as ―the ordered pattern of repeatable competitive actions carried out in strategic time‖ (pp. 163). Similar to Chi et al. (2007), FCI has recognized that competitive advantage depends upon the firm‘s ability to recognize and seize growth opportunities, and to assemble the needed resources, capabilities, and relationships needed to gain new customers and market share.
Firm culture often moderates the competitive actions chosen by managers. The data demonstrates that while the current informal of the organization is often appreciated by management, it may create disconnects as the company grows, which may confound
the decision-making process:
Our culture has been very unstructured and informal. Sometimes this helps us make decisions but a lot of the time it complicates things. There has been no protocol for most things. For example, now the field sales people are supposed to enter a completed customer inquiry or specification so that the information can flow to my department, engineering, production, etc. But they continue to just email, pass someone in the hall and give bits and pieces of the information. This makes it very hard for the rest of us who have to decide whether or not we are going to create this product. (FCI Manager, new customer acquisition).
We are becoming innovators. But this has not been our culture, it was not what we did. The bulk of us grew up here, this is what we know. We had a few large
Interestingly, major shifts and cultural adjustments are embodied in the
implementation and utilization of information systems:
Enforcing the use of the ERP system is changing the culture here. We have been a very informal company up to now, but as we grow that is having to change.
Getting all of the information we need when we need it and keeping all of the information straight is a little bit overwhelming at times. To keep up this pace, we have to enforce use of the system. (FCI Manager, new product development).
The Blackberry is how we communicate – it‘s like an appendage. (FCI Manager) You know you can always reach the person you need because we all have Blackberries. The way we work, it‘s become a necessity. There‘s not anymore ―9-to-5‖ around here. (FCI Manager) Subjective components such as managerial ―gut feeling,‖ managerial style and organizational culture are integral to any strategy formulation process (Barnes, 1984).
While we concur with Barnes‘ position, it must be recognized once such subjective judgments have been formulated, such judgments must then be communicated and disseminated to the various individuals responsible for achieving strategic goals. Again, even within the factors moderating choice, information systems continue to play a vital role in communicating and in facilitating competitive strategy.
In the Execution/Abandonment category, firm managers may follow one of two courses of action: competitive action execution or abandonment of competitive action.
4.5.1. Competitive Action Execution. Managers use information systems in identifying the best opportunities for execution. In this stage, managers are actively pursuing a course of action. For example, in the case of new product development, they are announcing the new product in the marketplace, actively promoting new products to potential customers and identifying ways in which new products can be utilized across various markets. In describing scenarios of successful execution, managers describe accomplishment, achievement, and interestingly, exploitation. Managers view not only their entry into a market as success, but also their ability to take the market away from a competing firm‘s product. This aggressive stance is indicative of FCI‘s dominant
We‘re constantly searching for new markets, new customer types. Through Internet research and our industry interactions we have identified some new enduses for our products. We came up with a product that we have been able to adapt for use by the white goods industry. This is a pretty big achievement for us, as can switch them to our product from the industry standard. We will see a new market open up for us because of it. (FCI Manager) A major achievement for FCI has been [new] product. This is such an achievement for FCI because we have been able to go beyond our standard processes. This is something not many companies can do in our industry. (FCI Manager) This kind of accomplishment is how we remain dominant. (FCI Manager) We are getting bombarded from all over with customer inquiries. One way we can exploit this product is to convert customers from [industry standard] to this [FCI] product. (FCI Manager)
industry. Once identified, managers go beyond using their organizational information and knowledge resources to insure the viability of executing an action to become active
members of the very bodies that set the product standards:
Different industries have different standards for uses for our type of products. We do a lot of research online and through industry sources to find out about these industry standards. Then we become active on the standards boards. For example, we‘ve become active in setting standards for utilities products, where we can have a lot of influence on setting the standards for our products in the utilities industry. With this kind of plan put into action, it can bring in new utilities customers for us. (FCI Manager) Automotive is a relatively new market for us. We have begun to do a lot of research into various industries and look for ways our products will fit in. We found out through our research that automotive has been trying to find ways to make vehicles lighter. With our new product, we can save them about seven to fifteen pounds per vehicle, plus we can do it at a lower cost than what they are currently using. (FCI Manager) 4.5.2. Competitive Action Abandonment. The alternative to the execution of competitive action is the abandonment. The abandonment of a competitive action emphasizes the day-to-day reality of decision making in the context of competitive action and resultant influences upon firm performance. Abandonment emphasizes the crucial role played by information systems in facilitating effective decisions. There is the occasion when competitive actions must be abandoned due to sudden shifts in demand or due to a flawed decision-making process. Once a competitive action decision has reached the enactment stage, the abandonment of the action will unavoidably adversely
affect firm performance:
Abandonment of competitive action also emphasizes the integral role information plays in the conception and enactment of competitive action. Managers perceive that deciding to execute a competitive action based upon ineffective Information Flow could spell
disaster for their organization:
Even with the information available to us through our own people, our own systems, from the industry, it‘s hard to know you‘re making the absolute right decision. You have to guard against oversights, flaws in decision-making. We have to guard against going ahead without complete information. Otherwise you will end up spending a bunch of time and resources and not get anywhere. (FCI Manager)
4.6. Firm Performance Through the competitive actions and responses in which the firm‘s managers engage, information systems will have an impact upon firm performance. Richard et al.
(2009) found that firm performance evaluation has taken various objective and subjective forms in extant research, and citing Steers (1975) states that ―Performance itself is likely to be somewhat firm specific, as the strategic choices a firm makes will dictate which performance measures will reflect the latent performance construct (Steers, 1975)‖ (p.
Thus, Richard et al. (2009) propose that, ―Measurement of performance must take into account heterogeneity of environments, strategies, and management practices‖ (p.
managers‘ interpretations of impacts of competitive actions on firm performance as well as objective evaluation in the form of internal and external documents and external securities analysts that seem to best reflect FCI‘s firm performance.
4.6.1. Market Performance and Financial Performance. While the primary evidence of the relationship between competitive activity and firm performance relies upon managerial interpretations, objective evidence of the effects of competitive actions upon firm performance is obtained through securities analyst‘s reports (outsiders‘ accounts) (Chen et al., 1993). Managers‘ interpretations that the execution of competitive actions such as the introduction of a new product or the entry into a new market as having a positive impact on firm performance are supported by the views of
objective outsiders (Chen et al., 1993), securities analysts:
Through innovation [FCI] has created a new market presence in the cell phone industry. (Jeffries and Co., 2008).
Merger synergies should contribute to gross margin in the mid 20s in [FCI] in 2008. (Jeffries and Co., 2008).
Q1 2008 revenues increased 156% year over year. (Roth Capital Partners, 2008) The Jeffries and Company, Inc. report substantiates the newly formed market presence in the cell phone industry through FCI‘s competitive actions through innovation in products.
Jeffries and Company, Inc. also predicts a strong future for FCI in the automotive market.
Similarly, due to FCI‘s acquisition of a new customer in the automotive market, PiperJaffray predicts strong sales growth and margin expansion. Roth Capital Partners
to its entry into the Chinese broadband market which was made possible through the marriage of the Chinese and U.S.-based companies. For each of these competitive actions and resultant effects upon firm performance, through managerial interpretations, the integral role played by information systems in impacting firm performance through the firm‘s competitive activity has been demonstrated.
The impact of IT on firm performance has generated interest among researchers and practitioners. Do investments in information technology improve firm performance?
How can such effects be measured? Carr (2003), in his controversial article ―IT Doesn‘t Matter,‖ suggests that IT has become commoditized, available to all, and thus, cannot provide competitive advantage to firms. However, rather than looking at the technology itself as providing competitive advantage, researchers have begun to suggest that it is the capabilities that technology provides within the organizational context that bring advantage. However, while important contributions to the evolving study of IT and firm performance have been made, many of these studies are based upon large-scale surveys (Bhatt & Grover, 2005) and secondary data (Bharadwaj, 2000; Chi et al., 2007a, 2007b) which can only provide a static snapshot view of the phenomenon and cannot explain how investments in IT affect performance (Sambamurthy et al., 2003). Additionally, given the limitations inherent in statistical methods of discovery, it is unclear whether effects on firm performance are attributable to the constructs under study or from some confounding variable.