Journal of Management Information Systems

Volume 13 Number 2 1996 pp. 5-7

Special Section: Strategic and Competitive Information Systems

Clemons, Eric K and Weber, Bruce W

Eric K. Clemons is Professor of Operations and Information Management at The Wharton School of the University of Pennsylvania. His research and teaching interests include strategic information systems, the use of information systems in international securities markets and financial services firms, the impact of systems on the distribution of consumer packaged goods and on retail services, and the impact of information technology on procurement and the nature of interfirm markets for intermediate goods and services. He specializes both in assessing the competitive implication of information technology and in managing the risk of large-scale implementation efforts. Dr. Clemons is also Project Director for the Reginald H. Jones Center's Sponsored Research Project on Information: Industry Structure and Competitive Strategy and senior fellow at the Wharton Financial Institutions Center.

His education includes an S.B. in physics from MIT and an M.S. and Ph.D. in operations research from Cornell University. In addition to twenty years on the faculties of Wharton, Cornell, and Harvard, Dr. Clemons has professional experience as a consultant in both the private and public sectors and in executive education both domestically and abroad. In his consulting practice, Dr. Clemons focuses on helping clients anticipate the fundamental impacts information technology will have on the structure of their industries and on the future strategies available to their firms. In addition to his more traditional consulting practice, he has added participation as a facilitator of strategic change. This has enabled his clients to manage the strategic risks of change more carefully, by engaging the client's full senior team early in assessing the wide range of potential futures enabled by technology, in assessing the need for strategic change, and in the formulation of the broad outlines of strategies that are enabled by technology.

Dr. Clemons is currently a member of the editorial board of the Journal of Management Information Systems and the International Journal of Electronic Commerce. He participated in the Congressional Office of Technology Assessment study of securities markets and served on the Quality of Markets Advisory Board of the London Stock Exchange.

Bruce W. Weber is an Assistant Professor in the Information Systems Department of the Stern School of Business at New York University. His research examines the impact of information technology on financial markets and the effects of information systems on industry and firm economic performance. He has an A.B. in applied mathematics from Harvard University and an M.A. and Ph.D. in decision sciences from the Wharton School of the University of Pennsylvania. Prior to joining the Stern faculty, he held a faculty position in Information Management at the London Business School. In 1995, he was a visiting faculty member at The Wharton School of the University of Pennsylvania.

The special section on Strategic and Competitive Information Systems appears in the Journal of Management Information Systems for the seventh consecutive year to showcase promising current work on the strategic use of information systems and the impact of information technology on the competitive performance of organizations.. Earlier versions of the three works in this special section were published in the Proceedings of the Twenty-Ninth Annual Hawaii International Conference on Systems Science in January 1996. All three were nominated for the Best Paper award in the conference's Information Systems track, and the papers by Theodore H. Clark and Donna B. Stoddard and by Sabyasachi Mitra and Antoine Karim Chaya were selected to share the award.

The papers in this year's Special Section emphasize the ways in which information technology (IT) affects competition within industries, and influences the relative performance of firms with differing IT strategies. Specifically, the authors address questions concerning information technology's role (1) in cross-organizational reengineering, (2) in achieving cost efficiency in firms, and (3) in revising the strategies of dominant, established firms facing new, narrowly focused competitors.

"Interorganizational Business Process Redesign: Merging Technological and Process Innovation," by Theodore H. Clark and Donna B. Stoddard, investigates the increasingly critical challenges of reengineering across firm boundaries. The authors break down IT-driven process redesign efforts into their technological and process components. Case examples are provided of coordinated efforts by manufacturers and retailers to improve performance in the distribution of grocery products. The authors conclude that effective management of the interdependence of these components-process innovation and the underlying information technology-is required to achieve significant results from interorganizational reengineering efforts.

In "Analyzing Cost-Effectiveness of Organizations: The Impact of Information Technology Spending," Sabyasachi Mitra and Antoine Karim Chaya find compelling evidence of cost reductions that result from IT investments in a multi-industry sample of 190 firms. The results contradict recent studies exposing a "Productivity Paradox"-namely, that huge IT investment shave failed to improve white-collar productivity. A strong case is made for assessing two categories of IT benefits. The first is an automation effect resulting from reduced labor inputs to carry out a task; the second is an information effect, arising from better decision making and greater employee autonomy. In tests of five hypotheses, the authors demonstrate that larger IT budgets are associated with beneficial automation and information effects, and lower firm costs.

Eric K. Clemons, David C. Croson, and Bruce W. Weber, in "Market Dominance as a Precursor of a Firm's Failure: Emerging Technologies and the Competitive Advantage of New Entrants," detail how firms that are new entrants have made strategic use of IT to "contest" markets in several industries. As the economic conditions of contestability become apparent in an increasing number of industries, new entrants are placing great pressure on previously dominant firms. The authors describe how information technology has reduced entry barriers and made competitive attacks on market share possible. Moreover, pricing policies and implicit cross-subsidies of once-dominant firms often lead new entrants to target only potentially profitable customers, making focused attacks particularly attractive. This combination-new IT-based entry possibilities and market attractiveness due to the incumbents' mispricing-leads to a fundamental increase in the ability of entrants to assume favorable competitive positions. The paper lists strategic responses available to incumbents in newly contestable markets.

These three papers represent important new contributions to the body of research on strategic and competitive information systems. They also employ a range of methodologies to study the strategic implications of information systems. A common theme in the papers is that the economic performance of firms reflects the use of IT to undertake innovation in business practices and to set strategies for competitive conditions that change at the pace of technological innovation. Research in strategic systems has continued to expand the understanding of consequences of large-scale IT use in firms and industries and to inform information systems practitioners, who are making multimillion-dollar investments in technologies whose competitive and strategic impacts are complex and difficult to anticipate.