The resource-based view of competitive advantage is the concept that a company keeps sustainable competitive advantage by controlling exploitable resources that are valuable, rare, hard to imitate, and have no substitute. All four of these characteristics are required to have a resource-based competitive advantage (Information systems: A manager’s guide to harnessing technology, 2015, p.25). Resources can offer a sustainable competitive advantage if they are internal resources to the company, if they are based on the company’s capabilities, if they are combined with the company’s capabilities to give it a competitive advantage, if the company’s market is attractive, and if the company’s innovation contributes to its financial performance (Holdford, 2018). Using the resource-based view, sustainable competitive advantage is achieved looking at tangible and intangible resources and assets and gaining visibility through resource analysis, resource allocation, and cross-functional use of resources. The VRIO (value, rarity, imitability, and organization) framework helps with that strategic visibility (Using the Resource-based View Strategy for a Competitive Advantage, 2022).
Information systems enable sustainable competitive advantage by providing strategic positioning by giving the company novel approaches to business which are different from competitors, hard for competitors to copy. Information systems also enable operational effectiveness and efficiency by improving quality, lowering operational costs, and designing efficient customer experiences (Information systems: A manager’s guide to harnessing technology, 2015, p.21). In this way, information systems can be a force multiplier, enabling companies to innovate and use their resources most efficiently.
Nicholas Carr believes that information technology (IT) is a commodity resource, and that the technology is just a business resource and does not necessarily give any strategic advantage or strategic value. He argues that the competitive advantage of companies like Walmart and Dell is due to good business choices and their business model rather than technology. Technology, he claims, is a tool that they use in addition to other resources and innovation, and that it should not be heralded as the differentiator which gives these companies an advantage. Carr also says that IT is becoming more commoditized and homogenized, and that innovations using technology have a limited amount of time before a fast follower comes along and improves on the idea, since it is impossible to keep innovations proprietary. Using technology distinctively, defending that distinctiveness against being copies by competitors is extremely difficult, to the point that it is severely diminished (Barret, 2015).
I believe that Nicholas Carr’s perspective is correct in that innovations that we make today are commodity tomorrow. We all celebrate a new technological miracle, but it is quickly copied and widely available soon after. I believe that there will always be innovations and new places of growth. There is an adoption curve where new technological innovations are introduced and picked up by innovators, then early adopters, then the early majority, late majority, and laggards (The 5 Customer Segments of Technology Adoption, 2015). Over the lifespan of technology, it goes through a maturity curve that is parallel to the adoption curve. In the maturity curve, technology goes through these phases: new, improving, mature, and aging (Ferguson, 2019). These adoption and maturity curves illustrate when technology will probably become commoditized. During the maturity and aging phases of the technology, it likely has been copied and emulated by competitors.
I believe strongly that technology is a business enabler and a tool and resource for operational efficiency, but it is necessary to keep innovating. If a company is not constantly innovating and growing, then the competitive advantage of the company will quickly fade away. Technology can, though, increase the speed of innovation and operational improvement, so it is a necessity in business.
Barret, Steve. (2015, May 18). CNET Interview with Nicholas Carr on ‘IT still doesn’t matter’ [YouTube]. Retrieved from https://www.youtube.com/watch?v=hj_mzU3N70g
Ferguson, P. (2019, July 11). Mature Technology. Retrieved from https://akfpartners.com/growth-blog/architectural-principle-use-mature-technology-proven-and-stable
Holdford D. A. (2018). Resource-based theory of competitive advantage – a framework for pharmacy practice innovation research. Pharmacy practice, 16(3), 1351. https://doi.org/10.18549/PharmPract.2018.03.1351
Information systems: A manager’s guide to harnessing technology. (2015). University of Minnesota Libraries Publishing. Licensed under Creative Commons Attribution – Non-Commercial-Share Alike License. Retrieved from https://open.lib.umn.edu/informationsystems/open/download?type=pdf
The 5 Customer Segments of Technology Adoption. (n.d.). On Digital Marketing. Retrieved from https://ondigitalmarketing.com/learn/odm/foundations/5-customer-segments-technology-adoption/
Using the Resource-based View Strategy for a Competitive Advantage. (2022, September 5). Retrieved from https://www.saviom.com/blog/using-the-resource-based-view-strategy-for-competitive-advantage/