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Wade & Hulland/Review: Resource-Based View of IS Research

MIS Quarterly Vol. 28 No. 1, pp. 1-XXX/March 2004 1

12 REVIEW ARTICLE

REVIEW: THE RESOURCE-BASED VIEW AND3

INFORMATION SYSTEMS RESEARCH:4

REVIEW, EXTENSION, AND SUGGESTIONS5

FOR FUTURE RESEARCH16

By: Michael Wade7Schulich School of Business8York University94700 Keele Street10Toronto, ON M3J [email protected]

14John Hulland15Graduate School of Business16University of Pittsburgh17Pittsburgh, PA [email protected]

Abstract2122

Information systems researchers have a long tra-23dition of drawing on theories from disciplines such24as economics, computer science, psychology, and25general management and using them in their own26research. Because of this, the information sys-27tems field has become a rich tapestry of theore-28

1Jane Webster was the accepting senior editor for this29paper.30

tical and conceptual foundations. As newtheories are brought into the field, particularlytheories that have become dominant in otherareas, there may be a benefit in pausing to assesstheir use and contribution in an IS context. Thepurpose of this paper is to explore and criticallyevaluate use of the resource-based view of thefirm (RBV) by IS researchers.

The paper provides a brief review of resource-based theory and then suggests extensions tomake the RBV more useful for empirical ISresearch. First, a typology of key IS resources ispresented, and these are then described using sixtraditional resource attributes. Second, we em-phasize the particular importance of looking atboth resource complementarity and moderatingfactors when studying IS resource effects on firmperformance. Finally, we discuss three consi-derations that IS researchers need to addresswhen using the RBV empirically. Eight sets ofpropositions are advanced to help guide futureresearch.

Keywords: Resource-based view, organizationalimpacts of IS, information systems resources,competitive advantage, IS strategic planning,information resource management


2 MIS Quarterly Vol. 28 No. 1/March 2004

Introduction12

In 1992, Mahoney and Pandian outlined how3the resource-based view of the firm (RBV)4might be useful to the field of strategic5management. One benefit of the theory, they6noted, was that it encouraged a dialogue7between scholars from a variety of8perspectives, which they described as �good9conversation.� Since then, the strengths and10weaknesses of the RBV have been vigorously11debated in strategic management and other12management disciplines (e.g., Barney 2001;13Fahy and Smithee 1999; Foss 1998; Priem and14Butler 2001a, 2001b).15

16Very little discussion on the resource-based17view, however, has been conducted in the field18of information systems. The RBV has been19used in the IS field on a number of occasions20(see the Appendix for a list of IS research21studies using the RBV), yet there has been no22effort to date to comprehensively evaluate its23strengths and weaknesses. This paper outlines24how the RBV can be useful to research in IS,25and provides guidelines for how this research26might be conducted. In short, the purpose of27this paper is to initiate a discussion of the RBV28within the conversation of information systems29research.30

31The paper is organized as follows. First, we32briefly introduce the resource-based view of the33firm and describe how the theory has relevance34for IS scholars. Second, we present a typology35of IS resources and then describe, compare,36and contrast them with one another using six37key resource attributes. Third, we address the38important issues of resource complementarity39and the role played by moderating factors that40influence the IS resource-firm performance41relationship. We then turn to a discussion of42three major sets of considerations that IS43researchers need to address when using the44RBV in empirical settings.45

The Resource-BasedView of the Firm

An Overview of the Resource-Based View

The resource-based view argues that firms pos-sess resources, a subset of which enables themto achieve competitive advantage, and a furthersubset which leads to superior long-term per-formance (Barney 1991; Grant 1991; Penrose1959; Wernerfelt 1984). Empirical studies of firmperformance using the RBV have found dif-ferences not only between firms in the sameindustry (Hansen and Wernerfelt 1989), but alsowithin the narrower confines of groups withinindustries (Cool and Schendel 1988). This sug-gests that the effects of individual, firm-specificresources on performance can be significant(Mahoney and Pandian 1992).

Resources that are valuable and rare and whosebenefits can be appropriated by the owning (orcontrolling) firm provide it with a temporarycompetitive advantage. That advantage can besustained over longer time periods to the extentthat the firm is able to protect against resourceimitation, transfer, or substitution. In general,empirical studies using the theory have stronglysupported the resource-based view (e.g., McGrathet al. 1995; Miller and Shamsie 1996; Zaheer andZaheer 1997).

One of the key challenges RBV theorists havefaced is to define what is meant by a resource.Researchers and practitioners interested in theRBV have used a variety of different terms to talkabout a firm�s resources, including competencies(Prahalad and Hamel 1990), skills (Grant 1991),strategic assets (Amit and Schoemaker 1993),assets (Ross et al. 1996), and stocks (Capron andHulland 1999). This proliferation of definitions andclassifications has been problematic for researchusing the RBV, as it is often unclear whatresearchers mean by key terminology (Priem andButler 2001a). In order to simplify the interpre-


MIS Quarterly Vol. 28 No. 1/March 2004 3

tation of the theory, it is useful to clarify the1definitions of relevant terms. In this paper, we2define resources as assets and capabilities that3are available and useful in detecting and4responding to market opportunities or threats5(Sanchez et al. 1996; see also Christensen and6Overdorf 2000). Together, assets and capabilities7define the set of resources available to the firm.8

9Assets are defined as anything tangible or10intangible the firm can use in its processes for11creating, producing, and/or offering its products12(goods or services) to a market, whereas capa-13bilities are repeatable patterns of actions in the14use of assets to create, produce, and/or offer15products to a market (Sanchez et al. 1996).16Assets can serve as inputs to a process, or as the17outputs of a process (Srivastava et al. 1998;18Teece et al. 1997). Assets can be either tangible19(e.g., information systems hardware, network20infrastructure) or intangible (e.g., software patents,21strong vendor relationships) (Hall 1997; Itami and22Roehl 1987; Srivastava et al. 1998). In contrast,23capabilities transform inputs into outputs of24greater worth (Amit and Schoemaker 1993;25Capron and Hulland 1999; Christensen and26Overdorf 2000; Sanchez et al. 1996; Schoemaker27and Amit 1994).2 Capabilities can include skills,28such as technical or managerial ability, or29processes, such as systems development or30integration.31

What Can the Resource-Based View32Contribute to IS Research?33

34A critical issue addressed in this review is the35usefulness of the resource-based view to IS36research. The RBV is increasingly being used by37

IS researchers and therefore it is valuable topause and reflect on the actual utility of the theoryto the IS field. That the theory has becomeinfluential in other management fields such asstrategy and marketing merely points to itspotential use in IS research. Usefulness in onefield does not dictate usefulness in all fields.Furthermore, the IS field already incorporatestheories from many other areas. This review willexplore what, if anything, the RBV can offer thatthe IS field does not already obtain fromelsewhere.

This review will argue that the RBV is indeeduseful to IS research. The theory provides avaluable way for IS researchers to think about howinformation systems relate to firm strategy andperformance. In particular, the theory provides acogent framework to evaluate the strategic valueof information systems resources. It also providesguidance on how to differentiate among varioustypes of information systems�including theimportant distinction between information tech-nology and information systems�and how tostudy their separate influences on performance(Santhanam and Hartono 2003). Further, thetheory provides a basis for comparison betweenIS and non-IS resources, and thus can facilitatecross-functional research.

Yet, as currently conceptualized, the theory is notideally suited to studying information systems.Unlike some resources, such as brand equity orfinancial assets, IS resources rarely contribute adirect influence to sustained competitive advant-age (SCA). Instead, they form part of a complexchain of assets and capabilities that may lead tosustained performance. In the parlance ofClemons and Row (1991), information systemsresources are necessary, but not sufficient, forSCA. Information systems exert their influence onthe firm through complementary relationships withother firm assets and capabilities. While the RBVrecognizes the role of resource complementarity,it is not well developed in the theory. Therefinement of this element is necessary toenhance the usefulness of the RBV to ISresearchers.

2In this paper we view the terms capabilities, compe-tencies, and core competencies as essentially synony-mous. According to Sanchez et al. (1996), the onlydifference between these terms lies in the fact that corecompetencies are capabilities that achieve competitiveadvantage. Because we explicitly discuss only capa-bilities that lead to superior performance, in this paperthe terms can be considered interchangeable.



We recognize three aspects of the RBV that1provide rare and valuable benefits to IS2researchers. First, by way of a defined set of3resource attributes, the RBV facilitates the spe-4cification of information systems resources. This5specification provides the groundwork for a set of6mutually exclusive and exhaustive information7systems assets and capabilities. This review sug-8gests a framework for this IS resource set.9Second, by using the same set of resource10attributes mentioned above, IS resources can be11compared with one another and, perhaps more12importantly, can be compared with non-IS13resources. Thus, the RBV promotes cross-func-14tional research through comparisons with other15firm resources. Third, the RBV sets out a clear16link between resources and SCA through a well-17defined dependent variable, providing a useful18way to measure the strategic value of IS19resources. In addition, we recognize one area in20which the theory is deficient as conceived�the21complementarity of resources�and suggest a22way to extend the theory to reduce the effect of23this deficiency. We also suggest key moderating24variables that are relevant to studies of the IS25resource-performance relationship and that we26believe warrant greater attention from IS27researchers.28

IS Resources and the Resource-29Based View30

31This section starts by reviewing RBV research32conducted to date within the IS field, with an eye33to identifying the major IS resources used in these34studies. These resources are then organized35using a typology proposed by Day (1994). This is36followed by a description of six key resource37attributes that have been employed by RBV38researchers in the past. Finally, we describe each39of the major IS resources identified previously40using these six attributes.41

Information Systems Resources4243

The resource-based view started to appear in IS44research in the mid-1990s (see the Appendix for45

a list of RBV studies conducted to date in the ISfield). Much of this work has attempted to identifyand define either a single IS resource or sets of ISresources. For example, Ross et al. (1996)divided IS into three IT assets which together withIT processes would contribute to business value.These three IT assets were labeled human assets(e.g., technical skills, business understanding,problem-solving orientation), technology assets(e.g., physical IT assets, technical platforms, data-bases, architectures, standards) and relationshipassets (e.g., partnerships with other divisions,client relationships, top management sponsorship,shared risk and responsibility). IT processes weredefined as planning ability, cost effective opera-tions and support, and fast delivery. This cate-gorization was later modified by Bharadwaj (2000)to include IT infrastructure, human IT resources,and IT-enabled intangibles.

Other categorization schemes have also beendeveloped. (The Appendix summarizes thesestudies. In Table 2, presented later in the paper,we offer an alternative way of categorizing theseconstructs.) Feeny and Willcocks (1998) iden-tified nine core IS capabilities, which theyorganized into four overlapping areas. Theseareas were business and IT vision (integrationbetween IT and other parts of the firm), design ofIT architectures (IT development skills), delivery ofIS services (implementation, dealing with vendorsand customers), and a core set of capabilitieswhich included IS leadership and informed buying.As a further step, each capability was ranked as tohow much it relied on business, technical, orinterpersonal skills. Bharadwaj et al. (1998) sug-gested and subsequently validated a measure ofIT capability with the following six dimensions:IT/business partnerships, external IT linkages,business IT strategic thinking, IT business processintegration, IT management, and IT infrastructure.Each dimension was found to be reliable and validusing psychometric testing on a sample of seniorIS executives.

The link between IS resources and firm perfor-mance has been investigated by a number ofresearchers. For example, Mata et al. (1995)used resource-based arguments to suggest that



five key IS drivers�customer switching costs,1access to capital, proprietary technology, technical2IT skills, and managerial IT skills�lead to sus-3tained competitive advantage, although they found4empirical support for only the last of these pro-5posed relationships. Powell and Dent-Micallef6(1997) divided information systems resources into7three categories: human resources, business8resources, and technology resources. In a study9of the U.S. retail industry, they found that only10human resources in concert with IT contributed to11improved performance. Among the business12resources, only IT training positively affected13performance, while no technology resources14linked positively to performance at all.15

16Using an approach similar to that employed by17Kohli and Jaworski (1990) to develop the mar-18keting orientation construct, Marchand et al.19(2000) proposed an information orientation con-20struct comprised of three elements: information21technology practices (the management of tech-22nology), information management practices (the23management of information collection, organi-24zation and use), and information behaviors and25values (behaviors and values of people using the26information). These factors were validated using27data from a large-scale cross-sectional survey.28The study also found that firms ranking highly on29all three information orientation dimensions30tended to have superior performance when com-31pared to other firms.32

33Many of the studies mentioned above divided IS34resources into two categories that can be broadly35defined as IS assets (technology-based) and IS36capabilities (systems-based). Research has sug-37gested that IS assets (e.g., infrastructure) are the38easiest resources for competitors to copy and,39therefore, represent the most fragile source of40sustainable competitive advantage for a firm41(Leonard-Barton 1992; Teece et al. 1997). In con-42trast, there is growing evidence that competitive43advantage often depends on the firm�s superior44deployment of capabilities (Christensen and45Overdorf 2000; Day 1994) as well as intangible46assets (Hall 1997; Itami and Roehl 1987;47

Srivistava et al. 1998). From an RBV perspective,this advantage may result from development ofcapabilities over an extended period of time thatbecome embedded in a company and are difficultto trade. Alternatively, the firm may possess acapability that is idiosyncratic to the firm (i.e., anIS expert with specialized knowledge who is loyalto the firm) or difficult to imitate due to pathdependencies (Dierickx and Cool 1989) orembeddedness in a firm�s culture (Barney 1991).Capabilities are often critical drivers of firm per-formance (Eisenhardt and Martin 2000; Makadok2001; Teece et al. 1997).

A Typology of IS Resources

Day (1994) suggests one approach to thinkingabout IS resources. He argues that the capa-bilities (as previously noted, a subset of the firm�sresources) held by a firm can be sorted into threetypes of processes: inside-out, outside-in, andspanning. Inside-out capabilities are deployedfrom inside the firm in response to marketrequirements and opportunities, and tend to beinternally focused (e.g., technology development,cost controls). In contrast, outside-in capabilitiesare externally oriented, placing an emphasis onanticipating market requirements, creating durablecustomer relationships, and understanding com-petitors (e.g., market responsiveness, managingexternal relationships). Finally, spanning capa-bilities, which involve both internal and externalanalysis, are needed to integrate the firm�s inside-out and outside-in capabilities (e.g., managing IS/business partnerships, IS management andplanning). Such an approach is entirely consistentwith Santhanam and Hartono�s (2003) recent callto develop theoretically-based multidimensionalmeasures of IT capability.

Table 1 suggests how eight key IS resourcesdescribed in previous research can be organizedwithin this framework. While this earlier work hasused a variety of different terms for IS resources,it can be mapped directly onto Day�s framework,as shown in Table 2. Each of the resources in thistable is described more fully below.



Table 1. A Typology of IS Resources1

Outside-In2 Spanning Inside-Out

� External relationship3management4

� Market responsiveness5

� IS-business partnerships� IS planning and change

management

� IS infrastructure� IS technical skills� IS development� Cost effective IS operations

678910

Table 2. A Categorization of Information Systems Resources from Previous Studies11Resource12 Source

Manage external13relationships14

Manage external linkages (Bharadwaj et al. 1998)Manage stakeholder relationships (Benjamin and Levinson 1993)Strong community networks (Jarvenpaa and Leidner 1998)Contract facilitation (Feeny and Willcocks 1998)Informed buying (Feeny and Willcocks 1998)Vendor development (Feeny and Willcocks 1998)Contract monitoring (Feeny and Willcocks 1998)Coordination of buyers and suppliers (Bharadwaj 2000)Customer service (Bharadwaj 2000)

Market responsiveness15 Fast delivery (Ross et al. 1996)Ability to act quickly (Bharadwaj 2000)Increased market responsiveness (Bharadwaj 2000)Responsiveness (Zaheer and Zaheer 1997)Fast product life cycle (Feeny and Ives 1990)Capacity to frequently update information (Lopes and Galletta 1997)Strategic flexibility (Jarvenpaa and Leidner 1998)Flexible IT systems (Bharadwaj 2000)Organizational flexibility (Powell and Dent-Micallef 1997)

IS-business partnerships16(manage internal17relationships)18

Integrate IT and business processes (Benjamin and Levinson 1993;Bharadwaj 2000; Bharadwaj et al. 1998)Capacity to understand the effect of IT on other business areas(Benjamin and Levinson 1993)IT/business partnerships (Bharadwaj et al. 1998; Ross et al. 1996)Aligned IT planning (Ross et al. 1996)Business/IT strategic thinking (Bharadwaj et al. 1998)IT/business synergy (Bharawdaj 2000; Jarvenpaa and Leidner 1998)IT assimilation (Armstrong and Sambamurthy 1999)Relationship building (Feeny and Willcocks 1998)IT/strategy integration (Powell and Dent-Micallef 1997)



Table 2. A Categorization of Information Systems Resources from Previous Studies1(Continued)2IS planning and change3management 4

IT management skills (Bharadwaj 2000; Bharadwaj et al. 1998; Mata etal. 1995)Business understanding (Feeny and Willcocks 1998; Ross et al. 1996)Problem solving orientation (Ross et al. 1996)Business systems thinking (Feeny and Willcocks 1998)Capacity to manage IT change (Benjamin and Levinson 1993)Information management practices (Marchand et al. 2000)Manage architectures/standards (Ross et al. 1996)Architecture planning (Feeny and Willcocks 1998)

IS infrastructure5 IT infrastructure (Armstrong and Sambamurthy 1999; Bharadwaj 2000;Bharadwaj et al. 1998)Proprietary technology (Mata et al. 1995)Hard infrastructure (Benjamin and Levinson 1993)Soft infrastructure (Benjamin and Levinson 1993)Storage and transmission assets (Lopes and Galletta 1997)Information processing capacity (Lopes and Galletta 1997)Technology asset (Ross et al. 1996)Information technology practices (Marchand et al. 2000)

IS technical skills6 Technical IT skills (Bharawdaj 2000; Feeny and Willcocks 1998; Mata etal. 1995; Ross et al. 1996)Knowledge assets (Bharadwaj 2000)Using knowledge assets (Bharadwaj 2000)

IS development7 Technical innovation (Bharadwaj 2000)Experimentation with new technology (Jarvenpaa and Leidner 1998)Capacity to develop services that utilize interactive multimedia (Lopesand Galletta 1997)Alertness (Zaheer and Zaheer 1997)

Cost effective IS8operations9

Cost effective operations and support (Ross et al. 1996)Getting IT to function (Feeny and Willcocks 1998)Enhanced product quality (Bharadwaj 2000)

10

Outside-In Resources1112

External relationship management. This re-13source represents the firm�s ability to manage14linkages between the IS function and stakeholders15outside the firm. It can manifest itself as an ability16to work with suppliers to develop appropriate sys-17tems and infrastructure requirements for the firm18(Feeny and Willcocks 1998), to manage relation-19ships with outsourcing partners (Benjamin and20Levinson 1993; Feeny and Willcocks 1998), or to21manage customer relationships by providing solu-22

tions, support, and/or customer service (Bharad-waj 2000; Bharadwaj et al. 1998). Many large ISdepartments rely on external partners for asignificant portion of their work. The ability to workwith and manage these relationships is an impor-tant organizational resource leading to competitiveadvantage and superior firm performance.

Market responsiveness. Market responsivenessinvolves both the collection of information fromsources external to the firm as well as the dis-semination of a firm�s market intelligence across



departments, and the organization�s response to1that learning (Day 1994; Kohli and Jaworski21990). It includes the abilities to develop and3manage projects rapidly (Ross et al. 1996) and to4react quickly to changes in market conditions5(Bharadwaj 2000; Feeny and Ives 1990; Zaheer6and Zaheer 1997). A key aspect of market7responsiveness is strategic flexibility, which allows8the organization to undertake strategic change9when necessary (Bharadwaj 2000; Jarvenpaa and10Leidner 1998; Powell and Dent-Micallef 1997).11

Spanning Resources1213

IS-business partnerships. This capability repre-14sents the processes of integration and alignment15between the IS function and other functional areas16or departments of the firm. The importance of IS17alignment, particularly with business strategy, has18been well documented (e.g., Chan et al. 1997;19Reich and Benbasat 1996). This resource has20variously been referred to as synergy (Bharadwaj212000; Jarvenpaa and Leidner 1999), assimilation22(Armstrong and Sambamurthy 1999), and partner-23ships (Bharadwaj et al. 1998; Ross et al. 1996).24All of these studies recognize the importance of25building relationships internally within the firm26between the IS function and other areas or27departments. Such relationships help to span the28traditional gaps that exist between functions and29departments, resulting in superior competitive30position and firm performance. An element of this31resource is the support for collaboration within the32firm.33

34IS planning and change management. The35capability to plan, manage, and use appropriate36technology architectures and standards also helps37to span these gaps. Key aspects of this resource38include the ability to anticipate future changes and39growth, to choose platforms (including hardware,40network, and software standards) that can accom-41modate this change (Feeny and Willcocks 1998;42Ross et al. 1996), and to effectively manage the43resulting technology change and growth (Bharad-44waj et al. 1998; Mata et al. 1995). This resource45has been defined variously in previous research46as �understanding the business case� (Feeny and47

Willcocks 1998; Ross et al. 1996), �problemsolving orientation� (Ross et al. 1996), and�capacity to manage IT change� (Benjamin andLevinson 1993). It includes the ability of IS man-agers to understand how technologies can andshould be used, as well as how to motivate andmanage IS personnel through the change process(Bharadwaj 2000).

Inside-Out Resources

IS infrastructure. Most studies recognize thatmany components of IS infrastructure (such asoff-the-shelf computer hardware and software)convey no particular strategic benefit due to lackof rarity, ease of imitation, and ready mobility.Thus, the types of IS infrastructure mentioned inmost of the existing RBV-IS studies are eitherproprietary or complex and hard to imitate(Benjamin and Levinson 1993; Lopes and Galletta1997). Despite these attempts to focus on thenon-imitable aspects of IS infrastructure, the ISinfrastructure resource has generally not beenfound to be a source of sustained competitiveadvantage for firms (Mata et al. 1995; Powell andDent-Micallef 1997; Ray et al. 2001).

IS technical skills. IS technical skills are a resultof the appropriate, updated technology skills,relating to both systems hardware and software,that are held by the IS/IT employees of a firm(Bharadwaj 2000; Ross et al. 1996). Such skillsdo not include only current technical knowledge,but also the ability to deploy, use, and managethat knowledge. Thus, this resource is focused ontechnical skills that are advanced, complex, and,therefore, difficult to imitate. Although the relativemobility of IS/IT personnel tends to be high, someIS skills cannot be easily transferred, such ascorporate-level knowledge assets (Bharadwaj2000) and technology integration skills (Feeny andWillcocks 1998), and, thus, these resources canbecome a source of sustained competitiveadvantage. This capability is focused primarily onthe present.

IS development. IS development refers to thecapability to develop or experiment with new



technologies (Bharadwaj 2000; Jarvenpaa and1Leidner 1998; Lopes and Galletta 1997), as well2as a general level of alertness to emerging tech-3nologies and trends that allow a firm to quickly4take advantage of new advances (Zaheer and5Zaheer 1997). Thus, IS development is future-6oriented. IS development includes capabilities7associated with managing a systems development8life-cycle that is capable of supporting competitive9advantage (Bharadwaj 2000; Marchand et al.102000; Ross et al. 1996), and should therefore lead11to superior firm performance.12

13Cost effective IS operations. This resource14encompasses the ability to provide efficient and15cost-effective IS operations on an ongoing basis.16Firms with greater efficiency can develop a long-17term competitive advantage by using this capa-18bility to reduce costs and develop a cost leader-19ship position in their industry (Barney 1991; Porter201985). In the context of IS operations, the ability21to avoid large, persistent cost overruns, unneces-22sary downtime, and system failure is likely to be23an important precursor to superior performance24(Ross et al. 1996). Furthermore, the ability to25develop and manage IT systems of appropriate26quality that function effectively can be expected to27have a positive impact on performance (Bharad-28waj 2000; Feeny and Willcocks 1998).29

Resource Attributes3031

In order to explore the usefulness of the RBV for32IS research, it is necessary to explicitly recognize33the characteristics and attributes of resources that34lead them to become strategically important.35Although firms possess many resources, only a36few of these have the potential to lead the firm to37a position of sustained competitive advantage.38What is it, then, that separates regular resources39from those that confer a sustainable strategic40benefit? RBV theorists have approached this41question by identifying sets of resource attributes42that might conceptually influence a firm�s com-43petitive position. Under this view, only resources44exhibiting all of these attributes can lead to a45sustained competitive advantage (SCA) for the46

firm.3 For example, Barney (1991) suggested thatadvantage-creating resources must possess fourkey attributes: value, rareness, inimitability, andnon-substitutability. Other typologies have beenproposed by Amit and Schoemaker (1993), Blackand Boal (1994), Collis and Montgomery (1995),and Grant (1991). Although the terms employedacross these frameworks are somewhat different,all attempt to link the heterogeneous, imperfectlymobile, and inimitable, firm-specific resource setspossessed by firms to their competitive positions.Before suggesting how the IS resources identifiedabove can be described using these attributes, wefirst discuss these attributes more generally asthey are viewed in the context of the RBV.

Some researchers have made the useful dis-tinction between resources that help the firm attaina competitive advantage and those that help thefirm to sustain that advantage (e.g., Piccoli et al.2002; Priem and Butler 2001a). Borrowing fromterminology used by Peteraf (1993), these twotypes of resource attributes can be thought of as,respectively, ex ante and ex post limits to compe-tition. Most previous research using the RBV hasblurred these two phases, but we believe that theyneed to be considered separately.

Ex ante limits to competition suggest that prior toany firm�s establishing a superior resource posi-tion, there must be limited competition for thatposition. If any firm wishing to do so can acquireand deploy resources to achieve the position, itcannot by definition be superior. Attributes in thiscategory include value, rarity, and appropriability.Firm resources can only be a source of SCA whenthey are valuable. A resource has value in anRBV context when it enables a firm to implementstrategies that improve efficiency and effective-ness (Barney 1991). Resources with little or no

3RBV theory is built on the assumption that all resourceattributes must be present for that resource to support asustained competitive advantage. While most empiricalwork using the RBV has supported this view, a fewstudies have found results that are inconsistent with thisassumption (e.g., Ainuddin 2000; Poppo and Zenger1998). The key point here is that this assumption isempirically testable, opening the RBV to potentialfalsification (see also Barney 2001).



value have a limited possibility of conferring an1SCA on the possessing firm. To take an extreme2example, the use of a new, innovative paper clip3design may set one firm apart from others, but it is4unlikely the paper clip design would be valuable5from a competitive advantage standpoint.4 6

7Resources that are valuable cannot become8sources of competitive advantage if they are in9plentiful supply. Rarity refers to the condition10where the resource is not simultaneously available11to a large number of firms (Amit and Schoemaker121993). For example, an ATM network might have13significant value to a bank, but since it is not rare,14it is unlikely to confer a strategic benefit. 15

16The appropriability of a resource relates to its rent17earning potential (Amit and Schoemaker 1993;18Collis and Montgomery 1995; Grant 1991). The19advantage created by a rare and valuable20resource or by a combination of resources may21not be of major benefit if the firm is unable to22appropriate the returns accruing from the advan-23tage. Technical skills provide an example of this24phenomenon. The additional benefit accruable to25a firm from hiring employees with rare and valu-26able technical skills may be appropriated away by27the employee through higher than normal wage28demands.5 Similarly, a computer component29supplier may be unable to enjoy the benefits of30improved cost efficiencies if the computer manu-31facturer (i.e., the buyer) is sufficiently powerful to32appropriate away such benefits. This might be33done by sharing the learning with other suppliers,34or by pitting more efficient suppliers against one35

another, forcing them to set lower prices than theymight otherwise establish in order to win thebusiness.

Ex post limits to competition mean thatsubsequent to a firm�s gaining a superior positionand earning rents, there must be forces that limitcompetition for those rents (Hidding 2001; Peteraf1993). Attributes in this category include imita-bility, substitutability, and mobility.

In order to sustain a competitive advantage, firmsmust be able to defend that advantage againstimitation.6 The advantage accruing from newlydeveloped features of computer hardware, forinstance, are typically short-lived since compe-titors are able to quickly duplicate the technology(Mata et al. 1995). According to Barney (1991),there are three factors that can contribute to lowimitability: unique firm history, causal ambiguity,and social complexity. The role of history recog-nizes the importance of a firm�s unique past, apast that other firms are no longer able toduplicate�the so-called Ricardian argument. Forexample, a firm might purchase a piece of land atone point in time that subsequently becomes veryvaluable (Hirshleifer 1980; Ricardo 1966). Causalambiguity exists when the link between a resourceand the competitive advantage it confers is poorlyunderstood. This ambiguity may lie in uncertaintyabout how a resource leads to SCA, or it may liein lack of clarity about which resource (orcombination of resources) leads to SCA. Suchambiguity makes it extremely hard for competingfirms to duplicate a resource or copy the way inwhich it is deployed (Alchian 1950; Barney 19861991; Dierickx and Cool 1989; Lippman andRumelt 1982; Reed and DeFillipe 1990). If a firmunderstands how and why its resources lead toSCA, then competing firms can take steps toacquire that knowledge, such as hiring away keypersonnel, or closely observing firm processesand outcomes. Finally, social complexity refers tothe multifarious relationships within the firm and

4An extensive discussion of the concept of value inrelation to resource-based theory has been conducted inthe strategic management literature (Barney 2001; Priemand Butler 2001a, 2001b; Makadok 2001). Most of thisdiscussion has focused on whether or not value can bedetermined endogenously to the theory. The contentionthat resource value is a pre-cursor to SCA has not beenin dispute.

5For example, firms attempting to hire ERP-knowledge-able personnel during the 1999-2000 period discoveredthat they were able to appropriate only part of thepotential rents associated with this resource, with thebalance appropriated by the employees themselves (inthe form of higher wages or compensation).

6It is important to note, however, that firms may notalways be able to mount such defenses as a result ofeither not fully understanding the threat of imitation ornot having the necessary resources to counter it.



between the firm and key stakeholders such as1shareholders, suppliers, and customers (Hambrick21987; Klein and Lefler 1981). The complexity of3these relationships makes them difficult to4manage and even more difficult to imitate. An5example of this is Wal-Mart�s logistics manage-6ment system. Even if all the individual elements7are in place, the relationships between the8elements, and thus its complexity, would likely9result in an imperfect substitute (Dierickx and Cool101989).11

12A resource has low substitutability if there are few,13if any, strategically equivalent resources that are,14themselves, rare and inimitable (Amit and15Schoemaker 1993; Black and Boal 1994; Collis16and Montgomery 1995). Firms may find, for17example, that excellence in IS product develop-18ment, systems integration, or environmental19scanning may be achieved through a number of20equifinal paths.21

22Once a firm establishes a competitive advantage23through the strategic use of resources, com-24petitors will likely attempt to amass comparable25resources in order to share in the advantage. A26primary source of resources is factor (i.e., open)27markets (Grant 1991). If firms are able to acquire28the resources necessary to imitate a rival�s29competitive advantage, the rival�s advantage will30be short-lived. Thus, a requirement for sustained31competitive advantage is that resources be32imperfectly mobile or non-tradable (Amit and33Schoemaker 1993; Barney 1991; Black and Boal341994; Dierickx and Cool 1989).7 Some resources35are more easily bought and sold than others.36Technological assets, for example, such as com-37

puter hardware and software, are relatively easyto acquire. Technical knowledge, managerialexperience, and many skills and abilities are lesseasy to obtain. Other resources, such ascompany culture, brand assets, and so on, mayonly be available if the firm itself is sold (Grant1991).

The preceding attributes�both ex ante and expost�are summarized in Table 3. Conceptually,the two types of resource attributes are related.When a resource is imitated, more of thatresource exists than before, and thus it becomesless rare. Resources that are highly mobile maybe acquired by competing firms, again affectingthe rarity of the resource for that firm (but not itsoverall rarity in the marketplace). Substitutability,by contrast, affects resource value, not rarity.Resources do not become less rare by havingmultiple substitutes; however, their value can beexpected to diminish as substitute resources aredeveloped. This conceptualization is shown inFigure 1.8

IS Resource Attributes

In this section, we use the resource attributesintroduced above to describe the IS resourcesidentified earlier in the paper. The relationshipsbetween these resources and their attributes aresummarized in Table 4. The entries in this tableshould be interpreted in relative (i.e., versus other

7 Resource mobility and tradability are closely relatedconstructs. As Peteraf (1993, p. 183) notes, resources�are perfectly immobile if they cannot be traded.� On theother hand, imperfectly mobile resources �are notcommonly, easily, or readily exchanged on the market�(Capron and Hulland 1999, p. 42), even though they aretradable. Such barriers to mobility can arise as a resultof switching costs (Montgomery and Wernerfelt 1988),resource co-specialization (Teece 1986), and/or hightransactions costs (Rumelt 1987). We prefer use of theterm resource mobility over resource tradability herebecause the former is a more finely grained constructthan the latter.

8It is important to recognize that imitability and imperfectmobility or tradability are distinct resource attributes.The former prevents imitation by competitors of a firm�scritical resources via direct copying or innovation. Thiscan be due to causal ambiguity, lack of relevantresources on the part of the potential imitator, and time-competitive pressures (Braney 1991; Dierickx and Cool1989). In contrast, imperfect mobility prevents theacquisition and transfer of key resources from one firmto another. Whereas resource imitability leads to anincrease in the availability of a critical resource (thusundermining its rarity), resource mobility describes thedegree to which an existing, fixed stock of a keyresource can be transferred between firms. This distinc-tion has been clearly recognized in previous RBV work(e.g., see Dierickx and Cool 1989; Dutta et al. 1999;Peteraf 1993).



1

Table 3. Resource Attributes2

Resource Attribute3 Terminology

Ex ante limits to competition4Value5 Value (Barney 1991; Dierickx and Cool 1989)

Rarity6 Rare (Barney 1991)Scarcity (Amit and Shoemaker 1993)Idiosyncratic assets (Williamson 1979)

Appropriability7 Appropriability (Amit and Shoemaker 1993; Collis and Montgomery 1995;Grant 1991)

Ex post limits to competition8Imitability9

10Imperfect imitability: history dependent, causal ambiguity, socialcomplexity (Barney 1991)Replicability (Grant 1991)Inimitability (Amit and Shoemaker 1993; Andrews 1971; Collis and Mont-gomery 1995)Uncertain imitability (Lippman and Rumelt 1982)Social Complexity (Fiol 1991)Causal ambiguity (Dierickx and Cool 1989)

Substitutability11 Non-substitutability (Barney 1991)Transparency (Grant 1991)Substitutability (Collis and Montgomery 1995)Limited substitutability (Amit and Shoemaker 1993; Dierickx and Cool1989)Substitutes (Black and Boal 1994)

Mobility12 Imperfect mobility (Barney 1991)Transferability (Grant 1991)Low tradability (Amit and Shoemaker 1993; Dierickx and Cool 1989)Tradability (Black and Boal 1994)

1314



Competitive Advantage Phase Sustainability Phase

Productive use of firm resourceswhich are�-valuable-rare-appropriable

leads to Short termcompetitiveadvantage

which

Is sustained over time due toresource�-imitability-substitutability-mobility

rarity

Low substitutabilityLow mobilityLow imitability

�sustains�

�sustains�

time

value

Ex ante limits to competition Ex post limits to competition

Competitive Advantage Phase Sustainability Phase

Productive use of firm resourceswhich are�-valuable-rare-appropriable

leads to Short termcompetitiveadvantage

which

Is sustained over time due toresource�-imitability-substitutability-mobility

rarity

Low substitutabilityLow mobilityLow imitability

�sustains�

�sustains�

time

value

Ex ante limits to competition Ex post limits to competition

Table 4. IS Resources, by Attribute1

2Advantage Creation Advantage Sustainability

3 Value Rarity Appropriability Imitability Substitutability Mobility

Outside-In4External5relationship6management7

H M � H L � M L L � M L

Market8responsiveness9 H M � H L � M L L � M L

Spanning10IS-business11partnerships12 H M � H L � M L L � M L

IS management/13planning14 H M � H L � M L � M L � M M

Inside-Out15IS infrastructure16 M � H L � M H H L � M H

IS technical skills17 M � H L � M M M M � H M � H

IS development18 M � H M M M M � H M

Cost efficient IS19operations20 M � H L � M M L � M M � H M

Note: L = low; M = medium, H = high2122232425

Figure 1. The Resource-Based View Over Time2627



entries in the same table) rather than absolute1terms. We emphasize that this table is based on2limited existing empirical evidence and therefore3describes hypothesized rather than proven4relationships.5

Value67

As noted earlier, all of the IS resources described8here have at least moderate value to the firms that9possess them. For example, the studies by10Bharadwaj (2000), Feeny and Willcocks (1998),11Lopes and Galletta (1997), and Marchand et al.12(2000), Mata et al. (1995), and Ross et al. (1996)13have all shown that IS resources have value to14their firms (albeit not always realized). At the15same time, outside-in and spanning resources16seem to have potentially higher value than inside-17out resources to firms. The reason for this is that18the two former sets of resources�if valuable�19must be based on a continued understanding of20the changing business environment. While inside-21out resources can lead to greater efficiency and/or22effectiveness at any particular point in time, it is23essential for the firm to track and respond to the24changing business environment over time if it is to25attain a sustainable competitive advantage.26

Rarity2728

In general, the key IS resources described here29are all likely to be relatively rare. However, as30was the case for the value attribute, outside-in and31spanning resources are likely to be associated32with a higher degree of rarity than are inside-out33resources. The underlying reason for this is that34available labor markets allow firms lacking key IS35technology, operational efficiency skills, and IS36development personnel resources to acquire them37by offering superior wages or through business38arrangements with external consultants. Similarly,39IS infrastructure can be acquired or copied rela-40tively easily once it has been in existence even for41a comparatively short period of time, although it42may be very rare initially. In contrast, spanning43and outside-in resources tend to be socially44complex and cannot be easily acquired in factor45

markets, and must instead be developed throughon-going, firm-specific investments or throughmergers and/or acquisitions of other companies.

Appropriability

Although it is difficult to determine the exactdegree of appropriability associated with each ISresource, a number of general observations seemwarranted based on past research. First, IS infra-structure, technology skills, IS development, andcost efficiency may be appropriable, rent-gene-rating resources in the short term, particularlywhen the firm possessing the IS resource has afirst-mover advantage in its use, and competitorsfind such uses difficult to wrest away from theadvantaged firm. For example, firms that are firstto possess next-generation hardware and soft-ware are typically able to use this new infra-structure to improve firm efficiency and/or effec-tiveness, thereby enhancing short-term compe-titive advantage and rent-earning potential.Second, the appropriability of the outside-in andspanning resources tends to be lower than that ofthe inside-out resources. This stems from the factthat they tend to be organizationally complex, andthereby more difficult to deploy successfully.

Imitability

Over time, some IS resources become easier toimitate than others. The outside-in and spanningresources (particularly IS-business partnerships)are likely to be more difficult to imitate becauseboth sets of resources will develop and evolveuniquely for each firm. Moreover, these resourcesare likely to be socially complex. In contrast, firmsare likely to be able to develop technology skillsand IS development capabilities through the hiringof relevant expertise via existing labor markets orby interacting with external consulting firms.Although less readily available, the IS manage-ment/planning and cost efficiency capabilities mayalso be available through such means. Thus,these latter resources will be more imitable thanthe outside-in and IS-business partnershipresources, but less imitable than the technology



skills and IS development capability. Finally,1existing empirical evidence suggests that IS2infrastructure is particularly easy to imitate over3moderate to longer time periods. 4

Substitutability56

The key question that one needs to answer in7considering substitutability is whether or not a8strategically equivalent resource exists and is9potentially available to the firm while leading to an10equifinal outcome. This may involve the use of11very different resource sets, but could also reflect12a decision to acquire and deploy resources in-13house versus obtaining them from third parties. In14the case of IS infrastructure, it seems unlikely that15strategic alternatives exist that lead to the same16ultimate competitive position. Thus, the substitu-17tability of this resource will be low. At the other18extreme, firms may be able to outsource their IS19development and other operations to third parties,20and thereby compete effectively. Strategic substi-21tutes for the outside-in and spanning resources22are also likely to be rare, although it may be23possible for firms with a subset of these capa-24bilities (e.g., market responsiveness) to compete25on an equal basis with firms possessing a different26subset (e.g., IS-business partnerships).27

Imperfect Mobility2829

This final resource attribute captures the extent to30which the underlying resource can be acquired31through factor markets. IS infrastructure, once32established, is easily disseminated to other firms,33and is thus highly mobile.9 Technology skills, as34well as the IS development, cost efficiency, and IS35management/planning capabilities can all be36

acquired via the marketplace; thus, they are alsorelatively mobile. In contrast, the external rela-tionship management, market responsiveness,and IS-business partnership capabilities aregenerally not readily available in factor markets.Therefore, the mobility of these latter threeresources is expected to be low.

IS Resource Attribute Propositions

Two key implications emerge from the precedingdiscussion. First, it is important to recognize thefundamental difference that can exist between aresource�s initial and longer-term impact on afirm�s competitive position. Second, Table 4suggests that both similarities and differencesexist between distinct types of IS resources (cf.Santhanam and Hartono 2003). Each of theseimplications is examined in turn below.

Resource Creation Versus Sustainability

Although various studies have examined how ISresources can potentially create competitiveadvantage for firms, very little of this work haslooked at sustaining that advantage over time. Infact, Kettinger et al. (1994) concluded that manyof the success stories attributed to new ITconfigurations were only successful for a shortperiod of time. Similarly, early arguments sug-gesting that a so-called first-mover advantage, ifmaintained, could lead to sustained advantage(e.g., Feeny and Ives 1990) were later challenged.In order to sustain a first-mover advantage, firmswould need to become perpetual innovators, arole that may be untenable (Kettinger et al. 1994).More focus on the sustainability of IS resources isclearly warranted (Willcocks et al. 1997).10

9Note that this statement assumes that IS hardware is adiscrete and separable part of the firm�s overall ISresource set, and that it can be transferred from one firmto another with relative ease. However, as one reviewernoted, this may only be a recent phenomenon. Old, pre-ERP collections of legacy systems and databases werefar more difficult to either imitate (due to organizationalcomplexity; Barney 1991) or acquire (due to co-specialization; see Barney 2001; Teece 1986).

10Defining precisely what is meant by the term sustain-able is trickier than it might first appear. Barney (1991,p. 102) clearly states that a sustained competitiveadvantage is one that �continues to exist after efforts toduplicate that advantage have ceased,� and that thisdefinition of SCA is equilibrium-based. However, asWiggins and Ruefli (2002, p. 84) note, while Barney�sdefinition is theoretically precise, it has proven to be



As we noted earlier, the ex post notions of1resource imitability, substitutability, and mobility2affect the ex ante notion of rarity. As resources3are copied and traded, they become less rare4(even when they maintain their value and appro-5priability). Because resource rarity is critical to the6maintenance of longer-term competitive advan-7tage, we predict the following:8

9Proposition 1: Only IS resources10that are (1) inimitable, (2) non-substi-11tutable, and (3) imperfectly mobile will12have a positive effect on competitive13position in the longer term.14

Outside-In Versus Spanning Versus15Inside-Out Resources16

17Proposition 1 is very general, and applies to both18IS and non-IS resources. Our earlier review of IS19resources suggests, however, that more specific20predictions can be made for different types of21resources. In particular, visual inspection of22Table 4 suggests that outside-in and spanning23resources tend to have similar resource attributes.24In general, when compared to inside-out re-25sources, they tend to have somewhat greater26value, be rarer (but less appropriable), be more27difficult to imitate or acquire through trade, and28have fewer strategic substitutes. Focusing for a29moment on the first two of these attributes, this30suggests that firms possessing superior external31relations, market responsiveness, IS-business32partnership, and IS management/planning re-33sources are likely to initially outperform com-34petitors that rely more on resources that are35internally focused (e.g., IS infrastructure, tech-36nology skills, IS development, and cost efficient37

operations).11 Furthermore, because it is harderto imitate, acquire, or find strategic substitutes forthe former set of resources than for the latter,outside-in and spanning resources are more likelyto maintain their rarity, and thus support a sus-tainable competitive position for a longer period oftime. Thus:

Proposition 2: Outside-in and span-ning IS resources will have a strongerimpact than inside-out IS resourceson initial competitive position.

Proposition 3: Outside-in and span-ning IS resources will have a moreenduring impact than inside-out ISresources on long-term competitiveposition.

A disproportionate share of the existing workwithin IS looking at the link between IS resourcesand firm performance or competitive position hasfocused either primarily or exclusively on thoseresources that we have characterized above asinside-out resources. However, the precedingdiscussion suggests strongly that the key driversof a longer-term competitive position are morelikely to be the result of superior outside-in andspanning resources, whereas those resourcesthat have received the greatest attention to datetend to be more transitory in their impact onperformance. Thus, one key conclusion to bedrawn from our review is that greater attentionneeds to be paid to all types of IS resources, andnot just those that are internally focused (Strauband Watson 2001). This does not mean thatresources such as IS infrastructure, technologyskills, IS development, and cost efficiency shouldbe ignored, but that their effects on competitiveposition and/or performance should be examinedjointly with those of other, less inwardly focused IS(and non-IS) resources.

�virtually impossible to meaningfully operationalize quan-titatively.� Others (e.g., Jacobsen 1988; Porter 1985)have suggested that a sustained competitive advantageis a competitive advantage that endures for a longerperiod of calendar time. In this section, we adopt thelatter perspective in order to develop empirically testablepropositions. We discuss this point in more detail in thesection on using the RBV in IS research.

11This initial period will typically be relatively short induration (e.g., 6 months to 1 year), representing the timerequired for competitors to imitate or acquire thenecessary resource(s). If these can be quickly attainedor duplicated, then the short-term competitive advantagewill prove to be fleeting, representing little more than afirst-mover advantage.



Potential Moderators12

The discussion thus far has assumed that IS3resources directly affect the performance and/or4competitive advantage of the firm. However, there5is considerable and growing evidence to suggest6that these effects may be more correctly viewed7as both contingent and complementary. We begin8this section by discussing the issue of resource9complementarity in general, and then turn to an10identification of key moderators that we believe11can affect the IS resource-performance relation-12ship.13

Resource Complementarity1415

Conceptual and empirical development of the16RBV as outlined above has resulted in a useful17way to analyze the strategic value of resources.18The further subdivision of resource attributes into19those that help to create a competitive advantage20and to sustain such an advantage once created21helps to account for changes in performance over22time. However, the RBV as currently conceived23fails to adequately consider the fact that resources24rarely act alone in creating or sustaining compe-25titive advantage. This is particularly true of IS26resources that, in almost all cases, act in con-27junction with other firm resources to provide28strategic benefits (Ravichandran and29Lertwongsatien 2002). For example, Powell and30Dent-Micallef (1997) concluded that the comple-31mentary use of IT and human resources lead to32superior firm performance, and Benjamin and33Levinson (1993) concluded that performance34depends on how IT is integrated with organiza-35tional, technical, and business resources.36

37The issue of complementarity is an important one38since it implies a more complex role for IS39resources within the firm (Alavi and Leidner 2001;40Henderson and Venkatraman 1993). In the same41way that IT software is useless without IT hard-42ware (and vice versa), IS resources play an43interdependent role with other firm resources44(Keen 1993; Walton 1989). Yet, the nature of this45role is largely unknown. Kettinger et al. (1994)46

concede that IT-based success rests on the abilityto �fit the pieces together� but offer little guidanceon how this might happen. Jarvenpaa andLeidner (1998) note that IT can generate compe-titive value only if deployed so that it leveragespreexisting business and human resources in thefirm via co-presence or complementarity. Yet, theprocess by which IS resources interact with otherfirm resources is poorly understood, as is thenature of those resources (Ravichandran andLertwongsatien 2002).

While recognized by various RBV theorists asimportant, the role of resource complementaritywithin the theory has not been extensivelydeveloped (Amit and Schoemaker 1993; Dierickxand Cool 1989; Teece 1986). Complementarityrefers to how one resource may influence another,and how the relationship between them affectscompetitive position or performance (Teece 1986).Black and Boal (1994) note that resources canhave one of three possible effects on one another:compensatory, enhancing, or suppressing/ de-stroying. A compensatory relationship existswhen a change in the level of one resource isoffset by a change in the level of anotherresource. An enhancing relationship exists whenone resource magnifies the impact of anotherresource. A suppressing relationship exists whenthe presence of one resource diminishes theimpact of another.

Although not based on resource theory, thestrategic information technology (SIT) area ofresearch is a rich source of evidence that can beused to illustrate the importance of the resourcecomplementarity issue. In particular, a review ofresearch in this area clearly demonstrates thatpossession of superior IS resources is notinevitably linked to enhanced performance. Sincethe 1950s, the influence of IT on organizations(Ackoff 1967; Argyris 1971; Dearden 1972; Gorryand Scott-Morton 1971; Keen 1981; Leavitt andWhisler 1958), both positive and negative, hasbeen hotly debated. The study of informationtechnology as a driver of competitive advantagebegan to take hold in the 1980s (e.g., Bakos andTreacy 1986; McFarlan 1984). A number of casestudies in the mid- to late-1980s appeared to sup-



port the notion of information technology as a1direct contributor of competitive advantage (e.g.,2Brady 1986; Copeland and McKenney 1988; Short3and Ventaktaman 1992). However, more recent4studies have challenged these conclusions by5suggesting contingent effects of IT resources on6performance (e.g., Carroll and Larkin 1992; Ket-7tinger et al. 1994; Powell and Dent-Micallef 1997).8

9Table 5 summarizes the SIT empirical literature to10date that relates IT to performance or competitive11advantage. Two general conclusions can be12drawn from this table. First, for those studies13finding a direct relationship between IT and14performance, the vast majority have reported a15positive effect (e.g., Banker and Kauffman 1991;16Mahmood 1993). In contrast, few studies have17indicated null or negative effects (for exceptions,18see Sager 1988; Venkatraman and Zaheer 1990;19Warner 1987). 20

21Second, a greater number of the SIT studies22summarized in Table 5 have found a contingent23effect of IT on performance than have found a24direct effect. In some cases, SIT has been noted25to have both a direct effect on performance as26well as an interactive effect with other constructs.27In other cases, only the interactive effects are28significant, particularly over the longer term. From29this, it seems clear that information systems30infrequently contribute directly and solely to sus-31tained firm performance. While information tech-32nology may be essential for firms to compete, it33conveys no particular sustainable advantage to34one firm over its rivals. This sentiment is con-35sistent with the strategic necessity hypothesis36proposed by Clemons and Row (1991). 37

38While the SIT research stream is not based on39resource-based logic, its conclusions helpfully40inform the debate around resource comple-41mentarity. From the preceding discussion, it42seems clear that there will be conditions under43which specific IS resources must interact with44other resources (IS and/or non-IS) if they are to45confer competitive advantage on the firm, both in46the immediate and longer terms. However, at47present the relevant set of moderating constructs48is not well established; we suggest that this needs49

to be a top priority of researchers interested inapplying the RBV in an IS context. Indeed, at themoment three competing propositions can bearticulated:

Proposition 4a: IS resources directlyinfluence competitive position andperformance.

Proposition 4b: IS resources influ-ence competitive position and perfor-mance both directly and indirectlythrough interactions with other con-structs (including other resources).

Proposition 4c: IS resources influ-ence competitive position and perfor-mance only indirectly through inter-actions with other constructs (in-cluding other resources).

Although only one of these propositions can becorrect, existing studies do not definitively supportone over the other two. The SIT literature as wellas a number of key resource-based studies withinIS appear to lend support for proposition 4b, whileresearchers are increasingly skeptical of pro-position 4a. The essential question that remainsunanswered�and that deserves researcherattention�is whether proposition 4b or 4c is morecorrect. Clemons and Row (1991) have argued infavor of the latter, but the empirical findings todate do not consistently support this perspective.It is our belief that RBV theory can be useful inhelping researchers to design future studiesaimed at resolving this ongoing debate.

Potential Moderators

Moderators that have the potential to affect therelationship between key IS resources and per-formance can be separated into organizationalfactors (i.e., those that operate within the firm) andenvironmental factors (i.e., those that operate out-side the firm�s boundaries). Top managementcommitment has been identified as a moderatingfactor within the organization. Similarly, environ



Table 5. Summary of the Effects of Strategic Information Technology on Firm1Performance2

Outcome Effect3 Relevant Studies

Direct and Positive4

Strategic information technology has a5direct and positive effect on competitive6advantage or performance7

Banker and Kauffman (1991); Bharadwaj (2000); Clemonsand Weber (1990); Floyd and Woolridge (1990); Jelassi andFiggon (1994); Mahmood (1993); Mahmood and Mann(1993); Mahmood and Soon (1991); Roberts et al. (1990);Silverman (1999); Tavakolion (1989); Tyran et al. (1992);Yoo and Choi (1990)

Direct and Negative8

Strategic information technology has a9negative effect on competitive10advantage or performance11

Warner (1987)

No Effect12

Strategic information technology has no13impact on competitive advantage or14performance15

Sager (1988); Venkatraman and Zaheer (1990)

Contingent Effect16

The effect of strategic information17technology on competitive advantage or18performance depends on other19constructs20

Banker and Kauffman (1988); Carroll and Larkin (1992);Clemons and Row (1988); Clemons and Row (1991);Copeland and McKenney (1988); Feeny and Ives (1990);Henderson and Sifonis (1988); Holland et al. (1992);Johnston and Carrico (1988); Kettinger et al. (1994);Kettinger et al. (1995); King et al. (1989); Lederer and Sethi(1988); Li and Ye (1999); Lindsey et al. (1990); Mann et al.(1991); Neo (1988); Powell and Dent-Micallef (1997); Reichand Benbasat (1990); Schwarzer (1995); Short andVenkatraman (1992)

21

mental turbulence, environmental munificence,22and environmental complexity have been pro-23posed as key moderating environmental factors.24Each of these moderators is discussed in turn25below. 26

Organizational Factors2728

Top Management Commitment to IS. This29construct relates primarily to having commitment30from top management for IS initiatives (Powell and31

Dent-Micallef 1997). In general, a top manage-ment team that promotes, supports, and guidesthe IS function is perceived to enhance the impactof IS resources on performance (Armstrong andSambamurthy 1999; Ross et al. 1996). Forexample, Neo (1988) found that the use of stra-tegic information technologies could lead tostrategic advantage subject to management visionand support. When such support is lacking, ISresources will have little effect on competitiveposition or performance, even when substantialinvestments are made to acquire or develop such



resources. Conversely, strong top management1support should facilitate a strong IS resource-2performance link. Thus:3

4Proposition 5: Strong top manage-5ment commitment to IS will interact6with IS resources to positively affect7performance.8

9Other Organizational Factors. Top manage-10ment commitment has been clearly identified in11the IS literature as affecting the relationship12between IS resources and firm-level competitive13advantage. However, there are other factors that14may also moderate this relationship in specific15contexts. For example, there is some evidence16that organizational structure affects the role of IS17resources within a firm (Fielder et al. 1996; Leifer181988; Sambamurthy and Zmud 1999). Corporate19culture, particularly as it relates to the level of20innovation within a firm, has been shown to influ-21ence the effectiveness of information system22adoption and use (Barley 1990; Orlikowski 1996).23Other factors such as firm size, location, and24industry may also influence how information25systems resources affect firm performance and26competitive advantage. The extent to which these27or other factors play a role in the IS resource-firm28performance relationship could become a subject29of future research.30

Environmental Factors3132

The relationship between IS resources and firm33performance is affected not only by internal34elements such as top management commitment35and corporate culture, but also by environmental36factors. These factors reflect the uncertainty in an37organization�s operating environment. Drawing on38the work of Aldrich (1979), Child (1972), and39Pfeffer and Salancik (1978), Dess and Beard40(1984) concluded that three dimensions of the41environment contribute most to environmental42uncertainty and are thus most likely to consistently43influence firm performance over time: environ-44mental turbulence, munificence, and complexity.45

Environmental Turbulence. In turbulent, fastchanging environments, different assets andcapabilities than those needed in more stableenvironments are required to achieve superiorperformance (Eisenhardt and Martin 2000; Teeceet al. 1997; Volberda 1996). In a relatively stablebusiness environment, the bulk of management�seffort is put toward creating competitive advantagefor the firm. Because the environment in this casechanges slowly, any advantage achieved by a firmis likely to be sustained over an extended periodof time (Miller and Shamsie 1996). By contrast, ina turbulent environment, many advantages areshort-lived as competitive and environmentalpressures quickly undermine any resource valueor heterogeneity (Foss 1998). The ability to stayon top of business trends and to quickly respondto changing market needs is critical for superiorfirm performance in such environments.

Firms faced with more stable environments havea tendency to emphasize static efficiency at theexpense of dynamic efficiency (Ghemawat andCosta 1993). Such firms prefer to exploit existingknowledge and capabilities rather than explorenew possibilities (Leonard-Barton 1992; Levinthaland March 1993; Levitt and March 1988). Ingeneral, these will be inside-out (i.e., IT tech-nology skills, IT development, cost efficiency, ISinfrastructure) rather than outside-in or spanningresources. Thus, in more stable environments,inside-out resources will be emphasized and be astronger determinant than outside-in or spanningresources of superior firm performance.

Proposition 6a: The re la t ionshipbetween inside-out resources andperformance will be stronger for firmsin stable business environments thanfor firms in turbulent business en-vironments; but

Proposition 6b: The re la t ionsh ipbetween outside-in resources andperformance will be stronger for firmsin turbulent business environmentsthan for firms in stable businessenvironments; and



Proposition 6c: The relationship1between spanning resources and2performance will be stronger for firms3in turbulent business environments4than for firms in stable business5environments.6

7Environmental Munificence. Environmental8munificence refers to the extent to which a busi-9ness environment can support sustained growth10(Dess and Beard 1984). Environments that are11mature or shrinking are normally characterized by12low levels of munificence, whereas rapidly growing13markets are typically associated with a high14degree of munificence. When munificence is low,15stiff competition often exists that can adversely16affect the attainment of organizational goals, or17even organizational survival (Toole 1994). In such18environments, firms frequently strive to maintain19profits by maximizing internal efficiencies. Inside-20out IS resources such as cost effective IS opera-21tions play a key role in affecting competitive22position in these cases by reducing costs and23streamlining operations. In contrast, while24outside-in and spanning IS resources can poten-25tially support organizational goals by helping to26monitor changes in the external environment to27coordinate internal responses to such changes,28the absence of munificence puts pressure on29organizations to reduce investments in outside-in30and spanning resources. Furthermore, since low31munificence environments tend to be relatively32mature, firms may be tempted to assume a static33competitive picture and to focus more attention on34inside-out capabilities that support improvements35in firm efficiency. 36

37Markets that are munificent tend to support38organizational growth despite imperfect firm39strategy. Such markets are relatively forgiving,40with firms able to be competitive even when they41do not possess superior resources. From this it42follows that possession of superior inside-out43capabilities will be substantially less critical when44environmental munificence is high than when it is45low. On the other hand, it is not clear how envi-46ronmental munificence affects the relationships47between both outside-in and spanning resources48

and a firm�s competitive position. Thus, we onlypropose the following moderating effect forenvironmental munificence (although we believethat its effect on all three types of resourcesshould be studied empirically):

Proposition 7: The relationshipbetween inside-out resources andperformance will be stronger for firmsin low munificent environments thanfor firms in high munificent envi-ronments.

Environmental Complexity. Environmentalcomplexity refers to the heterogeneity and rangeof an industry and/or an organization�s activities(Child 1972). It can refer variously to the numberof inputs and outputs required for an organi-zation�s operations, the number and types ofsuppliers, consumers and competitors that itinteracts with, and so on. Complexity makes itmore difficult for firms to both identify andunderstand the key drivers of performance. Fromthe RBV perspective, such ambiguity makes itmore difficult for competing firms to identify thesecritical resources for potential imitation, acqui-sition, or substitution. Thus, under conditions ofhigh environmental complexity, the link betweenkey resources and superior performance will tendto be stronger and more enduring.

This effect is likely to be important for all threetypes of resources. Organizations operating inhighly complex environments must rely on efficientand effective systems to manage information andknowledge. When complexity is high, outside-inand spanning capabilities help the firm to absorbexternal information and coordinate its competitiveresponses, but inside-out IS capabilities will alsobe important. For example, a robust and flexibleIS infrastructure coupled with strong IS technicalskills may help a firm manage its operations moreefficiently in the face of environmental complexity.Thus:

Proposition 8a: The relationshipbetween inside-out resources andperformance will be stronger for firms



in high complexity environments than1for firms in low complexity environ-2ments; and3

4Proposition 8b: The relationship5between outside-in resources and6performance will be stronger for firms7in high complexity environments than8for firms in low complexity environ-9ments; and10

11Proposition 8c: The relationship12between spanning resources and13performance will be strong for firms14in high complexity environments than15for firms in low complexity environ-16ments.17

Using the RBV in18IS Research19

20We believe that application of the RBV to IS21contexts has the potential to identify key drivers of22superior business performance. At the same time,23use of the RBV introduces new considerations24that must be dealt with by researchers. In this25section, we discuss three such considerations:26choice of an appropriate level of resource speci-27ficity, choice of an outcome construct, and28modifying the RBV framework over time by29introducing dynamic elements into it.30

Resource Specificity3132

How broadly or narrowly a resource is defined can33have a substantial effect on its usefulness (Pen-34rose 1959). However, on a practical basis, it is35not always clear to researchers what level of36specificity the problem requires. For example, a37resource such as the �ability to program C++� is a38good deal more precise that the �ability to develop39software� or �IS technical skills.� Examples of40both broadly and narrowly defined resources exist41in the IS literature. For example, in order to42

denote the ability to effective deal with outsideparties, Bharadwaj et al. (1998) used oneresource named manage external linkages, whileFeeny and Willcocks (1998) made a finerdistinction to include contract facilitation, informedbuying, vendor development, and contractmonitoring all as separate resources. A singleresource is frequently used to denote the level ofphysical IT infrastructure within a firm (Bharadwajet al. 1988; Ross et al. 1996). By contrast,Benjamin and Levinson (1993) divided ITinfrastructure into two separate resources: hardinfrastructure and soft infrastructure; and Lopesand Galletta (1997) further divided hard infra-structure into storage and transmission assets andinformation processing capability.

Broadly defined resources have the advantage ofbeing readily generalized beyond a specificresearch situation, but can lose their explanatoryvalue when applied to overly narrow or specificsituations. Their utility comes at a more generallevel of abstraction. For example, Miller andShamsie (1996) found that, in unstable environ-ments, property-based assets such as physicalinfrastructure were less likely to positively affectfinancial performance than more specificallydefined knowledge-based assets such as skillsand know-how. Broad definitions explore whatresource characteristics are important, and thusmay be applicable across multiple resources andresearch settings. At the same time, however,reliance on a high level of abstraction mayinappropriately combine distinct resources undera single label, thereby weakening the researcher�sability to uncover the true relationships that existbetween IS resources and key outcomes.

Resources can also be defined narrowly.Typically, these studies define one or tworesources in a particular context and explore therelationship between those resources and arelevant dependent variable. For example,Zaheer and Zaheer (1997) explored the linkbetween alertness and responsiveness, andmarket influence in global currency markets.Others have used general resource cate-gorizations at the conceptual level, but study-



specific operationalizations in the data collection1stage (e.g., Henderson and Cockburn 1994;2Powell and Dent-Micallef 1996). Studies of this3type are useful within the limited scope of the4research context, but there is often little a priori5reason to expect that results from these studies6can be generalized more broadly. In a study of7the pharmaceutical industry, Silverman (1999)8found that the RBV was validated with very narrow9resource definitions. Narrow definitions help to10fine-tune our understanding of specific resources11and their effect on competitive position and12performance in given settings. The dangers of13using resources that are overly narrow in their14definitions are twofold: any resultant findings are15likely to be difficult to generalize to new contexts,16and the list of potentially relevant resources can17quickly become prohibitively lengthy for practical18research use.19

20Most IS researchers making use of the RBV have21tried to strike a balance between these two22extremes (e.g., see Bharadwaj et al. 1998;23Marchand et al. 2000; van der Heijden 2000). The24appropriate level of resource specificity, in fact,25will vary according to the objectives of the study.26For research that examines specific technologies27or specific industries, a set of more narrowly28defined resources is appropriate. By contrast,29wider and more inclusive definitions are more30useful for research employing a wide scope. As a31general rule, we recommend that researchers err32on the side of generalizability. Narrow definitions33of IS resources may suffer from reduced rele-34vance as technologies, systems, and skills35become obsolete over time. As tools to facilitate36cross-disciplinary study and the development of a37cumulative research tradition, narrow definitions38are less effective than those that are more general39and inclusive. Thus, programming skills or IS40technical skills may be preferable as IS resources41to Java programming skills or object-oriented42programming skills. The resources described43earlier in this paper are all mid-level constructs44that are reasonably specific while also permitting45an acceptable level of generalizability across46studies.47

Choice of an Outcome Construct

The dependent variable in IS research has beena point of significant debate in the field (e.g.,Delone and McLean 1992; Seddon 1997). Manydependent variables are used in IS research, andit is often difficult to relate one set of findings toanother. In contrast, IS work using the RBV hastended to be more focused, since the primaryoutcome of interest is sustained competitiveadvantage (SCA). As noted earlier, Barney (1991,p. 102) originally suggested that SCA �continuesto exist after efforts to duplicate that advantagehave ceased,� a definition that assumes eventualequilibrium. However, more recently researchershave argued that in many industries long-runequilibria simply do not exist (e.g., Barney 2001;Dickson 1992; Hunt and Morgan 1995). Further-more, SCA has proved to be very difficult tooperationalize, and researchers employing theRBV have resorted to looking instead at relateddependent constructs such as above-averageperformance in the long run (Porter 1985; Wigginsand Ruefli 2002).

Given the preceding discussion, we suggest thatany dependent variable used in an RBV-basedstudy needs to exhibit three key attributes: (1) itshould provide an assessment of performance,(2) it should incorporate a competitive assessmentelement, and (3) it should address the notion ofperformance over time. Return on investment(ROI) and assets (ROA), sales, and market shareare commonly used performance metrics in thestrategic management literature (e.g., Bharadwaj2000; Robins and Wiersema 1995). Yet, limitingRBV research to firm-level dependent variablesmay be overly restrictive, particularly in the caseof IS resources that affect the firm at many levels.Firm performance is affected by a multitude offactors; thus, use of a single firm-level dependentvariable may not capture this broader context (Rayet al. 2001). The strategic information technologyresearch stream has found strong evidence for anindirect role for IT in firm performance. The basiclogic is that IT affects other resources or pro-cesses which, in turn, lead to competitiveadvantage. Given this role, it is appropriate to



measure the effect IS resources have on other1resources or processes. Therefore, IS2researchers may find it particularly beneficial to3use intermediate-level dependent variables at the4business process, department, or project level5(e.g., Ray et al. 2001). 6

7Second, there should be some sense of8comparativeness, assessing performance relative9to that enjoyed by key competitors. Taken in10isolation, a firm�s performance, whether strong or11weak, contains only limited meaning. For12example, a firm may enjoy strong share growth,13return on investment, and profit but actually lag14key competitors on those measures. Conversely,15traditional performance metrics may seem16disappointing until compared to an industry17average that is significantly worse. Unfortunately,18to date this aspect of firm performance is the one19that has been least emphasized by IS researchers20using the RBV. Thus, we encourage researchers21to take fuller advantage of competitive assess-22ment tools when measuring firm performance so23as to provide a richer and more complete account24of how the firm�s resources influence its compe-25titive position. 26

27Finally, any performance advantage must be28sustained over time. On a practical level, this29means that some effort must be made to track the30dependent variable of interest over time to avoid31drawing invalid conclusions about the durability32and sustainability of firm resources, an important33aspect of the resource-based view (Kettinger et al.341994). There is little doubt that some competitive35advantages endure for extended periods. For36example, Wiggins and Ruefli (2002) estimated37that between 2 and 5 percent of the firms they38studied had enjoyed at least 10 years of com-39petitive superiority. Some recent IS studies using40the RBV have attempted to incorporate time41elements into their design and analysis. For42example, Bharadwaj (2000) tracked ROA and43ROS over a 4 year period and Jarvenpaa and44Leidner (1998) conducted interviews over a 2 year45period. We suggest that this should be an46important consideration for all future IS studies47that make use of the RBV.48

A key question that remains is when does acompetitive advantage become long term orsustained? The logic of the RBV implies that afirm�s competitive advantage will be sustained foras long as its resources are valuable and itscompetitors fail to acquire, imitate, or findsubstitutes for them. Beyond this central insight,the issue of the length of sustainability has beensidestepped by much of the mainstream RBVliterature. There is a good reason for this. Lengthof sustainability is contingent on a wide variety offactors. Barney (1991) hints at some of thesefactors. Social complexity and causal ambiguitymake it difficult for competitors to imitateresources as the exact process by which thecompetitive advantage is achieved is not alwaysclear. Environmental turbulence and complexitymay also affect the extent to which a competitiveadvantage is sustained. For example, Miller andShamsie (1996) note that in times of relativestability an advantage may be sustained for a longperiod of time, but that during turbulent periodsany advantages may be short-lived. Eisenhardtand Martin (2000) go even further, arguing that invery turbulent environments sustainability cannotbe achieved without constant innovation.

When examining information technology-basedstrategic advantages, Hidding (2001) suggestedthat product or service type is a primary factor indetermining how long an advantage can besustained. Long cycle products, typically charac-terized by high consumer lock-in, may be able tosustain advantages for 7 to 10 years or more.Examples of long-cycle products include localphone services, airport hubs, and complex infor-mation technology products like operating sys-tems. Inside-out IS capabilities like cost effectiveoperations and IS infrastructure can support longcycle products by enhancing operating effi-ciencies. Standard cycle products, characterizedby high-volumes and low-margins, are able tosustain advantages for 4 to 6 years. Standard-cycle products can be supported by all of the ISresources. Short-cycle products, with very shortproduction cycles, are able to sustain advantagesfor less than 3 years. Examples of short-cycleproducts include microprocessors and many



information products. By supporting organiza-1tional change and renewal, outside-in and2spanning capabilities are able to support short3cycle products. 4

5Information systems resources such as those6described earlier in this review can be employed7by firms of any size, in any industry, producing any8type of product or service. Thus, too many con-9tingencies exist to generalize about how long a10competitive advantage may last. It is merely11possible to state that IS resources can support�12at least potentially�both short-term and long-term13advantages.14

Dynamic Resources1516

A growing body of literature seeks to more17formally incorporate the competitive environment18into resource-based thinking. One focus of this19research has been on the distinction between20stable and dynamic environments. Some21resources are more useful to the firm in relatively22stable environments while others are more useful23in dynamic, unstable, or volatile environments24(Miller and Shamsie 1996). The former have been25dubbed core resources, while the latter have been26called dynamic resources (Eisenhardt and Martin272000; Teece et al. 1997).28

29The distinction between these two resource types30represents an extension of the traditional static31RBV conceptualization. The resource-based view32has been criticized for ignoring factors sur-33rounding resources, instead assuming that they34simply exist (Stinchcombe 2000). Considerations35such as how resources are developed, how they36are integrated within the firm, and how they are37released have been under-explored in the litera-38ture. The mechanisms underlying how exactly key39resources benefit the firm are also poorly specified40in the RBV. The concept of dynamic resources41attempts to bridge these gaps by adopting a42process approach: by acting as a buffer between43core resources and the changing business44environment, dynamic resources help a firm adjust45its resource mix and thereby maintain the sustain-46

ability of the firm�s competitive advantage, whichotherwise might be quickly eroded (Eisenhardtand Martin 2000; Teece et al. 1997; Volberba1996).

Although IS researchers using the RBV have nottypically looked at dynamic resources, a study byJarvenpaa and Leidner (1998) suggests that ISresources may take on many of the attributes ofdynamic resources, and thus may be particularlyuseful to firms operating in rapidly changingenvironments. Thus, even if IS resources do notdirectly lead the firm to a position of superior SCA,they may nonetheless be critical to the firm�slonger-term competitiveness in unstable environ-ments if they help it to develop, add, integrate,and release other key resources over time. Thedynamic resources perspective provides anavenue for renewed relevance of IS resourcesbeyond their traditional interpretation within thecontext of the RBV. This suggests that IS studiesof resources (both IS and non-IS) will beparticularly informative when conducted in highlyturbulent business environments.

Summary and Conclusions

The resource-based view of the firm is a robusttheory that has received wide acceptance in othermanagement fields. While it has been used on anumber of occasions in IS research, there hasbeen no comprehensive effort to describe ordefend its use in an IS context. The purpose ofthis paper has been to provide an overview of theRBV for those who wish to understand and usethe theory in IS research.

The resource-based view of the firm is a usefultool for researchers to understand if, and how,particular parts of the firm affect the firm at large.Many parts have been extensively researched.For example, brands, patents, product develop-ment practices, knowledge management capa-bilities, and the like have been extensivelyresearched in the management disciplines. Otherparts are less well understood. As we havesuggested here, the RBV provides a way for IS



researchers to understand the role of information1system within the firm. Once the role of IS2resources has been explored and defined, it can3be compared on equal terms with the roles played4by other firm resources to eventually form an5integrated understanding of long-term firm com-6petitiveness.7

8The resource-based view makes a useful9distinction between information technology and10information systems. The former is asset-based,11while the latter comprises a mixture of assets and12capabilities formed around the productive use of13information technology. It is our contention that14the RBV, through its focus on attributes and its15recognition of the importance of resource com-16plementarity, will uncover an enhanced role for17information systems in sustained firm compe-18titiveness. And it is our hope that the discussions,19issues, and ideas set forth in the paper will20stimulate interest and research incorporating the21RBV in the field of information systems. 22

Acknowledgements2324

Both authors gratefully acknowledge the financial25support of the Schulich School of Business, the26Richard Ivey School of Business, the Katz27Graduate School of Business, and the Social28Sciences and Humanities Research Council of29Canada. Insightful comments on earlier versions30of the paper were received from Abhijit Ghopal,31Chris Higgins, Sid Huff, Derrick Neufeld, John32Prescott and Gautam Ray. We would particularly33like to thank Jay Barney and Christine Oliver for34their substantial contribution and support. Finally,35this paper benefitted greatly from the diligent and36tireless efforts of the senior editor, Jane Webster,37and three anonymous reviewers.38

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About the Authors

Michael Wade is an Assistant Professor ofOperations Management and Information Systemsat the Schulich School of Business, YorkUniversity, Toronto. He received a Ph.D. inManagement Information Systems from the Uni-versity of Western Ontario in 2002. His currentresearch focuses on the strategic use of infor-mation systems in turbulent environments.

John Hulland is Associate Professor of Marketingat the Katz School of Business, University ofPittsburgh. He received a Ph.D. in Marketing fromMassachusetts Institute of Technology in 1990,and has published his research in a variety ofjournals, including the Journal of Marketing,Marketing Science, Strategic Management Jour-nal, Organization Science, and Information Sys-tems Research. His current interests centeraround the resource-based view of the firm anduse of the partial least squares technique inapplied management settings.



Appendix1

Resource-Based Studies in IS Research2

Source/Title3 Paper Type FindingsComments on the

Use of the RBVSustaining it Advantage:4The Role of Structural5Differences (Clemons6and Row 1991)7

Conceptual Argues that IT cannot, in andof itself, lead to SCA, but mayassist other resources in doingso. Referred to as the stra-tegic necessity hypothesis.

Very good concep-tual work. Onlyloosely based on theRBV.

Information Technology8and Sustained Compe-9titive Advantage: A10Resource-based11Analysis Advantage12(Mata et al. 1995)13

Conceptual Considers whether four ISresources lead to SCA underthe resource-based view. Theresources are access tocapital, proprietary technology,technical IT skills, and mana-gerial IT skills. Using logicalRBV arguments, finds thatmanagerial IT skills are theonly resource that leads toSCA.

Good conceptualdevelopment. Logical rather thanempirical argumentsmade for appro-priateness ofresources. Resourcelist not justified.

Organizational Learning14and Core Capabilities15Development: The Role16of it (Andreu and Ciborra171996)18

Conceptual Looks at the role IT plays indeveloping capabilities andcompetencies within the firm. Describes the role of IT withinthe context of organizationallearning.

RBV not measured.

Develop Long-Term19Competitiveness20Through IT Assets (Ross21et al. 1996)22

Conceptual Defines three IT assets: IThuman resources asset,technology asset, andrelationship asset. Theseassets in combination with ITprocesses lead to SCA.

Loosely based on theRBV. RBV notactually measured. No empirical work.

Information Technology23as Competitive Advan-24tage: The Role of25Human, Business, and26Technology Resources27(Powell and Dent-28Micallef 1997)29

Empirical(retail industrysurvey)

Supports the strategic neces-sity hypothesis. Finds that ITalone cannot produce SCA,but that IT can leverage otherintangible, complementaryhuman and businessresources to gain SCA.

Strong empiricalcontent althoughRBV not measureddirectly.



Catching the Wave:1Alertness, Responsive-2ness, and Market3Influence in Global4Electronic Networks5(Zaheer and Zaheer61997)7

Empirical Uses an RBV framework toshow that alertness andresponsiveness lead to marketinfluence in the global financeindustry.

Strong empiricalwork. SCA is not themain dependentvariable. RBV notmeasured.

Resource-Based Theory8and a Structural Per-9spective of Strategy10Applied to the Provision11of Internet Services12(Lopes and Galletta131997)14

Conceptual Uses RBV and structural per-spective of strategy to developa series of propositions aboutonline information services. Divides resources into knowl-edge-based and property-based types.

Draws on Miller andShamsie (1996) forconceptualgrounding. Hypo-thesizes that knowl-edge-based re-sources are morevaluable in onlinesetting. No testing ofhypotheses.

IT Capabilities: Theo-15retical Perspectives and16Empirical Operationali-17zation (Bharadwaj et al.181998)19

Empirical Describes the formation of anIT capability construct with sixelements: IT businesspartnerships, external ITlinkages, business IT strategicthinking, IT business processintegration, IT management,and IT infrastructure.

Does not test the linkbetween capabilityconstruct andperformance or SCA.

Core IS Capabilities for20Exploiting Information21Technology (Feeny and22Willcocks 1998)23

Conceptual Nine core IS capabilities areidentified which are organizedinto four categories: businessand IT vision, delivery of ISservices, design of IT archi-tecture, and core IS capabi-lities. Capabilities are mappedonto skills and values.

Interesting con-ceptual work. Practitioner focus.Not directly linked toRBV theory. Non-empirical.

An Information Company24in Mexico: Extending the25RBV to a Developing26Country Context27(Jarvenpaa and Leidner281998)29

Empirical(case study)

Mixed support for the RBVfound in emerging countrycontext.

RBV not measureddirectly. Resourceattributes considered.

Information Technology30Assimilation in Forms: 31The Influence of Senior32Leadership and IT Infra-33structures (Armstrong34and Sambamurthy 1999)35

Empirical(survey)

Looks at the influences ofquality of senior leadership,sophistication of IT infrastruc-tures and organizational sizeon IT assimilation.

Conceptual modelonly loosely basedon the RBV. RBVnot actually mea-sured.



Strategic Context and1Patterns of IT Infrastruc-2ture Capability (Broad-3bent, Weill and Neo41999)5

Empirical(survey)

More extensive IT infrastruc-ture capability found in firmswhere products changedquickly and the implemen-tation of long-term strategieswas tracked over time.

Resource View Theory6Analysis of SAP as a7Source of Competitive8Advantage for Firms9(Pereira 1999)10

Conceptual Explores whether SAP couldbe considered a determinantof SCA in the RBV sense. Determines that it could, ifmanaged properly.

Non-empirical. Loosely based on theRBV. Some attri-butes justified withlogical arguments.

Building Competitive11Advantage Through12Information Systems: 13The Organizational14Information Quotient15(Service and Maddux161999)17

Conceptual Develops a series of successcomponents through which ITcan lead to SCA. Evaluationof these components leads toan organizational informationquotient.

RBV logic indirectlyapplied.

A Resource-Based Per-18spective on Information19Technology Capability20and Firm Technology21Capability and Firm22Performance: An23Empirical Investigation24(Bharadwaj 2000)25

Empirical(archival data,matchedpairs)

Performance of firms whichare rated to have superior ITcapability in magazine surveycompared to firms which donot. Performance of superiorIT capability firms found to behigher.

Strong conceptualdevelopment of ITcapability construct. Construct measuresnot used, however, inempirical analysis.

Capabilities, Business26Processes, and Compe-27titive Advantage: The28Impact of Information29Technology on Customer30Satisfaction in the North31American Insurance32Industry (Ray et al.332001)34

Empirical(survey)

Study finds that managerial ITknowledge and service climatepositively affect customerservice performance.

Supportive of theRBV. Argues thatRBV works at thelevel of businessprocesses as well asat the firm level.

Information Technology35and Competitive Advan-36tage: A Process37Oriented Assessment38(Ray et al. 2001)39

Empirical(survey)

Study finds that managerial ITknowledge leads to enhancedcustomer service performance but flexibility of IT infrastruc-ture, IT technical skills, and ITapplications do not.

Supportive of theRBV.

Sustaining Strategic it40Advantage in the Infor-41mation Age: How Stra-42tegy Paradigms Differ by43Speed (Hidding 2001)44

Conceptual Argues for a strategic modelthat differentiates among ITtypes. IS strategy shoulddepend on the length of theproduct cycle (ecologies).

Attempts to extendthe RBV to make itmore useful in quan-tifying sustainabilityof competitive advan-tage.



Information Technology,1Core Competencies, and2Sustained Competitive3Advantage (Byrd 2001)4

Conceptual Argues that IT infrastructureflexibility yields sustainedcompetitive advantage as anenabler of firm-specific corecompetencies.

Loosely based onRBV arguments.

Beyond Sabre: An5Empirical Test of6Expertise Exploitation in7Electronic Channels8(Christianse and9Venkatraman 2002)10

Empirical Finds that RBV is moreeffective than TransactionCost Economics at explainingthe creation of expertise. Finds technology lock in noteffective.

Constructs notexplicitly opera-tionalized asresources.

Membership Size, Com-11munication Activity,12Sustainability: A13Resource-Based Model14of Online Social15Structures (Butler 2001)16

Empirical Uses RBV to look at onlinesocial structures. Findscomplex relationships betweenmembership size, communica-tion activity, and online struc-ture sustainability.

Uses resource-basedlogic to frame con-ceptual arguments.Develops notion ofsustainability. Doesnot operationalizeresources usingresource attributes.

Impact of Information17Systems Resources and18Capabilities on Firm19Performance: A20Resource-Based Per-21spective (Ravichandran22and Lertwongsatien232002)24

Empirical Examines complementarityfrom a resource-basedperspective. Finds preliminarysupport for the relationshipbetween IT and non-IT firmcapabilities in achievingsuperior firm performance.

IT capability mea-sures (unspecified)used in analysis. Link made to firmsperformance, notSCA.

Diversification and25Performance of26Japanese IT Subsi-27diaries: A Resource-28Based View (Wade and29Gravill 2003)30

Empirical Finds that Japanese IT firmsthat diversify internationallybased on resource strengthsoutperform those withunrelated portfolios.

Uses the RBV as aguiding conceptualframework. Does notoperationalizeresources or testresource attributesdirectly.

Issues in Linking Infor-31mation Technology32Capability to Firm Per-33formance (Santhanam34and Hartono 2003)35

Empirical Extends and confirmsBharadwaj (2000). Finds thatfirms with superior ITcapability also exhibit superiorfirm performance.

IT capability notoperationalized,resource attributesnot used in analysis. Multidimensionaldependent constructused. Calls oncontinued use ofRBV in IS research.

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