A Resource-Based View: How Information Technology Creates Sustainable Competitive Advantage to Improve Organizations

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1 A Resource-Based View: How Information Technology Creates Sustainable Competitive Advantage to Improve Organizations Helal Mouneer Alalie 1 Yoshifumi Harada 2 Idris Md Noor 3 Abstract The present paper is a combination of review of literature available in the area of Resource-Based View, Information Technology and Sustainable Competitive Advantage. This study aims to identify the role of A Resource-Based View and information technology to Creates competitive advantages of organizations. Information technology plays vital role in the world. Many changes have been occurring in society with the Information Technology. It is still difficult to judge the effect of IT on business performance and competitiveness. Many scholars have sought to contribute by showing the impact of Information technology on firm performance, and emphasized its potential in creating a sustainable competitive advantage. This paper attempts to ascertain if Information technology can be a source of competitive advantage. Keywords: Resource-Based View, Information Technology, Sustainable Competitive Advantage. INTRODUCTION One of the most important challenges in the domain of organizational behavior in this era is rapid progress and changes in the area of information technology. Based on scientific opinions of most scientists, application of information technology leads to increased knowledge and awareness in employees and enriches the content of occupations (Sarafizadeh, 2009). Use of information technology in addition to influencing the nature of work and its environment, changes the way organizations compete. Information technology has led to development and improvement of organizations internal information, decreased internal expenditures and facilitation of production. Decreased cost has even provided opportunity for profiting at lower prices of products (Breznik, 2012). By fast action in getting the product to the market access to profits is achieved more rapidly. id- jamrpublication@gmail.com Page 1

2 Information technology helps the process of marketing and sale and rapidity of action in marketing particularly in cases where new products lead to decreased prices and obliteration of opportunities is enhanced (Zargar, Mahmoud, 2009). Resource-Based View According to (Wright, McMahan, & McWilliams, 1994) a resource is "anything which could be thought of as a strength or weakness of a given firm...those tangible assets which are tied semi permanently to the firm. Barney expands this definition to include "all assets, capabilities, organizational processes, firm attributes, information, knowledge, etc. controlled by a firm that enable the firm to conceive of and implement strategies that improve its efficiency and effectiveness" (Wernerfelt, 1984). According to Barney, resources fall into three categories: physical capital resources, human capital resources, and organizational capital resources. Physical capital resources consist of such things as the firm's plant and equipment, technology and geographic location. Human capital resources include such things as the experience, judgement, and intelligence of the individual managers and workers in the firm. Organizational capital resources consist of such things as the firm's structure, planning, controlling and coordinating systems, and the informal relations among groups within the firm and between the firm and other firms in its environment (Wright et al., 1994). Concept of information technology Both (Laudon & Laudon 2000),(Hellriegel et al 2001), (daft 2001) and (Janisse 2002) identified several concepts of information technology as one of the means available to managers to address the problems of change in the internal and external environments, Procedures, means, machines, techniques, which are used to convert inputs (materials, objects and information) to outputs (products and services). It can be expressed as the methods used to transform organizational inputs such as materials, ideas and information into outputs such as services. Technology is the practical applications of knowledge, especially in the specialized fields and in the capabilities provided through the practical applications of knowledge and through the methods of accomplishing the basic tasks through the use of processes: Technology, curricula and knowledge. Information technology is also defined as a branch of technology related to the study, use and processing of data for automatic retrieval, storage and organization. Transfer, control, presentation, conversion, exchange, and delivery (Witten & Cameron, 2008). Based on the above, it can be said that information technology includes three dimensions: - First: Human dimension: Includes the benefit of the human resource and able to use equipment and technological equipment to complete the work accurately. Thus, making the most of the necessary information that helps managers in the decision-making process in time. - Second: Behavioral dimension: Which includes the use of information technology, and contributes to many things, including reducing the cost of production, the use of modern methods of work, and provides better products and services to customers. Through hardware, software, and communication networks that are used to deliver high-quality work, being capable of compiling, analyzing, organizing, storing and retrieving large quantities of data and information when needed very quickly. id- jamrpublication@gmail.com Page 2

3 - Third: Technical dimension: Which includes the development and use of information technology through hardware, software, applications, procedures and systems involved in the processing such data and information. (Thomes, D., 2004). Information Technology and Sustainable Competitive Advantage The constant changes in business environments, the Information Technology revolution and the scientific and technological advancements are the main reasons which led business organizations to pay attention to the competitive advantage and reconsider their competitive status. Information Technology has become an important method to achieve and reinforce competitive advantage for many organizations (Al-Houri and Abdulsattar, 2013). Accordingly, organization managements need to enhance their understanding of the importance of Information Technology, alongside other means, as an essential tool for achieving and supporting competitive advantage through cutting costs, improving quality and boosting productivity (Sulaimani, 2012). Chen and Tsou (2007) conducted a study on financial companies in Taiwan and found that the adoption of Information Technology had positive impacts on the quality of services provided by such companies, thus increasing their competitive advantage (Chen & Tsou, 2007). Also, Sulaimani (2012) found in her study of Air Algeria that the use of Information Technology had a significant impact on improving the airline's performance and achieving competitive advantage (AL-Shbiel & NH Al-Olimat, 2016). The Resource-Based View and Sustainable Competitive Advantage The resource-based view (RBV) differs from the traditional industrial economics theory of the firm, which depends heavily upon alignment with external environmental forces in explaining firm profitability. The RBV, on the other hand, posits that the firm s internal resources are the primary predictors of superior financial performance (Wernerfelt, 1984). Each firm is capable of possessing heterogeneous resources that are difficult to replicate and are not perfectly mobile. If these resources provide a marketplace advantage that cannot easily be duplicated, they have the potential for providing a sustainable competitive advantage (Kearns & Lederer, 2003). The contribution of the RBV is the idea that firms should focus attention on developing internal assets and processes (Grant, 1991). Accordingly, firms should foster processes that are inimitable and leverage core resources. For firms dependent upon information, processes that assimilate and use information in a superior manner have the potential for creating a sustainable competitive advantage (Kearns & Lederer, 2003). Benefits of IT and its importance to the organization Organizations that wish to achieve sustainable competitive advantage need to employ the information technology they support to achieve many benefits, including the benefits pointed by (Reboldo et al. 2005), (Turban & Leidner 2008), (Lobez et al, 2009) which is Providing fast and accurate communication inside and outside the organization with business partners, storing large amounts of information in accessible locations and small spaces, allowing individuals to obtain large amounts of information, increasing the efficiency and effectiveness of the knowledge resource through id- jamrpublication@gmail.com Page 3

4 networking, Communication and coordination between them, as well as the completion of all the mention previously at a much lower cost Which would have been done manually. The use of information technology is to increase knowledge and awareness of staff and the enrichment of work and organizations can give staff more power and capacity through information technology. In particular, the application of information technology facilitates and reduces the scope of management oversight, which reduces the number of administrative levels in the organization., and reduce the time used by human resources. In addition, the expansion of managers of operations through the use of automated systems, and the performance of managers and organizations to significantly improve. It would also reduce the number of managers from the middle and supervisory level. (Sarafizadeh, 2009). (Basherab et al., 2007) (Ramanathan, 2009) and (Schniderjans et al. 2010) have shown that they also enjoy the benefits of information technology in a highly efficient and to achieve the objectives of their use in companies, and amongst them: 1. Achieve high degree of satisfaction to managers and staff by reducing defects and errors that occur in the administrative and management processes as it generates expertise in human resources for specialized functions in the organization, which leads to increased efficiency of human resources. 2. Technology is a good alternative to the organization to improve the quality of services provided, and can be identified by the satisfaction of users and customers as it helps deliver their products and services at the planned time. 3. Responding effectively to the change that occurs in competing organizations and companies. 4. It is a source of exploration of the environment forces (internal and external) in the organization through which the availability of new knowledge that gives a competitive advantage. 5. High speed in performance and accuracy through the use of modern automation and automation by storing large amounts of information in a way that is easy to access and retrieve. CONCLUSION In today s environment a Resource-Based View represents a critical success factor in Information Technology and plays a dominant role in the decision-making process. The understanding, interpretation and use of Information Technology may enable fundamentals to be created so as to sustain competitive advantage. Information technology plays vital role in the world. Many changes have been occurring in society with the Information Technology. The study had exited the most important recommendations include: - 1. It s necessary to give officials in the organizations increased attention to A Resource-Based View, and work to establish a specialized department for information technology 2. Deepen understanding and awareness of officials in the organizations to the great challenges, continuous obstacles and intense competition faced by the organizations, present and future. id- jamrpublication@gmail.com Page 4

5 References: AL-Shbiel, S., & NH Al-Olimat. (2016). Impact of Information Technology on Competitive Advantage in Jordanian Commercial Banks. Accounting Information System Effectiveness as a Mediating Variable. International Journal of Academic Research in Accounting, Finance and Management Sciences, 6(3), Breznik, L. idij. (2012). CAN INFORMATION TECHNOLOGY BE A SOURCE OF COMPETITIVE ADVANTAGE? Economic and Business Review. Chen, J. S., & Tsou, H. T. (2007). Information technology adoption for service innovation and firm performance. In Proceedings - ICSSSM 06: 2006 International Conference on Service Systems and Service Management. Kearns, G. S., & Lederer, A. L. (2003). A resource-based view of strategic IT alignment: How knowledge sharing creates competitive advantage. Decision Sciences. Wernerfelt, B. (1984). A resource based view of the firm. Strategic Management Journal. Wright, P. M., McMahan, G. C., & McWilliams, A. (1994). Human resources and sustained competitive advantage: A resource-based perspective. The International Journal of Human Resource Management. id- jamrpublication@gmail.com Page 5