Firm Strategy and the Internet in U.S. Commercial Banking.

Author List: Goh, Kim Huat; Kauffman, Robert J.;

Journal of Management Information Systems, 2013, Volume 30, Issue 2, Page 9/1/1940.

As information technology (IT) becomes more accessible, sustaining any competitive advantage from it becomes challenging. This has caused some critics to dismiss IT as a less valuable resource. We argue that, in addition to being able to generate strategic advantage, IT should also be viewed as a strategic necessity that prevents competitive disadvantage in rapidly changing business environments. We test a set of hypotheses on strategic advantage and strategic necessity in the context of Internet banking investments for the population of U.S. Federal Deposit Insurance Corporation (FDIC) banks from 2003 to 2005. We seek to understand whether their IT investments were made as a strategic choice or as a result of strategic necessity. Our econometric analysis suggests that IT investments (1) were made to complement firm strategy for strategic advantage as well as due to strategic necessity, and (2) paid off by enhancing firm performance and addressing the issue of strategic necessity. In addition, our analysis reveals the simultaneous relationship between performance and IT investments: high-performing banking firms appear to have been more likely to invest in IT. The econometric analysis methods that we employ made it possible for us to state all of our quantitative findings for the FDIC data to be stated after adjusting for this endogeneity through simultaneity.

Keywords: banking; econometrics; financial services IS and technology; Internet banking; IT investments; strategic advantage; strategic necessity; strategy; transaction costs

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List of Topics

#36	0.247	competitive advantage strategic systems information sustainable sustainability dynamic opportunities capabilities environments environmental turbulence turbulent dynamics key quest create sustained ability
#271	0.182	technology investments investment information firm firms profitability value performance impact data higher evidence diversification industry payoff return findings decisions greater
#229	0.151	alignment strategic business strategy performance technology value organizational orientation relationship information misalignment matched goals perspective fit firms executives argue need
#200	0.150	banking bank multilevel banks level individual implementation analysis resistance financial suggests modeling group large bank's services levels national data early
#207	0.062	design artifacts alternative method artifact generation approaches alternatives tool science generate set promising requirements evaluation problem designed incentives components addressing
#228	0.059	internet peer used access web influence traditional fraud world ecology services impact cases wide home studies addition choice 2008 telephone
#132	0.053	likelihood multiple test survival promotion reputation increase actions run term likely legitimacy important rates findings long short higher argue prior