Digital Systems and Competitive Responsiveness: The Dynamics of IT Business Value

Information & Management, 51 (2014) 762-773

12 Pages Posted: 8 Nov 2014

See all articles by Amitava Dutta

Amitava Dutta

George Mason University - Department of Information Systems and Operations Management

Hun Lee

George Mason University - Department of Management

Masoud Yasai

George Mason University - Department of Management

Date Written: April 13, 2014

Abstract

The mechanics of competition involve perception and reaction to competitor moves. Both incur delays that can be reduced by digital systems. Using system dynamics and the Red Queen paradigm, we modeled the impact of IT investments on response delays and business value, with the following results: (a) value has significant transient components; (b) value depends on investment level and the relative delays of competitors; and (c) relative delays affect the first-mover advantage. These results show that when assessing the value of IT investments, it is important to consider (a) the temporal pattern of benefits, not just their total magnitude, and (b) the impact of ongoing moves by competitors.

Keywords: IT business value, competitive dynamics, response delay, simulation modeling

Suggested Citation

Dutta, Amitava and Lee, Hun and Yasai, Masoud, Digital Systems and Competitive Responsiveness: The Dynamics of IT Business Value (April 13, 2014). Information & Management, 51 (2014) 762-773, Available at SSRN: https://ssrn.com/abstract=2520160

Amitava Dutta (Contact Author)

George Mason University - Department of Information Systems and Operations Management ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-1779 (Phone)

Hun Lee

George Mason University - Department of Management ( email )

United States

Masoud Yasai

George Mason University - Department of Management ( email )

United States

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