Information Management Capability, R&D and Marketing Effects on Competition Networks

Abstract

Firms are increasingly using information technology (IT) to complement their resources and obtain advantageous competitive positions. In this paper, we present a model of competition networks that simultaneously considers the effects of firm’s IT-enabled information management capability (IMC) in conjunction with firm’s R&D Resources and Marketing Resources. We propose that the complementarity between IMC, R&D and Marketing enable firms to attain a brokerage position in competition networks. Additionally, the model presented here introduces IMC as a key antecedent to brokerage positions in competition networks or Competitive Brokerage. This research therefore provides a comprehensive framework for examining competition networks in contexts that have been transformed by the use of IT. To test our model, we develop a novel bidirectional and weighted competition network that accurately depicts competition relationships and competitive asymmetry. This network extends across 11 different industries from 2004 to 2011. We matched the competition network with objective IMC, R&D, and marketing data from secondary sources. Results show that IMC, R&D Resources, and Marketing Resources as well as the complementary effects of IMC with R&D Resources and Marketing Resources are significant predictors of Competitive Brokerage. These findings are robust to concerns of alternative model specifications, endogeneity and unobserved heterogeneity.

Keywords: Information Management Capability, competition networks, firm resources, network brokerage