Review Inf Sys Wade and Hulland 2004

Wade & Hulland/Review: Resource-Based View of IS Research
MISQ REVIEW
REVIEW: THE RESOURCE-BASED VIEW AND

INFORMATION SYSTEMS RESEARCH:
REVIEW, EXTENSION, AND SUGGESTIONS
1
FOR FUTURE RESEARCH
By: Michael Wade tical and conceptual foundations. As new

Schulich School of Business theories are brought into the field, particularly
York University theories that have become dominant in other
4700 Keele Street areas, there may be a benefit in pausing to assess
Toronto, ON M3J 1P3 their use and contribution in an IS context. The
CANADA purpose of this paper is to explore and critically
mwade@schulich.yorku.ca evaluate use of the resource-based view of the
firm (RBV) by IS researchers.
John Hulland
Graduate School of Business The paper provides a brief review of resource-
University of Pittsburgh based theory and then suggests extensions to
Pittsburgh, PA 15260 make the RBV more useful for empirical IS
U.S.A. research. First, a typology of key IS resources is
jhulland@katz.pitt.edu presented, and these are then described using six
traditional resource attributes. Second, we em-
phasize the particular importance of looking at
both resource complementarity and moderating
Abstract factors when studying IS resource effects on firm
performance. Finally, we discuss three consi-
Information systems researchers have a long tra- derations that IS researchers need to address
dition of drawing on theories from disciplines such when using the RBV empirically. Eight sets of
as economics, computer science, psychology, and propositions are advanced to help guide future
general management and using them in their own research.
research. Because of this, the information sys-
tems field has become a rich tapestry of theore- Keywords: Resource-based view, organizational
impacts of IS, information systems resources,
1 competitive advantage, IS strategic planning,
Jane Webster was the accepting senior editor for this
paper. information resource management
MIS Quarterly Vol. 28 No. 1, pp. 107-142/March 2004 107

Introduction The Resource-Based

View of the Firm
In 1992, Mahoney and Pandian outlined how the
resource-based view of the firm (RBV) might be An Overview of the Resource-
useful to the field of strategic management. Based View
One benefit of the theory, they noted, was that
it encouraged a dialogue between scholars from
The resource-based view argues that firms pos-
a variety of perspectives, which they described
sess resources, a subset of which enables them
as good conversation. Since then, the
to achieve competitive advantage, and a further
strengths and weaknesses of the RBV have subset which leads to superior long-term per-
been vigorously debated in strategic formance (Barney 1991; Grant 1991; Penrose
management and other management disciplines 1959; Wernerfelt 1984). Empirical studies of firm
(e.g., Barney 2001; Fahy and Smithee 1999; performance using the RBV have found dif-
Foss 1998; Priem and Butler 2001a, 2001b). ferences not only between firms in the same
industry (Hansen and Wernerfelt 1989), but also
Very little discussion on the resource-based within the narrower confines of groups within
view, however, has been conducted in the field industries (Cool and Schendel 1988). This sug-
of information systems. The RBV has been gests that the effects of individual, firm-specific
used in the IS field on a number of occasions resources on performance can be significant
(see the Appendix for a list of IS research (Mahoney and Pandian 1992).
studies using the RBV), yet there has been no
effort to date to comprehensively evaluate its Resources that are valuable and rare and whose
strengths and weaknesses. This paper outlines benefits can be appropriated by the owning (or
how the RBV can be useful to research in IS, controlling) firm provide it with a temporary
and provides guidelines for how this research competitive advantage. That advantage can be
might be conducted. In short, the purpose of sustained over longer time periods to the extent
this paper is to initiate a discussion of the RBV that the firm is able to protect against resource
within the conversation of information systems imitation, transfer, or substitution. In general,
research. empirical studies using the theory have strongly
supported the resource-based view (e.g., McGrath
et al. 1995; Miller and Shamsie 1996; Zaheer and
The paper is organized as follows. First, we
Zaheer 1997).
briefly introduce the resource-based view of the
firm and describe how the theory has relevance
One of the key challenges RBV theorists have
for IS scholars. Second, we present a typology
faced is to define what is meant by a resource.
of IS resources and then describe, compare,
Researchers and practitioners interested in the
and contrast them with one another using six
RBV have used a variety of different terms to talk
key resource attributes. Third, we address the about a firms resources, including competencies
important issues of resource complementarity (Prahalad and Hamel 1990), skills (Grant 1991),
and the role played by moderating factors that strategic assets (Amit and Schoemaker 1993),
influence the IS resource-firm performance assets (Ross et al. 1996), and stocks (Capron and
relationship. We then turn to a discussion of Hulland 1999). This proliferation of definitions and
three major sets of considerations that IS classifications has been problematic for research
researchers need to address when using the using the RBV, as it is often unclear what
RBV in empirical settings. researchers mean by key terminology (Priem and
Butler 2001a). In order to simplify the interpre-
108 MIS Quarterly Vol. 28 No. 1/March 2004

tation of the theory, it is useful to clarify the IS researchers and therefore it is valuable to
definitions of relevant terms. In this paper, we pause and reflect on the actual utility of the theory
define resources as assets and capabilities that to the IS field. That the theory has become
are available and useful in detecting and influential in other management fields such as
responding to market opportunities or threats strategy and marketing merely points to its
(Sanchez et al. 1996; see also Christensen and potential use in IS research. Usefulness in one
Overdorf 2000). Together, assets and capabilities field does not dictate usefulness in all fields.
define the set of resources available to the firm. Furthermore, the IS field already incorporates
theories from many other areas. This review will
Assets are defined as anything tangible or explore what, if anything, the RBV can offer that
intangible the firm can use in its processes for the IS field does not already obtain from
creating, producing, and/or offering its products elsewhere.
(goods or services) to a market, whereas capa-
bilities are repeatable patterns of actions in the use This review will argue that the RBV is indeed
of assets to create, produce, and/or offer products useful to IS research. The theory provides a
to a market (Sanchez et al. 1996). Assets can valuable way for IS researchers to think about how
serve as inputs to a process, or as the outputs of information systems relate to firm strategy and
a process (Srivastava et al. 1998; Teece et al. performance. In particular, the theory provides a
1997). Assets can be either tangible (e.g., cogent framework to evaluate the strategic value
information systems hardware, network of information systems resources. It also provides
infrastructure) or intangible (e.g., software patents, guidance on how to differentiate among various
strong vendor relationships) (Hall 1997; Itami and types of information systemsincluding the
Roehl 1987; Srivastava et al. 1998). In contrast, important distinction between information tech-
capabilities transform inputs into outputs of greater nology and information systemsand how to
worth (Amit and Schoemaker 1993; Capron and study their separate influences on performance
Hulland 1999; Christensen and Overdorf 2000; (Santhanam and Hartono 2003). Further, the
Sanchez et al. 1996; Schoemaker and Amit 1994).2 theory provides a basis for comparison between
Capabilities can include skills, such as technical or IS and non-IS resources, and thus can facilitate
managerial ability, or processes, such as systems cross-functional research.
development or integration.
Yet, as currently conceptualized, the theory is not
ideally suited to studying information systems.
Unlike some resources, such as brand equity or
What Can the Resource-Based View financial assets, IS resources rarely contribute a
Contribute to IS Research? direct influence to sustained competitive advant-
age (SCA). Instead, they form part of a complex
chain of assets and capabilities that may lead to
A critical issue addressed in this review is the
sustained performance. In the parlance of
usefulness of the resource-based view to IS
Clemons and Row (1991), information systems
research. The RBV is increasingly being used by
resources are necessary, but not sufficient, for
SCA. Information systems exert their influence on
the firm through complementary relationships with
2
In this paper we view the terms capabilities, compe- other firm assets and capabilities. While the RBV
tencies, and core competencies as essentially synony-
mous. According to Sanchez et al. (1996), the only
recognizes the role of resource complementarity,
difference between these terms lies in the fact that core it is not well developed in the theory. The
competencies are capabilities that achieve competitive refinement of this element is necessary to
advantage. Because we explicitly discuss only capa-
enhance the usefulness of the RBV to IS
bilities that lead to superior performance, in this paper the
terms can be considered interchangeable. researchers.
MIS Quarterly Vol. 28 No. 1/March 2004 109

We recognize three aspects of the RBV that list of RBV studies conducted to date in the IS
provide rare and valuable benefits to IS field). Much of this work has attempted to identify
researchers. First, by way of a defined set of and define either a single IS resource or sets of IS
resource attributes, the RBV facilitates the spe- resources. For example, Ross et al. (1996)
cification of information systems resources. This divided IS into three IT assets which together with
specification provides the groundwork for a set of IT processes would contribute to business value.
mutually exclusive and exhaustive information These three IT assets were labeled human assets
systems assets and capabilities. This review sug- (e.g., technical skills, business understanding,
gests a framework for this IS resource set. problem-solving orientation), technology assets
Second, by using the same set of resource (e.g., physical IT assets, technical platforms, data-
attributes mentioned above, IS resources can be bases, architectures, standards) and relationship
compared with one another and, perhaps more assets (e.g., partnerships with other divisions,
importantly, can be compared with non-IS client relationships, top management sponsorship,
resources. Thus, the RBV promotes cross-func- shared risk and responsibility). IT processes were
tional research through comparisons with other defined as planning ability, cost effective opera-
firm resources. Third, the RBV sets out a clear link tions and support, and fast delivery. This cate-
between resources and SCA through a well- gorization was later modified by Bharadwaj (2000)
defined dependent variable, providing a useful way to include IT infrastructure, human IT resources,
to measure the strategic value of IS resources. In
and IT-enabled intangibles.
addition, we recognize one area in which the
theory is deficient as conceivedthe
Other categorization schemes have also been
complementarity of resourcesand suggest a way
developed. (The Appendix summarizes these
to extend the theory to reduce the effect of this
studies. In Table 2, presented later in the paper,
deficiency. We also suggest key moderating
we offer an alternative way of categorizing these
variables that are relevant to studies of the IS
constructs.) Feeny and Willcocks (1998) iden-
resource-performance relationship and that we
tified nine core IS capabilities, which they
believe warrant greater attention from IS
organized into four overlapping areas. These
researchers.
areas were business and IT vision (integration
between IT and other parts of the firm), design of
IT architectures (IT development skills), delivery of
IS Resources and the Resource- IS services (implementation, dealing with vendors
and customers), and a core set of capabilities
Based View
which included IS leadership and informed buying.
This section starts by reviewing RBV research As a further step, each capability was ranked as to
conducted to date within the IS field, with an eye to how much it relied on business, technical, or
identifying the major IS resources used in these interpersonal skills. Bharadwaj et al. (1998) sug-
studies. These resources are then organized gested and subsequently validated a measure of
using a typology proposed by Day (1994). This is IT capability with the following six dimensions:
followed by a description of six key resource IT/business partnerships, external IT linkages,
attributes that have been employed by RBV business IT strategic thinking, IT business process
researchers in the past. Finally, we describe each integration, IT management, and IT infrastructure.
of the major IS resources identified previously Each dimension was found to be reliable and valid
using these six attributes. using psychometric testing on a sample of senior
IS executives.
Information Systems Resources The link between IS resources and firm perfor-
mance has been investigated by a number of
The resource-based view started to appear in IS researchers. For example, Mata et al. (1995)
research in the mid-1990s (see the Appendix for a used resource-based arguments to suggest that

five key IS driverscustomer switching costs, et al. 1998). From an RBV perspective, this
access to capital, proprietary technology, technical advantage may result from development of
IT skills, and managerial IT skillslead to sus- capabilities over an extended period of time that
tained competitive advantage, although they found become embedded in a company and are difficult
empirical support for only the last of these pro- to trade. Alternatively, the firm may possess a
posed relationships. Powell and Dent-Micallef capability that is idiosyncratic to the firm (i.e., an
IS expert with specialized knowledge who is loyal
(1997) divided information systems resources into
to the firm) or difficult to imitate due to path
three categories: human resources, business
dependencies (Dierickx and Cool 1989) or
resources, and technology resources. In a study of
embeddedness in a firms culture (Barney 1991).
the U.S. retail industry, they found that only human
Capabilities are often critical drivers of firm per-
resources in concert with IT contributed to formance (Eisenhardt and Martin 2000; Makadok
improved performance. Among the business 2001; Teece et al. 1997).
resources, only IT training positively affected
performance, while no technology resources linked
positively to performance at all.
A Typology of IS Resources
Using an approach similar to that employed by
Kohli and Jaworski (1990) to develop the mar- Day (1994) suggests one approach to thinking
keting orientation construct, Marchand et al. (2000) about IS resources. He argues that the capa-
proposed an information orientation construct bilities (as previously noted, a subset of the firms
resources) held by a firm can be sorted into three
comprised of three elements: information
types of processes: inside-out, outside-in, and
technology practices (the management of tech-
spanning. Inside-out capabilities are deployed
nology), information management practices (the
from inside the firm in response to market
management of information collection, organization
requirements and opportunities, and tend to be
and use), and information behaviors and values internally focused (e.g., technology development,
(behaviors and values of people using the cost controls). In contrast, outside-in capabilities
information). These factors were validated using are externally oriented, placing an emphasis on
data from a large-scale cross-sectional survey. anticipating market requirements, creating durable
The study also found that firms ranking highly on customer relationships, and understanding com-
all three information orientation dimensions tended petitors (e.g., market responsiveness, managing
to have superior performance when compared to external relationships). Finally, spanning capa-
other firms. bilities, which involve both internal and external
analysis, are needed to integrate the firms inside-
Many of the studies mentioned above divided IS out and outside-in capabilities (e.g., managing IS/
resources into two categories that can be broadly business partnerships, IS management and
defined as IS assets (technology-based) and IS planning). Such an approach is entirely consistent
capabilities (systems-based). Research has sug- with Santhanam and Hartonos (2003) recent call
gested that IS assets (e.g., infrastructure) are the to develop theoretically-based multidimensional
easiest resources for competitors to copy and, measures of IT capability.
therefore, represent the most fragile source of
sustainable competitive advantage for a firm Table 1 suggests how eight key IS resources
(Leonard-Barton 1992; Teece et al. 1997). In con- described in previous research can be organized
trast, there is growing evidence that competitive within this framework. While this earlier work has
advantage often depends on the firms superior used a variety of different terms for IS resources,
deployment of capabilities (Christensen and it can be mapped directly onto Days framework,
Overdorf 2000; Day 1994) as well as intangible as shown in Table 2. Each of the resources in this
assets (Hall 1997; Itami and Roehl 1987; Srivistava table is described more fully below.

Table 1. A Typology of IS Resources

Outside-In Spanning Inside-Out
External relationship IS-business partnerships IS infrastructure
management IS planning and change IS technical skills
Market responsiveness management IS development
Cost effective IS operations
Table 2. A Categorization of Information Systems Resources from Previous Studies

Resource Source
Manage external Manage external linkages (Bharadwaj et al. 1998)
relationships 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 responsiveness 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 partnerships Integrate IT and business processes (Benjamin and Levinson 1993;
(manage internal Bharadwaj 2000; Bharadwaj et al. 1998)
relationships) 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 Studies

(Continued)
IS planning and change IT management skills (Bharadwaj 2000; Bharadwaj et al. 1998; Mata et
management al. 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 infrastructure 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 skills Technical IT skills (Bharawdaj 2000; Feeny and Willcocks 1998; Mata et
al. 1995; Ross et al. 1996)
Knowledge assets (Bharadwaj 2000)
Using knowledge assets (Bharadwaj 2000)
IS development Technical innovation (Bharadwaj 2000)
Experimentation with new technology (Jarvenpaa and Leidner 1998)
Capacity to develop services that utilize interactive multimedia (Lopes
and Galletta 1997)
Alertness (Zaheer and Zaheer 1997)
Cost effective IS Cost effective operations and support (Ross et al. 1996)
operations Getting IT to function (Feeny and Willcocks 1998)
Enhanced product quality (Bharadwaj 2000)
Outside-In Resources tions, support, and/or customer service (Bharad-

waj 2000; Bharadwaj et al. 1998). Many large IS
External relationship management. This re- departments rely on external partners for a
source represents the firms ability to manage significant portion of their work. The ability to work
linkages between the IS function and stakeholders with and manage these relationships is an impor-
outside the firm. It can manifest itself as an ability tant organizational resource leading to competitive
to work with suppliers to develop appropriate sys- advantage and superior firm performance.
tems and infrastructure requirements for the firm
(Feeny and Willcocks 1998), to manage relation- Market responsiveness. Market responsiveness
ships with outsourcing partners (Benjamin and involves both the collection of information from
Levinson 1993; Feeny and Willcocks 1998), or to sources external to the firm as well as the dis-
manage customer relationships by providing solu- semination of a firms market intelligence across

departments, and the organizations response to Willcocks 1998; Ross et al. 1996), problem
that learning (Day 1994; Kohli and Jaworski solving orientation (Ross et al. 1996), and
1990). It includes the abilities to develop and capacity to manage IT change (Benjamin and
manage projects rapidly (Ross et al. 1996) and to Levinson 1993). It includes the ability of IS man-
react quickly to changes in market conditions agers to understand how technologies can and
(Bharadwaj 2000; Feeny and Ives 1990; Zaheer should be used, as well as how to motivate and
and Zaheer 1997). A key aspect of market manage IS personnel through the change process
responsiveness is strategic flexibility, which allows (Bharadwaj 2000).
the organization to undertake strategic change
when necessary (Bharadwaj 2000; Jarvenpaa and
Leidner 1998; Powell and Dent-Micallef 1997). Inside-Out Resources
IS infrastructure. Most studies recognize that

Spanning Resources many components of IS infrastructure (such as
off-the-shelf computer hardware and software)
IS-business partnerships. This capability repre- convey no particular strategic benefit due to lack
sents the processes of integration and alignment of rarity, ease of imitation, and ready mobility.
between the IS function and other functional areas Thus, the types of IS infrastructure mentioned in
or departments of the firm. The importance of IS most of the existing RBV-IS studies are either
alignment, particularly with business strategy, has proprietary or complex and hard to imitate
been well documented (e.g., Chan et al. 1997; (Benjamin and Levinson 1993; Lopes and Galletta
Reich and Benbasat 1996). This resource has 1997). Despite these attempts to focus on the
variously been referred to as synergy (Bharadwaj non-imitable aspects of IS infrastructure, the IS
2000; Jarvenpaa and Leidner 1999), assimilation infrastructure resource has generally not been
(Armstrong and Sambamurthy 1999), and partner- found to be a source of sustained competitive
ships (Bharadwaj et al. 1998; Ross et al. 1996). advantage for firms (Mata et al. 1995; Powell and
All of these studies recognize the importance of Dent-Micallef 1997; Ray et al. 2001).
building relationships internally within the firm
between the IS function and other areas or IS technical skills. IS technical skills are a result
departments. Such relationships help to span the of the appropriate, updated technology skills,
traditional gaps that exist between functions and relating to both systems hardware and software,
departments, resulting in superior competitive that are held by the IS/IT employees of a firm
position and firm performance. An element of this (Bharadwaj 2000; Ross et al. 1996). Such skills
resource is the support for collaboration within the do not include only current technical knowledge,
firm. but also the ability to deploy, use, and manage
that knowledge. Thus, this resource is focused on
IS planning and change management. The technical skills that are advanced, complex, and,
capability to plan, manage, and use appropriate therefore, difficult to imitate. Although the relative
technology architectures and standards also helps mobility of IS/IT personnel tends to be high, some
to span these gaps. Key aspects of this resource IS skills cannot be easily transferred, such as
include the ability to anticipate future changes and corporate-level knowledge assets (Bharadwaj
growth, to choose platforms (including hardware, 2000) and technology integration skills (Feeny and
network, and software standards) that can accom- Willcocks 1998), and, thus, these resources can
modate this change (Feeny and Willcocks 1998; become a source of sustained competitive
Ross et al. 1996), and to effectively manage the advantage. This capability is focused primarily on
resulting technology change and growth (Bharad- the present.
waj et al. 1998; Mata et al. 1995). This resource
has been defined variously in previous research IS development. IS development refers to the
as understanding the business case (Feeny and capability to develop or experiment with new

technologies (Bharadwaj 2000; Jarvenpaa and firm.3 For example, Barney (1991) suggested that
Leidner 1998; Lopes and Galletta 1997), as well advantage-creating resources must possess four
as a general level of alertness to emerging tech- key attributes: value, rareness, inimitability, and
nologies and trends that allow a firm to quickly non-substitutability. Other typologies have been
take advantage of new advances (Zaheer and proposed by Amit and Schoemaker (1993), Black
Zaheer 1997). Thus, IS development is future- and Boal (1994), Collis and Montgomery (1995),
oriented. IS development includes capabilities and Grant (1991). Although the terms employed
associated with managing a systems development across these frameworks are somewhat different,
life-cycle that is capable of supporting competitive all attempt to link the heterogeneous, imperfectly
advantage (Bharadwaj 2000; Marchand et al. mobile, and inimitable, firm-specific resource sets
2000; Ross et al. 1996), and should therefore lead possessed by firms to their competitive positions.
to superior firm performance. Before suggesting how the IS resources identified
above can be described using these attributes, we
Cost effective IS operations. This resource first discuss these attributes more generally as
encompasses the ability to provide efficient and they are viewed in the context of the RBV.
cost-effective IS operations on an ongoing basis.
Firms with greater efficiency can develop a long- Some researchers have made the useful dis-
term competitive advantage by using this capa- tinction between resources that help the firm attain
bility to reduce costs and develop a cost leader- a competitive advantage and those that help the
ship position in their industry (Barney 1991; Porter firm to sustain that advantage (e.g., Piccoli et al.
1985). In the context of IS operations, the ability 2002; Priem and Butler 2001a). Borrowing from
to avoid large, persistent cost overruns, unneces- terminology used by Peteraf (1993), these two
sary downtime, and system failure is likely to be types of resource attributes can be thought of as,
an important precursor to superior performance respectively, ex ante and ex post limits to compe-
(Ross et al. 1996). Furthermore, the ability to tition. Most previous research using the RBV has
develop and manage IT systems of appropriate blurred these two phases, but we believe that they
quality that function effectively can be expected to need to be considered separately.
have a positive impact on performance (Bharad-
waj 2000; Feeny and Willcocks 1998). Ex ante limits to competition suggest that prior to
any firms establishing a superior resource posi-
tion, there must be limited competition for that
position. If any firm wishing to do so can acquire
Resource Attributes and deploy resources to achieve the position, it
cannot by definition be superior. Attributes in this
In order to explore the usefulness of the RBV for category include value, rarity, and appropriability.
IS research, it is necessary to explicitly recognize Firm resources can only be a source of SCA when
the characteristics and attributes of resources that they are valuable. A resource has value in an
lead them to become strategically important. RBV context when it enables a firm to implement
Although firms possess many resources, only a strategies that improve efficiency and effective-
few of these have the potential to lead the firm to ness (Barney 1991). Resources with little or no
a position of sustained competitive advantage.
What is it, then, that separates regular resources
from those that confer a sustainable strategic 3
RBV theory is built on the assumption that all resource
benefit? RBV theorists have approached this attributes must be present for that resource to support a
question by identifying sets of resource attributes sustained competitive advantage. While most empirical
work using the RBV has supported this view, a few
that might conceptually influence a firms com- studies have found results that are inconsistent with this
petitive position. Under this view, only resources assumption (e.g., Ainuddin 2000; Poppo and Zenger
exhibiting all of these attributes can lead to a 1998). The key point here is that this assumption is
empirically testable, opening the RBV to potential
sustained competitive advantage (SCA) for the falsification (see also Barney 2001).

value have a limited possibility of conferring an another, forcing them to set lower prices than they
SCA on the possessing firm. To take an extreme might otherwise establish in order to win the
example, the use of a new, innovative paper clip business.
design may set one firm apart from others, but it is
unlikely the paper clip design would be valuable Ex post limits to competition mean that
from a competitive advantage standpoint.4 subsequent to a firms gaining a superior position
and earning rents, there must be forces that limit
Resources that are valuable cannot become competition for those rents (Hidding 2001; Peteraf
sources of competitive advantage if they are in 1993). Attributes in this category include imita-
plentiful supply. Rarity refers to the condition bility, substitutability, and mobility.
where the resource is not simultaneously available
to a large number of firms (Amit and Schoemaker In order to sustain a competitive advantage, firms
1993). For example, an ATM network might have must be able to defend that advantage against
significant value to a bank, but since it is not rare, imitation.6 The advantage accruing from newly
it is unlikely to confer a strategic benefit. developed features of computer hardware, for
instance, are typically short-lived since compe-
The appropriability of a resource relates to its rent titors are able to quickly duplicate the technology
earning potential (Amit and Schoemaker 1993; (Mata et al. 1995). According to Barney (1991),
Collis and Montgomery 1995; Grant 1991). The there are three factors that can contribute to low
advantage created by a rare and valuable imitability: unique firm history, causal ambiguity,
resource or by a combination of resources may and social complexity. The role of history recog-
not be of major benefit if the firm is unable to nizes the importance of a firms unique past, a
appropriate the returns accruing from the advan- past that other firms are no longer able to
tage. Technical skills provide an example of this duplicatethe so-called Ricardian argument. For
phenomenon. The additional benefit accruable to example, a firm might purchase a piece of land at
a firm from hiring employees with rare and valu- one point in time that subsequently becomes very
able technical skills may be appropriated away by valuable (Hirshleifer 1980; Ricardo 1966). Causal
the employee through higher than normal wage ambiguity exists when the link between a resource
demands.5 Similarly, a computer component and the competitive advantage it confers is poorly
supplier may be unable to enjoy the benefits of understood. This ambiguity may lie in uncertainty
improved cost efficiencies if the computer manu- about how a resource leads to SCA, or it may lie
facturer (i.e., the buyer) is sufficiently powerful to in lack of clarity about which resource (or
appropriate away such benefits. This might be combination of resources) leads to SCA. Such
done by sharing the learning with other suppliers, ambiguity makes it extremely hard for competing
or by pitting more efficient suppliers against one firms to duplicate a resource or copy the way in
which it is deployed (Alchian 1950; Barney 1986
1991; Dierickx and Cool 1989; Lippman and
4 Rumelt 1982; Reed and DeFillipe 1990). If a firm
An extensive discussion of the concept of value in
relation to resource-based theory has been conducted in understands how and why its resources lead to
the strategic management literature (Barney 2001; Priem SCA, then competing firms can take steps to
and Butler 2001a, 2001b; Makadok 2001). Most of this acquire that knowledge, such as hiring away key
discussion has focused on whether or not value can be
determined endogenously to the theory. The contention
personnel, or closely observing firm processes
that resource value is a pre-cursor to SCA has not been and outcomes. Finally, social complexity refers to
in dispute. the multifarious relationships within the firm and
5
For example, firms attempting to hire ERP-knowledge-
able personnel during the 1999-2000 period discovered
6
that they were able to appropriate only part of the It is important to note, however, that firms may not
potential rents associated with this resource, with the always be able to mount such defenses as a result of
balance appropriated by the employees themselves (in either not fully understanding the threat of imitation or
the form of higher wages or compensation). not having the necessary resources to counter it.

between the firm and key stakeholders such as puter hardware and software, are relatively easy
shareholders, suppliers, and customers (Hambrick to acquire. Technical knowledge, managerial
1987; Klein and Lefler 1981). The complexity of experience, and many skills and abilities are less
these relationships makes them difficult to easy to obtain. Other resources, such as
manage and even more difficult to imitate. An company culture, brand assets, and so on, may
example of this is Wal-Marts logistics manage- only be available if the firm itself is sold (Grant
ment system. Even if all the individual elements 1991).
are in place, the relationships between the
elements, and thus its complexity, would likely The preceding attributesboth ex ante and ex
result in an imperfect substitute (Dierickx and Cool postare summarized in Table 3. Conceptually,
1989). the two types of resource attributes are related.
When a resource is imitated, more of that
A resource has low substitutability if there are few, resource exists than before, and thus it becomes
if any, strategically equivalent resources that are, less rare. Resources that are highly mobile may
themselves, rare and inimitable (Amit and be acquired by competing firms, again affecting
Schoemaker 1993; Black and Boal 1994; Collis the rarity of the resource for that firm (but not its
and Montgomery 1995). Firms may find, for overall rarity in the marketplace). Substitutability,
example, that excellence in IS product develop- by contrast, affects resource value, not rarity.
ment, systems integration, or environmental Resources do not become less rare by having
scanning may be achieved through a number of multiple substitutes; however, their value can be
equifinal paths. expected to diminish as substitute resources are
developed. This conceptualization is shown in
Once a firm establishes a competitive advantage Figure 1.8
through the strategic use of resources, com-
petitors will likely attempt to amass comparable
resources in order to share in the advantage. A
primary source of resources is factor (i.e., open) IS Resource Attributes
markets (Grant 1991). If firms are able to acquire
the resources necessary to imitate a rivals In this section, we use the resource attributes
competitive advantage, the rivals advantage will introduced above to describe the IS resources
be short-lived. Thus, a requirement for sustained identified earlier in the paper. The relationships
competitive advantage is that resources be between these resources and their attributes are
imperfectly mobile or non-tradable (Amit and summarized in Table 4. The entries in this table
Schoemaker 1993; Barney 1991; Black and Boal should be interpreted in relative (i.e., versus other
1994; Dierickx and Cool 1989).7 Some resources
are more easily bought and sold than others.
Technological assets, for example, such as com- 8
It is important to recognize that imitability and imperfect
mobility or tradability are distinct resource attributes.
The former prevents imitation by competitors of a firms
critical resources via direct copying or innovation. This
7
Resource mobility and tradability are closely related can be due to causal ambiguity, lack of relevant
constructs. As Peteraf (1993, p. 183) notes, resources resources on the part of the potential imitator, and time-
are perfectly immobile if they cannot be traded. On the competitive pressures (Braney 1991; Dierickx and Cool
other hand, imperfectly mobile resources are not 1989). In contrast, imperfect mobility prevents the
commonly, easily, or readily exchanged on the market acquisition and transfer of key resources from one firm
(Capron and Hulland 1999, p. 42), even though they are to another. Whereas resource imitability leads to an
tradable. Such barriers to mobility can arise as a result increase in the availability of a critical resource (thus
of switching costs (Montgomery and Wernerfelt 1988), undermining its rarity), resource mobility describes the
resource co-specialization (Teece 1986), and/or high degree to which an existing, fixed stock of a key
transactions costs (Rumelt 1987). We prefer use of the resource can be transferred between firms. This distinc-
term resource mobility over resource tradability here tion has been clearly recognized in previous RBV work
because the former is a more finely grained construct (e.g., see Dierickx and Cool 1989; Dutta et al. 1999;
than the latter. Peteraf 1993).

Table 3. Resource Attributes

Resource Attribute Terminology
Ex ante limits to competition
Value Value (Barney 1991; Dierickx and Cool 1989)
Rarity Rare (Barney 1991)
Scarcity (Amit and Shoemaker 1993)
Idiosyncratic assets (Williamson 1979)
Appropriability Appropriability (Amit and Shoemaker 1993; Collis and Montgomery 1995;
Grant 1991)
Ex post limits to competition
Imitability Imperfect imitability: history dependent, causal ambiguity, social
complexity (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)
Substitutability Non-substitutability (Barney 1991)
Transparency (Grant 1991)
Substitutability (Collis and Montgomery 1995)
Limited substitutability (Amit and Shoemaker 1993; Dierickx and Cool
1989)
Substitutes (Black and Boal 1994)
Mobility Imperfect mobility (Barney 1991)
Transferability (Grant 1991)
Low tradability (Amit and Shoemaker 1993; Dierickx and Cool 1989)
Tradability (Black and Boal 1994)

Table 4. IS Resources, by Attribute
Advantage Creation Advantage Sustainability

Value Rarity Appropriability Imitability Substitutability Mobility
Outside-In
External
relationship H MH LM L LM L
management
Market
H MH LM L LM L
responsiveness
Spanning
IS-business
H MH LM L LM L
partnerships
IS management/
planning H MH LM LM LM M
Inside-Out
IS infrastructure MH LM H H LM H
IS technical skills MH LM M M MH MH
IS development MH M M M MH M
Cost efficient IS
MH LM M LM MH M
operations
Note: L = low; M = medium, H = high
time
Competitive Advantage Phase Sustainability Phase
Productive Is sustained
use of firm over
resources leads to Short term which time due to
which are competitive resource
-valuable advantage -imitability
-rare -substitutability
-appropriable -mobility
Ex ante limits to competition Ex post limits to competition

value sustains Low substitutability
Low mobility
rarity sustains
Low imitability
Figure 1. The Resource-Based View Over Time

entries in the same table) rather than absolute markets, and must instead be developed through
terms. We emphasize that this table is based on on-going, firm-specific investments or through
limited existing empirical evidence and therefore mergers and/or acquisitions of other companies.
describes hypothesized rather than proven
relationships.
Appropriability
Value Although it is difficult to determine the exact

degree of appropriability associated with each IS
As noted earlier, all of the IS resources described resource, a number of general observations seem
here have at least moderate value to the firms that warranted based on past research. First, IS infra-
possess them. For example, the studies by structure, technology skills, IS development, and
Bharadwaj (2000), Feeny and Willcocks (1998), cost efficiency may be appropriable, rent-gene-
Lopes and Galletta (1997), and Marchand et al. rating resources in the short term, particularly
(2000), Mata et al. (1995), and Ross et al. (1996) when the firm possessing the IS resource has a
have all shown that IS resources have value to first-mover advantage in its use, and competitors
their firms (albeit not always realized). At the find such uses difficult to wrest away from the
same time, outside-in and spanning resources advantaged firm. For example, firms that are first
seem to have potentially higher value than inside- to possess next-generation hardware and soft-
out resources to firms. The reason for this is that ware are typically able to use this new infra-
the two former sets of resourcesif valuable structure to improve firm efficiency and/or effec-
must be based on a continued understanding of tiveness, thereby enhancing short-term compe-
the changing business environment. While inside- titive advantage and rent-earning potential.
out resources can lead to greater efficiency and/or Second, the appropriability of the outside-in and
effectiveness at any particular point in time, it is spanning resources tends to be lower than that of
essential for the firm to track and respond to the the inside-out resources. This stems from the fact
changing business environment over time if it is to that they tend to be organizationally complex, and
attain a sustainable competitive advantage. thereby more difficult to deploy successfully.
Rarity Imitability
In general, the key IS resources described here Over time, some IS resources become easier to
are all likely to be relatively rare. However, as imitate than others. The outside-in and spanning
was the case for the value attribute, outside-in and resources (particularly IS-business partnerships)
spanning resources are likely to be associated are likely to be more difficult to imitate because
with a higher degree of rarity than are inside-out both sets of resources will develop and evolve
resources. The underlying reason for this is that uniquely for each firm. Moreover, these resources
available labor markets allow firms lacking key IS are likely to be socially complex. In contrast, firms
technology, operational efficiency skills, and IS are likely to be able to develop technology skills
development personnel resources to acquire them and IS development capabilities through the hiring
by offering superior wages or through business of relevant expertise via existing labor markets or
arrangements with external consultants. Similarly, by interacting with external consulting firms.
IS infrastructure can be acquired or copied rela- Although less readily available, the IS manage-
tively easily once it has been in existence even for ment/planning and cost efficiency capabilities may
a comparatively short period of time, although it also be available through such means. Thus,
may be very rare initially. In contrast, spanning these latter resources will be more imitable than
and outside-in resources tend to be socially the outside-in and IS-business partnership
complex and cannot be easily acquired in factor resources, but less imitable than the technology

skills and IS development capability. Finally, acquired via the marketplace; thus, they are also
existing empirical evidence suggests that IS relatively mobile. In contrast, the external rela-
infrastructure is particularly easy to imitate over tionship management, market responsiveness,
moderate to longer time periods. and IS-business partnership capabilities are
generally not readily available in factor markets.
Therefore, the mobility of these latter three
Substitutability resources is expected to be low.
The key question that one needs to answer in

considering substitutability is whether or not a
strategically equivalent resource exists and is IS Resource Attribute Propositions
potentially available to the firm while leading to an
equifinal outcome. This may involve the use of Two key implications emerge from the preceding
very different resource sets, but could also reflect discussion. First, it is important to recognize the
a decision to acquire and deploy resources in- fundamental difference that can exist between a
house versus obtaining them from third parties. In resources initial and longer-term impact on a
the case of IS infrastructure, it seems unlikely that firms competitive position. Second, Table 4
strategic alternatives exist that lead to the same suggests that both similarities and differences
ultimate competitive position. Thus, the substitu- exist between distinct types of IS resources (cf.
tability of this resource will be low. At the other Santhanam and Hartono 2003). Each of these
extreme, firms may be able to outsource their IS implications is examined in turn below.
development and other operations to third parties,
and thereby compete effectively. Strategic substi-
tutes for the outside-in and spanning resources Resource Creation Versus Sustainability
are also likely to be rare, although it may be
possible for firms with a subset of these capa- Although various studies have examined how IS
bilities (e.g., market responsiveness) to compete resources can potentially create competitive
on an equal basis with firms possessing a different advantage for firms, very little of this work has
subset (e.g., IS-business partnerships). looked at sustaining that advantage over time. In
fact, Kettinger et al. (1994) concluded that many
of the success stories attributed to new IT
Imperfect Mobility configurations were only successful for a short
period of time. Similarly, early arguments sug-
This final resource attribute captures the extent to gesting that a so-called first-mover advantage, if
which the underlying resource can be acquired maintained, could lead to sustained advantage
through factor markets. IS infrastructure, once (e.g., Feeny and Ives 1990) were later challenged.
established, is easily disseminated to other firms, In order to sustain a first-mover advantage, firms
and is thus highly mobile.9 Technology skills, as would need to become perpetual innovators, a
well as the IS development, cost efficiency, and IS role that may be untenable (Kettinger et al. 1994).
management/planning capabilities can all be More focus on the sustainability of IS resources is
clearly warranted (Willcocks et al. 1997).10
9
Note that this statement assumes that IS hardware is a
10
discrete and separable part of the firms overall IS Defining precisely what is meant by the term sustain-
resource set, and that it can be transferred from one firm able is trickier than it might first appear. Barney (1991,
to another with relative ease. However, as one reviewer p. 102) clearly states that a sustained competitive
noted, this may only be a recent phenomenon. Old, pre- advantage is one that continues to exist after efforts to
ERP collections of legacy systems and databases were duplicate that advantage have ceased, and that this
far more difficult to either imitate (due to organizational definition of SCA is equilibrium-based. However, as
complexity; Barney 1991) or acquire (due to co- Wiggins and Ruefli (2002, p. 84) note, while Barneys
specialization; see Barney 2001; Teece 1986). definition is theoretically precise, it has proven to be

As we noted earlier, the ex post notions of operations).11 Furthermore, because it is harder

resource imitability, substitutability, and mobility to imitate, acquire, or find strategic substitutes for
affect the ex ante notion of rarity. As resources the former set of resources than for the latter,
are copied and traded, they become less rare outside-in and spanning resources are more likely
(even when they maintain their value and appro- to maintain their rarity, and thus support a sus-
priability). Because resource rarity is critical to the tainable competitive position for a longer period of
maintenance of longer-term competitive advan- time. Thus:
tage, we predict the following:
Proposition 2: Outside-in and span-
Proposition 1: Only IS resources ning IS resources will have a stronger
that are (1) inimitable, (2) non-substi- impact than inside-out IS resources
tutable, and (3) imperfectly mobile will on initial competitive position.
have a positive effect on competitive
position in the longer term. Proposition 3: Outside-in and span-
ning IS resources will have a more
enduring impact than inside-out IS
Outside-In Versus Spanning Versus resources on long-term competitive
Inside-Out Resources position.
Proposition 1 is very general, and applies to both A disproportionate share of the existing work
IS and non-IS resources. Our earlier review of IS within IS looking at the link between IS resources
resources suggests, however, that more specific and firm performance or competitive position has
predictions can be made for different types of focused either primarily or exclusively on those
resources. In particular, visual inspection of resources that we have characterized above as
Table 4 suggests that outside-in and spanning inside-out resources. However, the preceding
resources tend to have similar resource attributes. discussion suggests strongly that the key drivers
In general, when compared to inside-out re- of a longer-term competitive position are more
sources, they tend to have somewhat greater likely to be the result of superior outside-in and
value, be rarer (but less appropriable), be more spanning resources, whereas those resources
difficult to imitate or acquire through trade, and that have received the greatest attention to date
have fewer strategic substitutes. Focusing for a tend to be more transitory in their impact on
moment on the first two of these attributes, this performance. Thus, one key conclusion to be
suggests that firms possessing superior external drawn from our review is that greater attention
relations, market responsiveness, IS-business needs to be paid to all types of IS resources, and
partnership, and IS management/planning re- not just those that are internally focused (Straub
sources are likely to initially outperform com- and Watson 2001). This does not mean that
petitors that rely more on resources that are resources such as IS infrastructure, technology
internally focused (e.g., IS infrastructure, tech- skills, IS development, and cost efficiency should
nology skills, IS development, and cost efficient be ignored, but that their effects on competitive
position and/or performance should be examined
jointly with those of other, less inwardly focused IS
(and non-IS) resources.
virtually impossible to meaningfully operationalize quan-

11
titatively. Others (e.g., Jacobsen 1988; Porter 1985) This initial period will typically be relatively short in
have suggested that a sustained competitive advantage duration (e.g., 6 months to 1 year), representing the time
is a competitive advantage that endures for a longer required for competitors to imitate or acquire the
period of calendar time. In this section, we adopt the necessary resource(s). If these can be quickly attained
latter perspective in order to develop empirically testable or duplicated, then the short-term competitive advantage
propositions. We discuss this point in more detail in the will prove to be fleeting, representing little more than a
section on using the RBV in IS research. first-mover advantage.

Potential Moderators concede that IT-based success rests on the ability

to fit the pieces together but offer little guidance
The discussion thus far has assumed that IS on how this might happen. Jarvenpaa and
resources directly affect the performance and/or Leidner (1998) note that IT can generate compe-
competitive advantage of the firm. However, there titive value only if deployed so that it leverages
is considerable and growing evidence to suggest preexisting business and human resources in the
that these effects may be more correctly viewed firm via co-presence or complementarity. Yet, the
as both contingent and complementary. We begin process by which IS resources interact with other
this section by discussing the issue of resource firm resources is poorly understood, as is the
complementarity in general, and then turn to an nature of those resources (Ravichandran and
identification of key moderators that we believe Lertwongsatien 2002).
can affect the IS resource-performance relation-
ship. While recognized by various RBV theorists as
important, the role of resource complementarity
within the theory has not been extensively
developed (Amit and Schoemaker 1993; Dierickx
Resource Complementarity and Cool 1989; Teece 1986). Complementarity
refers to how one resource may influence another,
Conceptual and empirical development of the and how the relationship between them affects
RBV as outlined above has resulted in a useful competitive position or performance (Teece 1986).
way to analyze the strategic value of resources. Black and Boal (1994) note that resources can
The further subdivision of resource attributes into have one of three possible effects on one another:
those that help to create a competitive advantage compensatory, enhancing, or suppressing/ de-
and to sustain such an advantage once created stroying. A compensatory relationship exists
helps to account for changes in performance over when a change in the level of one resource is
time. However, the RBV as currently conceived offset by a change in the level of another
fails to adequately consider the fact that resources resource. An enhancing relationship exists when
rarely act alone in creating or sustaining compe- one resource magnifies the impact of another
titive advantage. This is particularly true of IS resource. A suppressing relationship exists when
resources that, in almost all cases, act in con- the presence of one resource diminishes the
junction with other firm resources to provide impact of another.
strategic benefits (Ravichandran and
Lertwongsatien 2002). For example, Powell and Although not based on resource theory, the
Dent-Micallef (1997) concluded that the comple- strategic information technology (SIT) area of
mentary use of IT and human resources lead to research is a rich source of evidence that can be
superior firm performance, and Benjamin and used to illustrate the importance of the resource
Levinson (1993) concluded that performance complementarity issue. In particular, a review of
depends on how IT is integrated with organiza- research in this area clearly demonstrates that
tional, technical, and business resources. possession of superior IS resources is not
inevitably linked to enhanced performance. Since
The issue of complementarity is an important one the 1950s, the influence of IT on organizations
since it implies a more complex role for IS (Ackoff 1967; Argyris 1971; Dearden 1972; Gorry
resources within the firm (Alavi and Leidner 2001; and Scott-Morton 1971; Keen 1981; Leavitt and
Henderson and Venkatraman 1993). In the same Whisler 1958), both positive and negative, has
way that IT software is useless without IT hard- been hotly debated. The study of information
ware (and vice versa), IS resources play an technology as a driver of competitive advantage
interdependent role with other firm resources began to take hold in the 1980s (e.g., Bakos and
(Keen 1993; Walton 1989). Yet, the nature of this Treacy 1986; McFarlan 1984). A number of case
role is largely unknown. Kettinger et al. (1994) studies in the mid- to late-1980s appeared to sup-

port the notion of information technology as a to be a top priority of researchers interested in

direct contributor of competitive advantage (e.g., applying the RBV in an IS context. Indeed, at the
Brady 1986; Copeland and McKenney 1988; Short moment three competing propositions can be
and Ventaktaman 1992). However, more recent articulated:
studies have challenged these conclusions by
suggesting contingent effects of IT resources on Proposition 4a: IS resources directly
performance (e.g., Carroll and Larkin 1992; Ket- influence competitive position and
tinger et al. 1994; Powell and Dent-Micallef 1997). performance.
Table 5 summarizes the SIT empirical literature to Proposition 4b: IS resources influ-
date that relates IT to performance or competitive ence competitive position and perfor-
advantage. Two general conclusions can be mance both directly and indirectly
drawn from this table. First, for those studies through interactions with other con-
finding a direct relationship between IT and structs (including other resources).
performance, the vast majority have reported a
positive effect (e.g., Banker and Kauffman 1991; Proposition 4c: IS resources influ-
Mahmood 1993). In contrast, few studies have ence competitive position and perfor-
indicated null or negative effects (for exceptions, mance only indirectly through inter-
see Sager 1988; Venkatraman and Zaheer 1990; actions with other constructs (in-
Warner 1987). cluding other resources).
Second, a greater number of the SIT studies Although only one of these propositions can be
summarized in Table 5 have found a contingent correct, existing studies do not definitively support
effect of IT on performance than have found a one over the other two. The SIT literature as well
direct effect. In some cases, SIT has been noted as a number of key resource-based studies within
to have both a direct effect on performance as IS appear to lend support for proposition 4b, while
well as an interactive effect with other constructs. researchers are increasingly skeptical of pro-
In other cases, only the interactive effects are position 4a. The essential question that remains
significant, particularly over the longer term. From unansweredand that deserves researcher
this, it seems clear that information systems attentionis whether proposition 4b or 4c is more
infrequently contribute directly and solely to sus- correct. Clemons and Row (1991) have argued in
tained firm performance. While information tech- favor of the latter, but the empirical findings to
nology may be essential for firms to compete, it date do not consistently support this perspective.
conveys no particular sustainable advantage to It is our belief that RBV theory can be useful in
one firm over its rivals. This sentiment is con- helping researchers to design future studies
sistent with the strategic necessity hypothesis aimed at resolving this ongoing debate.
proposed by Clemons and Row (1991).
While the SIT research stream is not based on

resource-based logic, its conclusions helpfully Potential Moderators
inform the debate around resource comple-
mentarity. From the preceding discussion, it Moderators that have the potential to affect the
seems clear that there will be conditions under relationship between key IS resources and per-
which specific IS resources must interact with formance can be separated into organizational
other resources (IS and/or non-IS) if they are to factors (i.e., those that operate within the firm) and
confer competitive advantage on the firm, both in environmental factors (i.e., those that operate out-
the immediate and longer terms. However, at side the firms boundaries). Top management
present the relevant set of moderating constructs commitment has been identified as a moderating
is not well established; we suggest that this needs factor within the organization. Similarly, environ

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

Performance
Outcome Effect Relevant Studies
Direct and Positive
Strategic information technology has a Banker and Kauffman (1991); Bharadwaj (2000); Clemons
direct and positive effect on competitive and Weber (1990); Floyd and Woolridge (1990); Jelassi and
advantage or performance Figgon (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 Negative
Strategic information technology has a Warner (1987)
negative effect on competitive
advantage or performance
No Effect
Strategic information technology has no Sager (1988); Venkatraman and Zaheer (1990)
impact on competitive advantage or
performance
Contingent Effect
The effect of strategic information Banker and Kauffman (1988); Carroll and Larkin (1992);
technology on competitive advantage or Clemons and Row (1988); Clemons and Row (1991);
performance depends on other Copeland and McKenney (1988); Feeny and Ives (1990);
constructs 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); Reich
and Benbasat (1990); Schwarzer (1995); Short and
Venkatraman (1992)
mental turbulence, environmental munificence, Dent-Micallef 1997). In general, a top manage-

and environmental complexity have been pro- ment team that promotes, supports, and guides
posed as key moderating environmental factors. the IS function is perceived to enhance the impact
Each of these moderators is discussed in turn of IS resources on performance (Armstrong and
below. Sambamurthy 1999; Ross et al. 1996). For
example, Neo (1988) found that the use of stra-
tegic information technologies could lead to
Organizational Factors strategic advantage subject to management vision
and support. When such support is lacking, IS
Top Management Commitment to IS. This resources will have little effect on competitive
construct relates primarily to having commitment position or performance, even when substantial
from top management for IS initiatives (Powell and investments are made to acquire or develop such

resources. Conversely, strong top management Environmental Turbulence. In turbulent, fast

support should facilitate a strong IS resource- changing environments, different assets and
performance link. Thus: capabilities than those needed in more stable
environments are required to achieve superior
Proposition 5: Strong top manage- performance (Eisenhardt and Martin 2000; Teece
ment commitment to IS will interact et al. 1997; Volberda 1996). In a relatively stable
with IS resources to positively affect business environment, the bulk of managements
performance. effort is put toward creating competitive advantage
for the firm. Because the environment in this case
changes slowly, any advantage achieved by a firm
Other Organizational Factors. Top manage- is likely to be sustained over an extended period
ment commitment has been clearly identified in of time (Miller and Shamsie 1996). By contrast, in
the IS literature as affecting the relationship a turbulent environment, many advantages are
between IS resources and firm-level competitive short-lived as competitive and environmental
advantage. However, there are other factors that pressures quickly undermine any resource value
may also moderate this relationship in specific or heterogeneity (Foss 1998). The ability to stay
contexts. For example, there is some evidence on top of business trends and to quickly respond
that organizational structure affects the role of IS to changing market needs is critical for superior
resources within a firm (Fielder et al. 1996; Leifer firm performance in such environments.
1988; Sambamurthy and Zmud 1999). Corporate
culture, particularly as it relates to the level of Firms faced with more stable environments have
innovation within a firm, has been shown to influ- a tendency to emphasize static efficiency at the
ence the effectiveness of information system expense of dynamic efficiency (Ghemawat and
adoption and use (Barley 1990; Orlikowski 1996). Costa 1993). Such firms prefer to exploit existing
Other factors such as firm size, location, and knowledge and capabilities rather than explore
industry may also influence how information new possibilities (Leonard-Barton 1992; Levinthal
systems resources affect firm performance and and March 1993; Levitt and March 1988). In
competitive advantage. The extent to which these general, these will be inside-out (i.e., IT tech-
or other factors play a role in the IS resource-firm nology skills, IT development, cost efficiency, IS
performance relationship could become a subject infrastructure) rather than outside-in or spanning
of future research. resources. Thus, in more stable environments,
inside-out resources will be emphasized and be a
stronger determinant than outside-in or spanning
Environmental Factors resources of superior firm performance.
The relationship between IS resources and firm Proposition 6a: T h e r e l a t i o n s h i p

performance is affected not only by internal between inside-out resources and
elements such as top management commitment performance will be stronger for firms
and corporate culture, but also by environmental in stable business environments than
factors. These factors reflect the uncertainty in an for firms in turbulent business en-
organizations operating environment. Drawing on vironments; but
the work of Aldrich (1979), Child (1972), and
Pfeffer and Salancik (1978), Dess and Beard Proposition 6b: T h e r e l a t i o n s h i p
(1984) concluded that three dimensions of the between outside-in resources and
environment contribute most to environmental performance will be stronger for firms
uncertainty and are thus most likely to consistently in turbulent business environments
influence firm performance over time: environ- than for firms in stable business
mental turbulence, munificence, and complexity. environments; and

Proposition 6c: The relationship and a firms competitive position. Thus, we only
between spanning resources and propose the following moderating effect for
performance will be stronger for firms environmental munificence (although we believe
in turbulent business environments that its effect on all three types of resources
than for firms in stable business should be studied empirically):
environments.
Proposition 7: The relationship
Environmental Munificence. Environmental between inside-out resources and
munificence refers to the extent to which a busi- performance will be stronger for firms
ness environment can support sustained growth in low munificent environments than
(Dess and Beard 1984). Environments that are for firms in high munificent envi-
mature or shrinking are normally characterized by ronments.
low levels of munificence, whereas rapidly growing
markets are typically associated with a high Environmental Complexity. Environmental
degree of munificence. When munificence is low, complexity refers to the heterogeneity and range
stiff competition often exists that can adversely of an industry and/or an organizations activities
affect the attainment of organizational goals, or (Child 1972). It can refer variously to the number
even organizational survival (Toole 1994). In such of inputs and outputs required for an organi-
environments, firms frequently strive to maintain zations operations, the number and types of
profits by maximizing internal efficiencies. Inside- suppliers, consumers and competitors that it
out IS resources such as cost effective IS opera- interacts with, and so on. Complexity makes it
tions play a key role in affecting competitive more difficult for firms to both identify and
position in these cases by reducing costs and understand the key drivers of performance. From
streamlining operations. In contrast, while the RBV perspective, such ambiguity makes it
outside-in and spanning IS resources can poten- more difficult for competing firms to identify these
tially support organizational goals by helping to critical resources for potential imitation, acqui-
monitor changes in the external environment to sition, or substitution. Thus, under conditions of
coordinate internal responses to such changes, high environmental complexity, the link between
the absence of munificence puts pressure on key resources and superior performance will tend
organizations to reduce investments in outside-in to be stronger and more enduring.
and spanning resources. Furthermore, since low
munificence environments tend to be relatively This effect is likely to be important for all three
mature, firms may be tempted to assume a static types of resources. Organizations operating in
competitive picture and to focus more attention on highly complex environments must rely on efficient
inside-out capabilities that support improvements and effective systems to manage information and
in firm efficiency. knowledge. When complexity is high, outside-in
and spanning capabilities help the firm to absorb
Markets that are munificent tend to support external information and coordinate its competitive
organizational growth despite imperfect firm responses, but inside-out IS capabilities will also
strategy. Such markets are relatively forgiving, be important. For example, a robust and flexible
with firms able to be competitive even when they IS infrastructure coupled with strong IS technical
do not possess superior resources. From this it skills may help a firm manage its operations more
follows that possession of superior inside-out efficiently in the face of environmental complexity.
capabilities will be substantially less critical when Thus:
environmental munificence is high than when it is
low. On the other hand, it is not clear how envi- Proposition 8a: The relationship
ronmental munificence affects the relationships between inside-out resources and
between both outside-in and spanning resources performance will be stronger for firms

in high complexity environments than denote the ability to effective deal with outside
for firms in low complexity environ- parties, Bharadwaj et al. (1998) used one
ments; and resource named manage external linkages, while
Feeny and Willcocks (1998) made a finer
Proposition 8b: The relationship distinction to include contract facilitation, informed
between outside-in resources and buying, vendor development, and contract
performance will be stronger for firms monitoring all as separate resources. A single
in high complexity environments than resource is frequently used to denote the level of
for firms in low complexity environ- physical IT infrastructure within a firm (Bharadwaj
ments; and et al. 1988; Ross et al. 1996). By contrast,
Benjamin and Levinson (1993) divided IT
Proposition 8c: The relationship infrastructure into two separate resources: hard
between spanning resources and infrastructure and soft infrastructure; and Lopes
performance will be strong for firms and Galletta (1997) further divided hard infra-
in high complexity environments than structure into storage and transmission assets and
for firms in low complexity environ- information processing capability.
ments.
Broadly defined resources have the advantage of
being readily generalized beyond a specific
research situation, but can lose their explanatory
Using the RBV in value when applied to overly narrow or specific
situations. Their utility comes at a more general
IS Research level of abstraction. For example, Miller and
Shamsie (1996) found that, in unstable environ-
We believe that application of the RBV to IS
ments, property-based assets such as physical
contexts has the potential to identify key drivers of
infrastructure were less likely to positively affect
superior business performance. At the same time,
financial performance than more specifically
use of the RBV introduces new considerations
defined knowledge-based assets such as skills
that must be dealt with by researchers. In this
and know-how. Broad definitions explore what
section, we discuss three such considerations:
resource characteristics are important, and thus
choice of an appropriate level of resource speci-
may be applicable across multiple resources and
ficity, choice of an outcome construct, and
research settings. At the same time, however,
modifying the RBV framework over time by
reliance on a high level of abstraction may
introducing dynamic elements into it.
inappropriately combine distinct resources under
a single label, thereby weakening the researchers
ability to uncover the true relationships that exist
Resource Specificity between IS resources and key outcomes.
How broadly or narrowly a resource is defined can Resources can also be defined narrowly.
have a substantial effect on its usefulness (Pen- Typically, these studies define one or two
rose 1959). However, on a practical basis, it is resources in a particular context and explore the
not always clear to researchers what level of relationship between those resources and a
specificity the problem requires. For example, a relevant dependent variable. For example,
resource such as the ability to program C++ is a Zaheer and Zaheer (1997) explored the link
good deal more precise that the ability to develop between alertness and responsiveness, and
software or IS technical skills. Examples of market influence in global currency markets.
both broadly and narrowly defined resources exist Others have used general resource cate-
in the IS literature. For example, in order to gorizations at the conceptual level, but study-

specific operationalizations in the data collection Choice of an Outcome Construct

stage (e.g., Henderson and Cockburn 1994;
Powell and Dent-Micallef 1996). Studies of this The dependent variable in IS research has been
type are useful within the limited scope of the a point of significant debate in the field (e.g.,
research context, but there is often little a priori Delone and McLean 1992; Seddon 1997). Many
reason to expect that results from these studies dependent variables are used in IS research, and
can be generalized more broadly. In a study of it is often difficult to relate one set of findings to
the pharmaceutical industry, Silverman (1999) another. In contrast, IS work using the RBV has
found that the RBV was validated with very narrow tended to be more focused, since the primary
resource definitions. Narrow definitions help to outcome of interest is sustained competitive
fine-tune our understanding of specific resources advantage (SCA). As noted earlier, Barney (1991,
and their effect on competitive position and p. 102) originally suggested that SCA continues
performance in given settings. The dangers of to exist after efforts to duplicate that advantage
using resources that are overly narrow in their have ceased, a definition that assumes eventual
definitions are twofold: any resultant findings are equilibrium. However, more recently researchers
have argued that in many industries long-run
likely to be difficult to generalize to new contexts,
equilibria simply do not exist (e.g., Barney 2001;
and the list of potentially relevant resources can
Dickson 1992; Hunt and Morgan 1995). Further-
quickly become prohibitively lengthy for practical
more, SCA has proved to be very difficult to
research use.
operationalize, and researchers employing the
RBV have resorted to looking instead at related
Most IS researchers making use of the RBV have dependent constructs such as above-average
tried to strike a balance between these two performance in the long run (Porter 1985; Wiggins
extremes (e.g., see Bharadwaj et al. 1998; and Ruefli 2002).
Marchand et al. 2000; van der Heijden 2000). The
appropriate level of resource specificity, in fact, Given the preceding discussion, we suggest that
will vary according to the objectives of the study. any dependent variable used in an RBV-based
For research that examines specific technologies study needs to exhibit three key attributes: (1) it
or specific industries, a set of more narrowly should provide an assessment of performance,
defined resources is appropriate. By contrast, (2) it should incorporate a competitive assessment
wider and more inclusive definitions are more element, and (3) it should address the notion of
useful for research employing a wide scope. As a performance over time. Return on investment
general rule, we recommend that researchers err (ROI) and assets (ROA), sales, and market share
on the side of generalizability. Narrow definitions are commonly used performance metrics in the
of IS resources may suffer from reduced rele- strategic management literature (e.g., Bharadwaj
vance as technologies, systems, and skills 2000; Robins and Wiersema 1995). Yet, limiting
become obsolete over time. As tools to facilitate RBV research to firm-level dependent variables
cross-disciplinary study and the development of a may be overly restrictive, particularly in the case
cumulative research tradition, narrow definitions of IS resources that affect the firm at many levels.
are less effective than those that are more general Firm performance is affected by a multitude of
and inclusive. Thus, programming skills or IS factors; thus, use of a single firm-level dependent
technical skills may be preferable as IS resources variable may not capture this broader context (Ray
to Java programming skills or object-oriented et al. 2001). The strategic information technology
programming skills. The resources described research stream has found strong evidence for an
earlier in this paper are all mid-level constructs indirect role for IT in firm performance. The basic
that are reasonably specific while also permitting logic is that IT affects other resources or pro-
an acceptable level of generalizability across cesses which, in turn, lead to competitive
studies. advantage. Given this role, it is appropriate to

measure the effect IS resources have on other A key question that remains is when does a
resources or processes. Therefore, IS competitive advantage become long term or
researchers may find it particularly beneficial to sustained? The logic of the RBV implies that a
use intermediate-level dependent variables at the firms competitive advantage will be sustained for
business process, department, or project level as long as its resources are valuable and its
(e.g., Ray et al. 2001). competitors fail to acquire, imitate, or find
substitutes for them. Beyond this central insight,
Second, there should be some sense of the issue of the length of sustainability has been
comparativeness, assessing performance relative sidestepped by much of the mainstream RBV
to that enjoyed by key competitors. Taken in literature. There is a good reason for this. Length
isolation, a firms performance, whether strong or of sustainability is contingent on a wide variety of
weak, contains only limited meaning. For factors. Barney (1991) hints at some of these
example, a firm may enjoy strong share growth, factors. Social complexity and causal ambiguity
return on investment, and profit but actually lag make it difficult for competitors to imitate
key competitors on those measures. Conversely, resources as the exact process by which the
traditional performance metrics may seem competitive advantage is achieved is not always
disappointing until compared to an industry clear. Environmental turbulence and complexity
average that is significantly worse. Unfortunately, may also affect the extent to which a competitive
to date this aspect of firm performance is the one advantage is sustained. For example, Miller and
that has been least emphasized by IS researchers Shamsie (1996) note that in times of relative
using the RBV. Thus, we encourage researchers stability an advantage may be sustained for a long
to take fuller advantage of competitive assess- period of time, but that during turbulent periods
ment tools when measuring firm performance so any advantages may be short-lived. Eisenhardt
as to provide a richer and more complete account and Martin (2000) go even further, arguing that in
of how the firms resources influence its compe- very turbulent environments sustainability cannot
titive position. be achieved without constant innovation.
Finally, any performance advantage must be When examining information technology-based

sustained over time. On a practical level, this strategic advantages, Hidding (2001) suggested
means that some effort must be made to track the that product or service type is a primary factor in
dependent variable of interest over time to avoid determining how long an advantage can be
drawing invalid conclusions about the durability sustained. Long cycle products, typically charac-
and sustainability of firm resources, an important terized by high consumer lock-in, may be able to
aspect of the resource-based view (Kettinger et al. sustain advantages for 7 to 10 years or more.
1994). There is little doubt that some competitive Examples of long-cycle products include local
advantages endure for extended periods. For phone services, airport hubs, and complex infor-
example, Wiggins and Ruefli (2002) estimated mation technology products like operating sys-
that between 2 and 5 percent of the firms they tems. Inside-out IS capabilities like cost effective
studied had enjoyed at least 10 years of com- operations and IS infrastructure can support long
petitive superiority. Some recent IS studies using cycle products by enhancing operating effi-
the RBV have attempted to incorporate time ciencies. Standard cycle products, characterized
elements into their design and analysis. For by high-volumes and low-margins, are able to
example, Bharadwaj (2000) tracked ROA and sustain advantages for 4 to 6 years. Standard-
ROS over a 4 year period and Jarvenpaa and cycle products can be supported by all of the IS
Leidner (1998) conducted interviews over a 2 year resources. Short-cycle products, with very short
period. We suggest that this should be an production cycles, are able to sustain advantages
important consideration for all future IS studies for less than 3 years. Examples of short-cycle
that make use of the RBV. products include microprocessors and many

information products. By supporting organiza- ability of the firms competitive advantage, which
tional change and renewal, outside-in and otherwise might be quickly eroded (Eisenhardt
spanning capabilities are able to support short and Martin 2000; Teece et al. 1997; Volberba
cycle products. 1996).
Information systems resources such as those Although IS researchers using the RBV have not
described earlier in this review can be employed typically looked at dynamic resources, a study by
by firms of any size, in any industry, producing any Jarvenpaa and Leidner (1998) suggests that IS
type of product or service. Thus, too many con- resources may take on many of the attributes of
tingencies exist to generalize about how long a dynamic resources, and thus may be particularly
competitive advantage may last. It is merely useful to firms operating in rapidly changing
possible to state that IS resources can support environments. Thus, even if IS resources do not
at least potentiallyboth short-term and long-term directly lead the firm to a position of superior SCA,
advantages. they may nonetheless be critical to the firms
longer-term competitiveness in unstable environ-
ments if they help it to develop, add, integrate,
and release other key resources over time. The
Dynamic Resources
dynamic resources perspective provides an
avenue for renewed relevance of IS resources
A growing body of literature seeks to more
beyond their traditional interpretation within the
formally incorporate the competitive environment
context of the RBV. This suggests that IS studies
into resource-based thinking. One focus of this
of resources (both IS and non-IS) will be
research has been on the distinction between
particularly informative when conducted in highly
stable and dynamic environments. Some
turbulent business environments.
resources are more useful to the firm in relatively
stable environments while others are more useful
in dynamic, unstable, or volatile environments
(Miller and Shamsie 1996). The former have been
Summary and Conclusions
dubbed core resources, while the latter have been
called dynamic resources (Eisenhardt and Martin
The resource-based view of the firm is a robust
2000; Teece et al. 1997). theory that has received wide acceptance in other
management fields. While it has been used on a
The distinction between these two resource types number of occasions in IS research, there has
represents an extension of the traditional static been no comprehensive effort to describe or
RBV conceptualization. The resource-based view defend its use in an IS context. The purpose of
has been criticized for ignoring factors sur- this paper has been to provide an overview of the
rounding resources, instead assuming that they RBV for those who wish to understand and use
simply exist (Stinchcombe 2000). Considerations the theory in IS research.
such as how resources are developed, how they
are integrated within the firm, and how they are The resource-based view of the firm is a useful
released have been under-explored in the litera- tool for researchers to understand if, and how,
ture. The mechanisms underlying how exactly key particular parts of the firm affect the firm at large.
resources benefit the firm are also poorly specified Many parts have been extensively researched.
in the RBV. The concept of dynamic resources For example, brands, patents, product develop-
attempts to bridge these gaps by adopting a ment practices, knowledge management capa-
process approach: by acting as a buffer between bilities, and the like have been extensively
core resources and the changing business researched in the management disciplines. Other
environment, dynamic resources help a firm adjust parts are less well understood. As we have
its resource mix and thereby maintain the sustain- suggested here, the RBV provides a way for IS

researchers to understand the role of information Ackoff, R. Management Misinformation Sys-

system within the firm. Once the role of IS tems, Management Science (14:4), 1967, pp.
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be compared on equal terms with the roles played Alavi, A., and Leidner, D. Review: Knowledge
by other firm resources to eventually form an Management and Knowledge Management
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Dow Jones-Irwin, Homewood, IL, 1971.
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support of the Schulich School of Business, the Influence of Senior Leadership and IT Infra-
Richard Ivey School of Business, the Katz structures, Information Systems Research
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Sciences and Humanities Research Council of Bakos, J. Y., and Treacy, M. E. Information
Canada. Insightful comments on earlier versions Technology and Corporate Strategy: A
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Prescott and Gautam Ray. We would particularly Banker, R., and Kauffman, R. J. Strategic
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Van der Heijden, H. Measuring IT Core Capa-
bilities for Electronic Commerce: Results from About the Authors
a Confirmatory Factor Analysis, in Pro-
ceedings of the 21st International Conference Michael Wade is an Assistant Professor of
on Information Systems, W.J. Orlikowski, S. Operations Management and Information Systems
Ang, P. Weill, H. C. Krcmar, and J. I. DeGross at the Schulich School of Business, York
(eds.), Brisbane, Australia, 2000, pp. 152-163. University, Toronto. He received a Ph.D. in
Venkatraman, N., and Zaheer, A. Electronic Management Information Systems from the Uni-
Integration and Strategic Advantage: Quasi- versity of Western Ontario in 2002. His current
Experimental Study in the Insurance Industry, research focuses on the strategic use of infor-
Information Systems Research (1:4), 1990, pp. mation systems in turbulent environments.
377-393.
Volberda, H. W. Toward the Flexible Firm: How John Hulland is Associate Professor of Marketing
to Remain Vital in Hypercompetitive Environ- at the Katz School of Business, University of
ments, Organization Science (7:4), 1996, pp. Pittsburgh. He received a Ph.D. in Marketing from
359-374. Massachusetts Institute of Technology in 1990,
Wade M., and Gravill, J. Diversification and and has published his research in a variety of
Performance of Japanese IT Subsidiaries: A journals, including the Journal of Marketing,
Resource-Based View, Information and Marketing Science, Strategic Management Jour-
Management (40:4), 2003, pp. 305-316. nal, Organization Science, and Information Sys-
Walton, R. Up and Running: Integrating Infor- tems Research. His current interests center
mation Technology and the Organization, around the resource-based view of the firm and
Harvard Business School Press, Cambridge, use of the partial least squares technique in
MA, 1989. applied management settings.

Appendix
Resource-Based Studies in IS Research
Comments on the
Source/Title Paper Type Findings Use of the RBV
Sustaining it Advantage: Conceptual Argues that IT cannot, in and Very good concep-
The Role of Structural of itself, lead to SCA, but may tual work. Only
Differences (Clemons assist other resources in doing loosely based on the
and Row 1991) so. Referred to as the stra- RBV.
tegic necessity hypothesis.
Information Technology Conceptual Considers whether four IS Good conceptual
and Sustained Compe- resources lead to SCA under development.
titive Advantage: A the resource-based view. The Logical rather than
Resource-based resources are access to empirical arguments
Analysis Advantage capital, proprietary technology, made for appro-
(Mata et al. 1995) technical IT skills, and mana- priateness of
gerial IT skills. Using logical resources. Resource
RBV arguments, finds that list not justified.
managerial IT skills are the
only resource that leads to
SCA.
Organizational Learning Conceptual Looks at the role IT plays in RBV not measured.
and Core Capabilities developing capabilities and
Development: The Role competencies within the firm.
of it (Andreu and Ciborra Describes the role of IT within
1996) the context of organizational
learning.
Develop Long-Term Conceptual Defines three IT assets: IT Loosely based on the
Competitiveness human resources asset, RBV. RBV not
Through IT Assets (Ross technology asset, and actually measured.
et al. 1996) relationship asset. These No empirical work.
assets in combination with IT
processes lead to SCA.
Information Technology Empirical Supports the strategic neces- Strong empirical
as Competitive Advan- (retail industry sity hypothesis. Finds that IT content although
tage: The Role of survey) alone cannot produce SCA, RBV not measured
Human, Business, and but that IT can leverage other directly.
Technology Resources intangible, complementary
(Powell and Dent- human and business
Micallef 1997) resources to gain SCA.

Catching the Wave: Empirical Uses an RBV framework to Strong empirical

Alertness, Responsive- show that alertness and work. SCA is not the
ness, and Market responsiveness lead to market main dependent
Influence in Global influence in the global finance variable. RBV not
Electronic Networks industry. measured.
(Zaheer and Zaheer
1997)
Resource-Based Theory Conceptual Uses RBV and structural per- Draws on Miller and
and a Structural Per- spective of strategy to develop Shamsie (1996) for
spective of Strategy a series of propositions about conceptual
Applied to the Provision online information services. grounding. Hypo-
of Internet Services Divides resources into knowl- thesizes that knowl-
(Lopes and Galletta edge-based and property- edge-based re-
1997) based types. sources are more
valuable in online
setting. No testing of
hypotheses.
IT Capabilities: Theo- Empirical Describes the formation of an Does not test the link
retical Perspectives and IT capability construct with six between capability
Empirical Operationali- elements: IT business construct and
zation (Bharadwaj et al. partnerships, external IT performance or SCA.
1998) linkages, business IT strategic
thinking, IT business process
integration, IT management,
and IT infrastructure.
Core IS Capabilities for Conceptual Nine core IS capabilities are Interesting con-
Exploiting Information identified which are organized ceptual work.
Technology (Feeny and into four categories: business Practitioner focus.
Willcocks 1998) and IT vision, delivery of IS Not directly linked to
services, design of IT archi- RBV theory. Non-
tecture, and core IS capabi- empirical.
lities. Capabilities are mapped
onto skills and values.
An Information Company Empirical Mixed support for the RBV RBV not measured
in Mexico: Extending the (case study) found in emerging country directly. Resource
RBV to a Developing context. attributes considered.
Country Context
(Jarvenpaa and Leidner
1998)
Information Technology Empirical Looks at the influences of Conceptual model
Assimilation in Forms: (survey) quality of senior leadership, only loosely based
The Influence of Senior sophistication of IT infrastruc- on the RBV. RBV
Leadership and IT Infra- tures and organizational size not actually mea-
structures (Armstrong on IT assimilation. sured.
and Sambamurthy 1999)

Strategic Context and Empirical More extensive IT infrastruc-

Patterns of IT Infrastruc- (survey) ture capability found in firms
ture Capability (Broad- where products changed
bent, Weill and Neo quickly and the implemen-
1999) tation of long-term strategies
was tracked over time.
Resource View Theory Conceptual Explores whether SAP could Non-empirical.
Analysis of SAP as a be considered a determinant Loosely based on the
Source of Competitive of SCA in the RBV sense. RBV. Some attri-
Advantage for Firms Determines that it could, if butes justified with
(Pereira 1999) managed properly. logical arguments.
Building Competitive Conceptual Develops a series of success RBV logic indirectly
Advantage Through components through which IT applied.
Information Systems: can lead to SCA. Evaluation
The Organizational of these components leads to
Information Quotient an organizational information
(Service and Maddux quotient.
1999)
A Resource-Based Per- Empirical Performance of firms which Strong conceptual
spective on Information (archival data, are rated to have superior IT development of IT
Technology Capability matched capability in magazine survey capability construct.
and Firm Technology pairs) compared to firms which do Construct measures
Capability and Firm not. Performance of superior not used, however, in
Performance: An IT capability firms found to be empirical analysis.
Empirical Investigation higher.
(Bharadwaj 2000)
Capabilities, Business Empirical Study finds that managerial IT Supportive of the
Processes, and Compe- (survey) knowledge and service climate RBV. Argues that
titive Advantage: The positively affect customer RBV works at the
Impact of Information service performance. level of business
Technology on Customer processes as well as
Satisfaction in the North at the firm level.
American Insurance
Industry (Ray et al.
2001)
Information Technology Empirical Study finds that managerial IT Supportive of the
and Competitive Advan- (survey) knowledge leads to enhanced RBV.
tage: A Process customer service performance
Oriented Assessment but flexibility of IT infrastruc-
(Ray et al. 2001) ture, IT technical skills, and IT
applications do not.
Sustaining Strategic it Conceptual Argues for a strategic model Attempts to extend
Advantage in the Infor- that differentiates among IT the RBV to make it
mation Age: How Stra- types. IS strategy should more useful in quan-
tegy Paradigms Differ by depend on the length of the tifying sustainability
Speed (Hidding 2001) product cycle (ecologies). of competitive advan-
tage.

Information Technology, Conceptual Argues that IT infrastructure Loosely based on

Core Competencies, and flexibility yields sustained RBV arguments.
Sustained Competitive competitive advantage as an
Advantage (Byrd 2001) enabler of firm-specific core
competencies.
Beyond Sabre: An Empirical Finds that RBV is more Constructs not
Empirical Test of effective than Transaction explicitly opera-
Expertise Exploitation in Cost Economics at explaining tionalized as
Electronic Channels the creation of expertise. resources.
(Christianse and Finds technology lock in not
Venkatraman 2002) effective.
Membership Size, Com- Empirical Uses RBV to look at online Uses resource-based
munication Activity, social structures. Finds logic to frame con-
Sustainability: A complex relationships between ceptual arguments.
Resource-Based Model membership size, communica- Develops notion of
of Online Social tion activity, and online struc- sustainability. Does
Structures (Butler 2001) ture sustainability. not operationalize
resources using
resource attributes.
Impact of Information Empirical Examines complementarity IT capability mea-
Systems Resources and from a resource-based sures (unspecified)
Capabilities on Firm perspective. Finds preliminary used in analysis.
Performance: A support for the relationship Link made to firms
Resource-Based Per- between IT and non-IT firm performance, not
spective (Ravichandran capabilities in achieving SCA.
and Lertwongsatien superior firm performance.
2002)
Diversification and Empirical Finds that Japanese IT firms Uses the RBV as a
Performance of that diversify internationally guiding conceptual
Japanese IT Subsi- based on resource strengths framework. Does not
diaries: A Resource- outperform those with operationalize
Based View (Wade and unrelated portfolios. resources or test
Gravill 2003) resource attributes
directly.
Issues in Linking Infor- Empirical Extends and confirms IT capability not
mation Technology Bharadwaj (2000). Finds that operationalized,
Capability to Firm Per- firms with superior IT resource attributes
formance (Santhanam capability also exhibit superior not used in analysis.
and Hartono 2003) firm performance. Multidimensional
dependent construct
used. Calls on
continued use of
RBV in IS research.

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

REVIEW: THE RESOURCE-BASED VIEW AND

By: Michael Wade tical and conceptual foundations. As new

MIS Quarterly Vol. 28 No. 1, pp. 107-142/March 2004 107

Introduction The Resource-Based

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

MIS Quarterly Vol. 28 No. 1/March 2004 109

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

MIS Quarterly Vol. 28 No. 1/March 2004 111

Table 1. A Typology of IS Resources

Table 2. A Categorization of Information Systems Resources from Previous Studies

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

Table 2. A Categorization of Information Systems Resources from Previous Studies

Outside-In Resources tions, support, and/or customer service (Bharad-

MIS Quarterly Vol. 28 No. 1/March 2004 113

IS infrastructure. Most studies recognize that

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

MIS Quarterly Vol. 28 No. 1/March 2004 115

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Table 3. Resource Attributes

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

Table 4. IS Resources, by Attribute

Advantage Creation Advantage Sustainability

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

Ex ante limits to competition Ex post limits to competition

Figure 1. The Resource-Based View Over Time

MIS Quarterly Vol. 28 No. 1/March 2004 119

Value Although it is difficult to determine the exact

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

The key question that one needs to answer in

MIS Quarterly Vol. 28 No. 1/March 2004 121

As we noted earlier, the ex post notions of operations).11 Furthermore, because it is harder

virtually impossible to meaningfully operationalize quan-

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

Potential Moderators concede that IT-based success rests on the ability

MIS Quarterly Vol. 28 No. 1/March 2004 123

port the notion of information technology as a to be a top priority of researchers interested in

While the SIT research stream is not based on

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

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

mental turbulence, environmental munificence, Dent-Micallef 1997). In general, a top manage-

MIS Quarterly Vol. 28 No. 1/March 2004 125

resources. Conversely, strong top management Environmental Turbulence. In turbulent, fast

The relationship between IS resources and firm Proposition 6a: T h e r e l a t i o n s h i p

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

MIS Quarterly Vol. 28 No. 1/March 2004 127

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

specific operationalizations in the data collection Choice of an Outcome Construct

MIS Quarterly Vol. 28 No. 1/March 2004 129

Finally, any performance advantage must be When examining information technology-based

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

MIS Quarterly Vol. 28 No. 1/March 2004 131

researchers to understand the role of information Ackoff, R. Management Misinformation Sys-

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

MIS Quarterly Vol. 28 No. 1/March 2004 133

DeLone, W. H., and McLean, E. R. Information Foss, N. J. The Resource-Based Perspective:

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

MIS Quarterly Vol. 28 No. 1/March 2004 135

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Straub, D., and Watson, R. Transformational Warner, T. N. Information Technology as a

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