© 2008 CORNELL UNIVERSITY

10.1177/1938965508320722
Volume 49, Issue 3 282-296

Information
Technology in Hotel
Management
A Framework for Evaluating the
Sustainability of IT-Dependent
Competitive Advantage

by GABRIELE PICCOLI

Information technology can provide hospitality firms
with a sustained competitive advantage, provided
the technology complements operations. Based on
interdisciplinary research findings with regard to the
sustainability of IT-enabled competitive advantage,
this article provides a framework that can help both
hospitality scholars and managers formally analyze
existing and proposed IT-dependent strategic initia-
erosion of competitive advantage: (1) IT-resources bar-
rier, (2) complementary-resources barrier, (3) IT-project
barrier, and (4) preemption barrier.
Keywords: IT initiatives; hospitality management;
competitive advantage; IT framework

tives. The chief element in achieving a competitive
advantage is to identify the drivers of response lag,
which is the time it takes for competitors to imitate
an IT initiative—if they are able to do so. The drivers can
be grouped into one of the following four barriers to
T
here is growing evidence that hospitality ven-
tures are not using information technology
(IT) strategically and are not reaping benefits
commensurate with the substantial sums of money
being expended on IT. As an example, a recent study

282 Cornell Hospitality Quarterly AUGUST 2008

 INFORMATION TECHNOLOGY IN HOTEL MANAGEMENT
by McKinsey concluded that after spend-
ing $7.6 billion in IT between 1995 and
2000, the lodging industry saw no increase
in revenue (after controlling for the effects
of the booming economy) and no tangible
increase in productivity (Brown and
Stange 2002). Yet significant case evi-
dence suggests that IT has had and contin-
ues to have the potential to enable value
creation and sustained differentiation in
the hospitality industry. For example,
Ritz-Carlton has traditionally been able
to offer unmatched personalized service
using a centralized repository named
CLASS (Customer Loyalty Anticipation
and Satisfaction System) that enables each
property in the chain to collect and retrieve
personal preferences of each guest (Klein,
Sasser, and Jones 1999). More recently,
Harrah’s Entertainment has received signifi-
cant attention for its business intelligence
(BI) initiative (Lal and Carrolo 2002)—a
cornerstone of its considerable financial
success.
But simply relying on case evidence to
demonstrate the value of technology in
hospitality limits the ability of hospitality
scholars to generalize and disseminate
their findings. This is particularly impor-
tant since it is not enough for this research
to influence information systems profes-
sionals. Rather, this research must perme-
ate the discourse and the agenda of senior
management. Surveys have historically
shown remarkable consistency with the
finding that executives typically feel that
IT decisions are well outside of their com-
fort zone (Ross and Weill 2002)—and hos-
pitality is no exception. This inability of
executives to evaluate the strategic poten-
tial of the IT resource can create chal-
lenges, since both a dogmatic acceptance
of the value of IT and its a priori rejection
are dangerous policies.
With that in mind, this article supports
the integration of IT into management
AUGUST 2008
INFORMATION TECHNOLOGY
strategy in three ways. First, it introduces
the notion of IT-dependent strategic initia-
tives (Piccoli and Ives 2005) in an effort to
spur hospitality academics and managers
to expand their focus on IT investments.
Second, it produces a framework, grounded
in a review of more than twenty-five years
of academic research on the strategic value
of IT. Third, based on the proposed frame-
work, it suggest some avenues for future
research that are particularly fertile for
hospitality scholars and of particular inter-
est to hospitality managers.
Focusing on IT-Dependent
Strategic Initiatives
Information systems are sociotechnical
systems that include IT, processes, people,
and organizational structure (Bostrom and
Heinen 1977a, 1977b). All four components
are necessary to deliver the information-
processing functionalities the organization
needs. More important, any change in one
component (e.g., a new software program,
a change in organizational structure from
property-focused to brand-focused) will
affect and require adjustment in each of
the other components. In short, any change
has systemic effects (O’Hara, Watson, and
Kavan 1999).
The distinction between information
technology and information systems is
critical if we are to understand the strate-
gic potential of computer-based activities.
Information systems embrace the strategy
inherent in information technology. The
distinction between IT and information
systems clarifies why the firm that focuses
solely on IT investments to become com-
petitive (i.e., blindly purchasing computer
systems) is wasting its money. IT invest-
ments can be strategic only as components
of a firm-specific information system with
information-processing functionality that
is directed at an improved competitive posi-
tion. Thus, the discourse in the strategic
Cornell Hospitality Quarterly 283
INFORMATION TECHNOLOGY INFORMATION TECHNOLOGY IN HOTEL MANAGEMENT
information systems literature should be
recast from a focus on the IT resource to
the more accurate focus on IT-dependent
strategic initiatives.
IT-dependent strategic initiatives consist
of identifiable competitive moves that
depend on the use of IT to be enacted and
are designed to lead to sustained improve-
ments in a firm’s competitive position
(Piccoli and Ives 2005). The notion of IT-
dependent strategic initiatives is rooted in a
perspective that views strategy not as the
making of a few discrete “one-time” deci-
sions but as the configuration of interrelated
and interlocking activities (Rivkin 2000).
Thus, IT-dependent strategic initiatives do
not simply consist of building a computer
system or application that is thought to gen-
erate competitive advantage until it is suc-
cessfully replicated (Carr 2003); rather,
such initiatives consist of the configuration
of an activity system, dependent on IT at its
core, that fosters the creation and appropri-
ation of economic value (Brandenburger
and Stuart 1996). Note that this concept in
no way discounts the role that IT plays.
Initiatives are termed as IT-dependent in
recognition of the fact that they could not
be feasibly executed without the technolog-
ical foundation.
Examples of IT-dependent strategic ini-
tiatives abound in all segments of the hos-
pitality industry. They can be extremely
complex, such as the Harrah’s Entertain-
ment BI initiative (see Shoemaker and
Bowen 2003), or the recent Customers
Really Matter initiative, which was recently
launched by Hilton Hotels, which is cen-
tered on the $50 million OnQ proprietary
IT infrastructure. But IT-dependent strate-
gic initiatives can be much narrower in
scope, such as Carlson’s recent pioneering
effort with web-based check-in or Trip-
Advisors’ foray into social networking and
Web 2.0 with the introduction of the “My
Travel Map” feature.
284 Cornell Hospitality Quarterly
Evaluating the Sustainability
of IT-Dependent Competitive
Advantage
The major criticism levied against the
potential for sustained performance associ-
ated with IT innovation is that technology
is easily replicated by competitors (Carr
2003). In other words, the accusation is
that IT helps companies create value that
they cannot appropriate over time because
competitors can easily imitate the innova-
tion. But shifting away from an IT invest-
ment perspective demonstrates that the
creation and appropriation of economic
value hinges on successfully deploying a
defensible IT-dependent strategic initiative,
not just replicating the IT core.
The Response-Lag Perspective
The framework proposed in this article
is rooted in the response-lag perspective,
which suggests that competitive imitation
occurs in stages (MacMillan 1988, 1989).
Once a firm’s rivals find themselves at a
disadvantage, they search for the sources
of the firm’s competitive advantage. If they
are successful in identifying those sources,
the competitors must decide whether they
are able and willing to respond and, if they
are, what approach to take.
Response lag, that is, the time it takes
competitors to respond in a way that erodes
a firm’s competitive advantage, represents
the delay in competitive response. The
longer the time and the higher the cost of
replication, the more resilient is the firm’s
advantage. Response-lag drivers are defined
as the characteristics of the technology, the
firm, its competitors, or the value system in
which the firm is embedded that combine to
make replication of the IT-dependent strate-
gic initiative difficult and costly (Piccoli and
Ives 2005; MacMillan 1989).
Response-lag drivers can be grouped into
one of the following four barriers to erosion
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 INFORMATION TECHNOLOGY IN HOTEL MANAGEMENT
of competitive advantage: (1) IT-resources
barrier, (2) complementary-resources bar-
rier, (3) IT-project barrier, and (4) preemp-
tion barrier (Piccoli and Ives 2005). The
magnitude of each barrier to erosion is
determined by the strength of its response-
lag drivers. In what follows, I describe
each barrier and its associated response-
lag drivers.
Barrier 1: IT Resources
IT-dependent strategic initiatives rely on
access to the resources and capabilities
necessary to produce and use the technol-
ogy at the core. Two classes of response-
lag drivers contribute to the height of the
IT-resources barrier; these are IT resources
and IT capabilities. An initiative becomes
increasingly difficult to copy as it becomes
more reliant on preexisting IT resources,
such as the IT infrastructure and data repos-
itories, as well as capabilities such as IT
development and management skills.
IT Assets
For the purposes of this discussion, IT
assets are technology resources available
to the organization, including hardware
components and platforms (e.g., a private
network connected to globally distributed
locations), software applications and envi-
ronments (e.g., a proprietary revenue man-
agement system using custom-developed
models), and data repositories. These
resources contribute to building response
lag directly, by simplifying and speeding
up the development and introduction of
the initiative’s IT core, or indirectly, by
making it difficult for competitors who
have no ready access to the needed IT
resources to replicate leader’s initiative.
The literature has identified the following
critical IT assets.
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INFORMATION TECHNOLOGY
IT Infrastructure
An IT infrastructure is a set of IT com-
ponents that are interconnected and man-
aged by IT specialists with the objective of
providing a set of standard services to the
organization (Broadbent, Weill, and St.
Clair 1999). Thus, the IT infrastructure
provides the foundation for the delivery of
business applications. With IT infrastruc-
ture-development times generally estimated
to exceed five years (Bharadwaj 2000), the
response lag and ensuing barrier to imita-
tion is likely to be substantial.
Information Repositories
Information is now widely recognized as
a fundamental organizational resource, and
firms are investing significantly to improve
their ability to collect, store, manage, and
distribute it (Glazer 1991, 1999; Brohman
et al. 2003). Information repositories are
often large data stores containing extensive
information about customers, suppliers,
products, or operations, organized in a struc-
tured form that is accessible and useable for
decision-making purposes (for example, a
data warehouse; see Griffin 1998; Magnini,
Honeycutt, and Hodge 2003). A firm’s
information repositories can contribute to
the development of substantial response lag
by supporting strategic initiatives (Rumelt
1987). Competitors attempting to replicate
the leader’s strategic initiative must not only
duplicate the IT at its core, but they must
also accumulate a comparable information
resource—a feat that, by definition, would
take substantial time.
IT Capabilities
IT capabilities are derived from the
skills and abilities of the firm’s workforce
Cornell Hospitality Quarterly 285
INFORMATION TECHNOLOGY INFORMATION TECHNOLOGY IN HOTEL MANAGEMENT
and represent repeatable patterns of behav-
ior in the use of the firm’s assets (Wade and
Hulland 2004). IT capabilities directly influ-
ence the response lag associated with the
introduction of IT at the core of IT-depen-
dent strategies, because they facilitate the
technology’s design, development, deploy-
ment, and use. These capabilities also play
a fundamental role in enabling effective
and timely implementation, maintenance,
and use of the technology. Researchers
have identified and investigated the follow-
ing critical IT capabilities.
IT Technical Skills and Business
Understanding
IT technical skills relate to the ability to
design and develop effective computer
applications. They include proficiency in
system analysis and design, infrastructure
design, and programming (Ross, Beath,
and Goodhue 1996). Another element is
the depth of business understanding of IT
specialists. Business understanding enables
the IT specialists charged with developing
the technology supporting IT-dependent
strategic initiatives to envision a creative
and feasible technical solution to business
problems. A high level of business under-
standing also contributes to the creation of
response lag by mitigating the risks associ-
ated with the introduction of the strategic
initiative and the relative investments in tech-
nology (Mata, Fuerst, and Barney 1995).
IT-Management Skills
IT-management skills refer to the firm’s
ability to provide leadership for the infor-
mation systems function, manage IT pro-
jects, integrate different technical skills,
evaluate technology options, select appro-
priate technology sources, and manage
change ensuing from the introduction of
IT. IT-management skills, because of their
286 Cornell Hospitality Quarterly
idiosyncratic and socially complex nature
and the learning curve associated with
their development, are a source of sustain-
able competitive advantage. Managerial
IT skills can contribute to creating sub-
stantial response lag when techniques and
routines that have been developed over
time can substantially reduce development
costs and development lead times.
Competitors who attempt to replicate the
initiative but lack the same high level of
managerial IT skills as the innovator face
substantial obstacles to imitation.
Relationship Asset
The relationship asset is accumulated
over time and finds its roots in a mutual
respect and trusting rapport between the
information systems function and business
managers. When a firm has developed a
substantial relationship asset, information
systems specialists and business managers
are able to work together effectively by
coordinating and communicating exten-
sively. Having developed the relationship,
they share a vision for the role of IT within
the business. Business clients share the
risk and accept the responsibility for IT
projects, and information systems special-
ists are able to anticipate a business’s IT
needs and devise solutions that support
these needs.
Barrier 2: Complementary
Resources
While IT is by definition a fundamental
component of any IT-dependent strategic
initiative, successful implementation of such
an initiative requires that complementary
organizational resources be mobilized as
well. Thus, to implement an IT-dependent
strategic initiative, the firm must develop
or acquire the necessary complementary
resources (e.g., physical assets such as a
hotel, intangible assets such as a brand).
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 INFORMATION TECHNOLOGY IN HOTEL MANAGEMENT
As an initiative becomes more reliant on
distinctive complementary resources, the
complementary-resource barrier to imita-
tion strengthens, and replication of the
strategy becomes slower, costlier, and more
difficult. In this situation, competitors will
have to acquire or develop not only the
IT at the core of the strategy but also the
complementary resources that underpin
the initiative.
Structural Resources
Structural resources comprise non-IT-
related tangible and intangible internal
assets used by the firm in the enactment of
its IT-dependent strategic initiative.
Tangible resources. In theory, any tan-
gible resource available to the firm can
underpin an IT-dependent strategic initia-
tive. Among these are competitive scope,
physical assets, scale of operations and mar-
ket share, organizational structure, gover-
nance, and slack resources (Feeny and Ives
1990; Kettinger et al. 1994). In the hospi-
tality industry, a prime location may be the
simplest example of a complementary asset
that can support a new IT-dependent strate-
gic initiative.
Intangible resources. As in the case of
tangible resources, nearly any of a firm’s
intangible resources can support an IT-
dependent initiative. Examples of com-
monly cited intangible resources that can be
so applied include corporate culture, top
management commitment, and the ability
to manage risk (Powell and Dent-Micallef
1997). As with tangible IT resources,
complementary intangible resources create
response lag by making a strategic initiative
more difficult to imitate.
Action Resources
A firm’s action resources define how the
firm carries out its productive activities. The
AUGUST 2008
INFORMATION TECHNOLOGY
action resources specify what activities
are performed and what steps or business
processes make up those activities. The activ-
ities that the firm undertakes and the manner
in which it performs them contribute to
response lag and help sustain competitive
advantage created by the initiative.
Activity System
A performance-maximizing activity
system relies on a set of economic activities
that are both interlocking and mutually
reinforcing, expressly showing internal
consistency (internal fit) and appropriately
configured given the firm’s external envi-
ronment (external fit) (Siggelkow 2001).
Although IT is one of the fundamental
components of the strategy, it still must fit
within the entire activity system.
When a firm has implemented a given
configuration of activities and has devel-
oped the IT core supporting the linked
activities, replication of the technology
alone is insufficient for successful imita-
tion. Indeed, narrowly replicating just
the IT core leads to further decline of the
imitator’s position by absorbing time,
money, and management attention without
eroding the leader’s competitive advantage
(Siggelkow 2001). A classic example of a
firm that has an idiosyncratic activity system
is Southwest Airlines. Because Southwest
does not cater flights, does not offer seat
assignments, has a standardized fleet of
aircrafts, uses less crowded airports, and
focuses on point-to-point travel by price-
sensitive customers, it is relatively resis-
tant to competitive imitation. Many airlines
have imitated one or another aspect of
Southwest’s activity system (some no longer
cater meals, and others have adopted a
modified version of Southwest’s “cattle call”
seating approach), but that alone will not
suffice. That said, attempting to duplicate the
entire package (nearly an insurmountable
Cornell Hospitality Quarterly 287
INFORMATION TECHNOLOGY INFORMATION TECHNOLOGY IN HOTEL MANAGEMENT
project) at minimum generates considerable
response lag.
Business Processes
A business process is defined as the
“specific ordering of work activities across
time and place, with a beginning, an end,
and clearly identified inputs and outputs: a
structure for action” (Davenport 1993). The
notion of business process is related to, but
distinct from, that of the economic activi-
ties discussed above. Economic activities
describe the set of undertakings that the
firm performs, while business processes
describe the way in which the firm per-
forms them. The contribution that business
processes make to response lag and to the
height of barriers to imitation depends on
their distinctiveness and strategic value.
When a firm is able to introduce an IT-
dependent strategic initiative built around a
business process with unique and differen-
tiated characteristics, significant barriers to
imitation are erected.
External Resources
External resources are assets (such as
brand, reputation, and interorganizational
relationship assets) that do not reside inter-
nally with the firm but accumulate with
other firms and with consumers. Generally
intangible, external resources are usually
developed over time.
When a firm’s IT-dependent strategic
initiative can make use of or contribute to
the development of these external resources,
it considerably improves response lag and
augments barriers to imitation. Thus, the
firm forces competitors to develop a com-
parable level of external resources before
producing an effective response.
Barrier 3: IT Projects
IT-dependent strategic initiatives rely
on an essential enabling IT core, but they
288 Cornell Hospitality Quarterly
cannot be implemented until the necessary
technology has been successfully intro-
duced. The response-lag drivers of the IT
project barrier are driven by the character-
istics of the technology and the implemen-
tation process. Information technologies
are not homogeneous, undifferentiated
entities. To the contrary, they differ sub-
stantially with respect to their intrinsic
characteristics, their ability to complement
other organizational resources, the context
in which they are introduced and used, and
the degree of organizational change that
needs to occur during the implementation
process (Orlikowski and Iacono 2001).
For example, while a website can easily be
designed and deployed, large infrastruc-
ture projects (e.g., data warehouses) are
complex, lengthy, and prone to failure.
IT Characteristics
Information technologies differ with
respect to their complexity, distinctive-
ness, and visibility to competitors. The lit-
erature has identified the following IT
characteristics.
IT Complexity
Different IT applications have different
degrees of complexity. The complexity of
the technology is a function of the bundle
of skills and knowledge necessary to effec-
tively design, develop, implement, and use
the IT in question (Fichman 2000).
Technology complexity raises the IT pro-
ject barrier by increasing development lead
times for a competitive response.
IT Uniqueness
Uniqueness represents the degree to
which the technology is custom-made for
the organization. On the low end of the IT
uniqueness continuum are self-contained,
off-the-shelf IT products that need little inte-
gration or customization (e.g., an electronic
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 INFORMATION TECHNOLOGY IN HOTEL MANAGEMENT
mail system). At the high end are custom-
developed applications or infrastructure sub-
systems that are unavailable in the open
market (Piccoli and Ives 2005). When the IT
underlying the innovator’s strategy is not
distinctive, competitors can engage consul-
tants or service firms to aid them in reducing
knowledge barriers and, thereby, reduce the
imitation response lag. Unique IT makes this
process much more difficult (Fichman and
Kemerer 1997).
Visibility
Visibility represents the extent to which
competitors can observe the enabling tech-
nology (Moore and Benbasat 1991). The
visibility dimension can be conceptualized
as a continuum spanning from custom-
developed internal systems (e.g., a data
warehouse), which are virtually invisible to
competitors, to immediately visible inter-
organizational or customer-facing systems
requiring extensive education and selling to
external users or customers (e.g., an online
purchasing system). IT that is highly visible
and is readily available for inspection by
competitors limits the strength of the IT
project barrier.
Implementation Process
Since different classes of information
technologies are inherently dissimilar, it fol-
lows that the processes by which they are
implemented and become available to the
organization also differ. According to the lit-
erature, the implementation characteristics
of the IT core of the strategic initiative in
question will contribute to determine the
strength of this barrier to imitation.
Implementation-Process Complexity
Implementation-process complexity is
a function of the size and scope of the
project, the number of functional units
AUGUST 2008
INFORMATION TECHNOLOGY
involved, the complexity of user require-
ments, and possible political issues, among
other things. Complex IT infrastructure
projects certainly have a substantial lead
time. While the components may be
commodity-like (e.g., personal computers,
servers, telecommunication equipment), it
is difficult to integrate them into an effec-
tive system (Broadbent, Weill, and St.
Clair 1999).
Degree of Process Change
Business processes often need to change
to fit a new system—particularly in the case
of large, highly integrated enterprise sys-
tems (O’Hara, Watson, and Kavan 1999).
The challenges escalate when several orga-
nizations or operations use the technology
involved in the strategic initiative. The
more departments involved and the more
organizational boundaries crossed, the
harder and the riskier the change becomes.
Yet as complexity increases, so do the diffi-
culties encountered by competitors in imi-
tating the strategy.
Barrier 4: Preemption
Even if a competitor is able to replicate
an IT initiative, the response may bear no
fruit. This is true when the IT-dependent
strategic initiative pioneered by the first
mover creates preferential relationships
with customers or other members of the
value system and thereby introduces sub-
stantial switching costs. Research about
switching costs has a long tradition demon-
strating that under these circumstances it is
not enough for competitors merely to imi-
tate the leader’s strategy; they need either
to compensate the customer for the cost of
switching or provide enough additional
value to justify the customer’s decision to
incur the switching costs (Feeny and Ives
1990). That is, imitators must be “that
much better,” where “that much” is an
amount greater than the current value of all
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INFORMATION TECHNOLOGY INFORMATION TECHNOLOGY IN HOTEL MANAGEMENT

cospecialized investments that the customer the potential for strong barriers to imitation
has made. associated with the initiative.

Switching Costs Cospecialized Intangible Investments

Switching costs represent the total costs
borne by the parties of an exchange when
one of them leaves the exchange—includ-
ing psychological, physical, and economic
costs. Switching costs are particularly
powerful when it comes to IT-dependent
strategic initiatives because “switching
costs are the norm, not the exception, in
the information economy” (Shapiro and
Varian 1998, 111). IT-dependent strate-
gic initiatives, which rely heavily on the
collection, storage, manipulation, and dis-
tribution of information, are particularly
suited to the creation and exploitation of
switching costs.
Cospecialized Tangible Investments
Implementing an IT-dependent strategic
initiative may require that the firm’s cus-
tomers acquire the physical assets necessary
to participate in the initiative. The total
capital outlay necessary to obtain these assets
is termed cospecialized tangible invest-
ments. These range from computer hard-
ware and telecommunication equipment
to software applications and interfaces
between the existing customers’ systems
and the firm’s IT. For example, hotel fran-
chisees buy costly interfaces for the fran-
chising brand’s reservation system. These
interfaces become valueless if the property
is rebranded. The extent to which the IT-
dependent strategic initiative requires cospe-
cialized tangible investments determines
As is true of tangible investments, imple-
menting an IT-dependent strategic initiative
often necessitates that a firm’s customers or
channel partners invest time and money to
take part in the initiative. An investment of
this kind is known as a cospecialized intan-
gible investment. For instance, to benefit
from customer relationship management
initiatives, customers often need to take the
time to complete a profile. Cospecialized
intangible investments might include
“set-up” costs as well as ongoing costs
(e.g., retraining new travel associates to use
a reservation system). Data and information
repositories represent perhaps the most
important class of cospecialized intangi-
ble investments in the information age.
Considerable switching costs can be built on
information accumulated over time. An inter-
esting example is offered by information
that is valuable only as long as the customer
is using the firm’s products or services (e.g.,
revenue-management models and historical
records that are brand specific and become
valueless if the hotel is rebranded).1
Value System Structure
A firm does not engage in economic
activity in isolation but as a link in a larger
value chain or system that includes upstream
and downstream members. The structure
of this value system can provide opportuni-
ties for preemptive strategies and for the
exploitation of the response-lag drivers

1. The software here is neither proprietary nor brand specific, and the data are not acquired over a network
or hosted by the brand. Yet the historic data and the models the hotel has developed assume that the hotel
has a given brand (e.g., Four Seasons). If the hotel is rebranded, while the software, the data, and the mod-
els are retained, their value is much lower because the data and models are specific to the original brand
and assume the hotel sports the related flag (e.g., has access to Four Season’s brand equity, reservation
systems, loyal customer base).

290 Cornell Hospitality Quarterly AUGUST 2008

 INFORMATION TECHNOLOGY IN HOTEL MANAGEMENT
discussed here. The structure of the value
system does not directly affect the strength
of the preemption barrier to imitation but,
instead, magnifies or diminishes the pre-
emptive effects of switching costs.
Relationship Exclusivity
An exclusive relationship exists when
participants in the value system will elect to
do business with only one firm that provides
a particular set of products or services. The
firm’s counterpart (i.e., customer or supplier)
places a premium on dealing with either the
firm or one of its competitors, but not both.
Relationship exclusivity is the norm with IT-
dependent initiatives that provide integration
services and that benefit from the accumula-
tion of historical information. When first
introduced, the American Airlines SABRE
terminal for travel agents created strong
incentives for relationship exclusivity, as
travel agents did not want to waste valuable
office space for competitors’ proprietary
terminals (e.g., United’s Apollo), which
were considered essentially duplicates of the
SABRE terminal.
When a business relationship benefits
from exclusivity, the customer faces penal-
ties for hedging behavior and for sourcing
the needed product or service from multiple
firms, and when competitors introduce com-
peting offers, customers are already invested
in their relationship with the incumbent.
Concentrated Value-System Link
At each of the various stages or links of
the value system, the degree of concentra-
tion in the link is inversely proportional to
the number of suitable business entities
populating that link—where suitability
depends on whether the firm would find
the products or services offered by the ven-
dors populating the link acceptable. A
highly concentrated link is one where there
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INFORMATION TECHNOLOGY
are relatively few organizations or con-
sumers available for the firm to use or
serve. In the case of airline global distribu-
tion systems (GDSs), for instance, the total
number of travel agents serving the market
targeted by the airline sponsoring the
system represents the concentrated link. A
market of given size will support only a
finite number of competitors, and achiev-
ing a substantial penetration in the concen-
trated value-system link—by definition, a
small market—is necessary to successfully
preempt imitation. As the degree of con-
centration increases, the time necessary to
secure a relationship with a substantial pro-
portion of the link decreases—all else
being equal. Consequently, the leader has a
better chance of capturing a substantial
proportion of relationships and thereby
using switching costs to “lock out” com-
petitors and maximize its barriers to imita-
tion. Conversely, when a link in the value
system comprises a large number of busi-
ness entities, a firm is unlikely to effec-
tively reach a critical mass of entities and
raise substantial barriers to imitation in the
same amount of time.
The Dynamics of Sustainability
When launching IT-dependent strategic
initiatives, as with any other strategic initia-
tive, a firm must have a plan for continu-
ously remaining ahead of the competition.
The information systems literature has
recently begun to incorporate the notion of
agility (Sambamurthy, Bharadwaj, and
Grover 2003) and dynamic capabilities
(Wade and Hulland 2004). This perspective
integrates with the framework proposed
here as it calls for looking at opportunities
to reinvigorate and reinforce the four barri-
ers to erosion. Two primary mechanisms to
reinvigorate and strengthen advantage over
time have been identified: capability devel-
opment and asset-stock accumulation.
Cornell Hospitality Quarterly 291
INFORMATION TECHNOLOGY INFORMATION TECHNOLOGY IN HOTEL MANAGEMENT
Capability development. Capability
development is the process by which an
organization is able to improve its perfor-
mance over time by enhancing its ability to
use available resources for maximum effec-
tiveness (McKenney, Copeland, and Mason
1995; Nevis, DiBella, and Gould 1995).
When it comes to IT-dependent strategic
initiatives, the firm is able to engage in
“learning by using” to develop a superior
ability to use the firm’s resources. For
example, reflecting on their success with
SABRE, some of the pioneers suggested
that SABRE was developed to respond to an
internal challenge: managing American
Airlines’ growing inventory of seats and
routes. Once SABRE was in place and
American Airlines began using it with
increasing competence, its potential as a dis-
tribution channel became apparent (Hopper
1990). Thus, there is a mutually reinforcing
dynamic between response-lag drivers and a
firm’s IT-dependent strategic initiative.
Response-lag drivers offer the firm a “head
start” on the competition. The enactment of
the strategy enables the firm to engage in the
learning process, leading to further develop-
ment of the response-lag drivers and the
preservation of barriers to imitation.
Asset-stock accumulation. Many assets
underpinning an IT-dependent strategic ini-
tiative cannot be acquired in the market
(e.g., specialized databases and forecasting
models, a company reputation or brand).
Rather, such assets must be built up and
developed over time as a result of a consis-
tent process of accumulation (Dierickx and
Cool 1989). Harrah’s Entertainment has
shown the competitive power of customer
data and data analysis. At the core of
Harrah’s success is a comprehensive reposi-
tory of personal and behavioral data about
each gambler and predictive computer mod-
els of a gambler’s projected worth. Harrah’s
ability to collect data and develop the
predictive models depends on having the
292 Cornell Hospitality Quarterly
information systems for data collection,
storage, analysis, and distribution in place.
These became available only when Harrah’s
launched its IT-dependent strategic initia-
tive. Moreover, no matter how committed a
competitor may be, the process of data
accumulation requires time to complete. For
example, if a destination customer visits a
Las Vegas property once per quarter to play
blackjack, collecting six data points about
that customer (i.e., information on six visits)
requires one and one-half years.
For these reasons, sustainability often
does not stem from visionary one-time
initiatives but from evolutionary efforts
predicated on a commitment to capability
building and asset-stock accumulation
(McKenney, Copeland, and Mason 1995).
On this basis, the firm can develop the
strategic initiative, offering a moving tar-
get to its competitors by reinforcing its
barriers to imitation over time.
Implications for Research
As outlined above, over the past three
decades, information systems researchers
have identified a number of response lag
drivers that can contribute to the sustainabil-
ity of a competitive advantage stemming
from the implementation of IT-dependent
strategic initiatives. These response lag
drivers can be grouped into four barriers to
erosion: namely, the IT resources barrier,
the complementary resources barrier, the
IT project barrier, and the preemption
barrier. The literature also suggests that
capability development and asset stock
accumulation are the two processes by
which response lag drivers are created and
strengthened over time.
While the literature has produced signif-
icant insight, a number of questions await
investigation. This is particularly true in the
hospitality industry, where the emphasis on
service and customer service systems offers
a wealth of opportunities for scholars to
AUGUST 2008
 INFORMATION TECHNOLOGY IN HOTEL MANAGEMENT
contribute to our understanding of strategic
information systems. Hospitality scholars
have the responsibility to uncover and
explain how IT-dependent strategic initia-
tives lead to the creation and appropriation
of economic value in this industry.
Research in this area has to contend with
two methodological problems. First, study-
ing the impact of information systems on
a firm’s competitive position over time
requires a longitudinal approach that makes
it difficult to collect needed data and to
rule out competing explanations. The case
of Wyndham International is emblematic
(Piccoli and Applegate 2003). While the
firm crafted the innovative Wyndham
ByRequest initiative and witnessed some
positive results with respect to brand recog-
nition and customer loyalty, its prohibitive
debt position prevented it from becoming
profitable. This confounding factor makes
it difficult to determine whether the
Wyndham ByRequest initiative was suc-
cessful. We cannot definitively say that this
initiative failed to differentiate the firm or
to create a sustainable source of competi-
tive advantage. Recent research suggests
that traditional aggregate measures of a
firm’s performance may be ill suited to the
evaluation of specific initiatives (Ray,
Barney, and Muhanna 2004). Yet obtaining
longitudinal process-level data is one of the
primary challenges associated with
research in this area.
Beyond methodological considerations
and the validation and testing of the pro-
posed model, a number of opportunities
for extension exist. The current impetus
toward the investigation of dynamic IT
capabilities suggests that some response-lag
drivers that are developed through organi-
zational learning or asset stock accumula-
tion will be specific to the IT-dependent
strategic initiative that originally generated
them, while others will likely be broader
and will generate more general digital
AUGUST 2008
INFORMATION TECHNOLOGY
options. I have found, however, no compre-
hensive taxonomy of IT-dependent strate-
gic initiatives. Developing and testing such
a taxonomy will enable the systematic eval-
uation of different classes of IT-dependent
strategic initiatives. Cross-organizational
initiatives (e.g., supply chain management)
also represent a class of initiatives that cre-
ates fertile ground for extending research
studies beyond the current focus on an
individual firm. With the widespread adop-
tion of enabling technologies (e.g., radio
frequency identification), this area of
research has the potential to be extremely
timely and relevant.
Significant opportunities for future
work also exist for better contextualizing
the proposed model to hospitality research.
The emergence of the service science per-
spective (Spohrer and Riecken 2006) has
challenged information systems scholars to
focus on service design and service provi-
sion. Moreover, the increasing presence of
information technology as an enabler of
service (Rayport and Jaworski 2004) has
focused managerial attention toward the
possibilities offered by customer service
systems (Brohman et al. 2003). Hospitality
scholars, with their deep understanding of
the service context, are best positioned to
respond to this challenge. Future work
should seek to understand the potential for
IT-dependent strategic initiatives focused
on service provision and service delivery.
Moreover, it should evaluate whether agile
information systems provide the opportu-
nity for the provision of unprecedented
levels of personalized service.
Managerial Implications
Beyond serving the needs and objectives
of the community of hospitality scholars,
the concept of IT-dependent strategic initia-
tives and the framework introduced in this
article should prove useful to hospitality
managers. First, conceptualizing information
Cornell Hospitality Quarterly 293
INFORMATION TECHNOLOGY INFORMATION TECHNOLOGY IN HOTEL MANAGEMENT
technology as part of IT-dependent strategic
initiatives rather than as IT investments
focuses attention on the fact that value
creation with technology does not occur in
isolation. Rather, it occurs in conjunction
with the redesign of business processes, the
selection and training of appropriate indi-
viduals, and often with organizational struc-
ture change. In the case of Harrah’s, the firm
invested $100 million in IT. For that to pay
off, the firm had to first restructure its casino
operations to facilitate the consolidation of
cross-property data and to eliminate disin-
centives to cross-property marketing.
Furthermore, the firm had to hire a cadre of
new employees with analytical skills—so
called decision scientists—and institute a
new set of experimental processes designed
to proactively generate insight about cus-
tomer behavior.
Another example is provided by the
Radisson Express Yourself initiative—
pioneering hotel check-in on the web. For
this process to operate, Radisson had to do
far more than roll out a new website. The
initiative required the redesign of the
check-in process, with the institution of
processes for preassignment of rooms to
customers checking in online and for the
creation of a separate queue for Express
Yourself guests.
While perhaps intuitive on the surface, the
notion of IT-dependent strategic initiatives is
still far from the norm in the hospitality
industry. The IT investment perspective,
which treats technology as somehow sepa-
rate from other organizational resources,
remains prevalent.
The second contribution of this article
to managerial practice is the sustainability
framework. Rooted in three decades of
research, the framework can be used to
evaluate both proposed new initiatives and
those of competitors. While the objective
is not to estimate exactly the magnitude
of any particular barrier to erosion, the
294 Cornell Hospitality Quarterly
framework guides the analysis through a
series of issues designed to refine the
analysis. These issues are discussed here
from the perspective of an innovator propos-
ing a new IT-dependent strategic initiative.
Note, however, that the framework is
flexible and the same points can be used to
analyze the sources of response lag in an
existing initiative.
The analysis can also identify competi-
tors who are positioned to replicate the
initiative. Based on a clear understanding
of the characteristics of the proposed
IT-dependent strategic initiative, the objec-
tive of this competitor analysis is to evalu-
ate the strength of the IT-resource and
complementary-resource barriers to ero-
sion. Managers should at this point evalu-
ate each response lag driver and identify
sources of asymmetry that can be exploited
and amplified through the deployment of
the proposed initiative.
The analysis can also determine how
long it will take competitors to have the
same information-processing functionality
in place and whether replication will do
competitors any good. Armed with an
understanding of which competitors will
be in a position to respond to the innova-
tion and a general idea of how long it may
take them to have the same functionality in
place, the innovating firm should use this
part of the analysis to help estimate the
magnitude of the preemption barrier to
erosion. Even when outright preemption is
not possible, the attentive innovator often
has the ability to create substantial obsta-
cles for any prospective imitator by levy-
ing switching costs at the appropriate
stage in the value system.
Finally, the analysis should determine
what evolutionary paths are created by the
innovation. No initiative is static, and bar-
riers to erosion decay over time as compe-
tition runs its course. This issue enables an
analysis of the organizational learning
AUGUST 2008
 INFORMATION TECHNOLOGY IN HOTEL MANAGEMENT
and asset-stock-accumulation processes
described earlier. While the evolutionary
paths thus identified must be revised as the
situation changes, this analysis can high-
light important response-lag drivers that
can be strengthened over time.
Conclusions
The hotel industry’s relationship with
information technology could be charac-
terized as a love-hate relationship since its
first application to the industry in the early
1960s (see, for example, Alvarez, Ferguson,
and Dunn 1983). Managers intuitively
understand and value the potential that IT
offers for strategic differentiation and
value creation. Yet executives often feel
threatened by the complexity and rapid
pace of IT evolution and lack reliable mod-
els to evaluate its strategic potential.
This article has sought to summarize and
integrate the interdisciplinary literature con-
cerned with the sustainability of IT-enabled
competitive advantage in an effort to pro-
vide a framework that can help both hospi-
tality scholars and managers formally
analyze existing and proposed IT-depen-
dent strategic initiatives. The timeliness of
this work is suggested by a number of hos-
pitality trends and the growing potential
offered by IT innovations. The framework,
grounded in three decades of scholarly
research, comprises a static and a dynamic
component, thus allowing for the generation
of testable hypotheses and a comprehensive
analysis of how and when competitive
advantage rooted in information systems
innovations can be protected.
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