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Keywords
Internet, Competitive advantage, Profitability
Abstract
Since the beginnings of the computing era it has been suggested that firm performance could be enhanced by the use of information technology which would help firms to score better on such indicators as productivity, profitability and market share. TCP/IP or the Internet are examples of the technology that is now available to help firms pursue their strategic aims. So far, however, their effects remain uncertain. In this paper we attempt to provide some evidence regarding the impact of the Internet on competitive advantage in a non "dot.com" industry in Spain. We also offer some ideas that may help to explain the role of the Internet as a competitive tool in modern firms.
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Introduction
Since the beginnings of the computing era (Kaufman, 1966; Licklider and Taylor, 1990) it has been suggested that the implementation of computing technologies would have a series of positive effects on the enterprise (McFarlan, 1984; Porter and Millar, 1985; Cash and Konsynski, 1985). These authors claim that internet technology (IT) may serve as a strategic tool: by modifying not only the conditions in which products are supplied and produced, but also the market structure itself and economies of production. IT has a potential effect on any of Porter's (1980) competitive strategies, whether it be cost leadership, differentiation or specialisation in a market niche.
According to Porter and Millar (1985, p. 14), IT can alter a firm's costs at any point in the value chain (Porter, 1980), since its effects come to bear on all the elements needed to manage information. It can also enhance a strategy of differentiation, by giving the product a distinctive character, or providing the company with speed, reliability of service, or additional information useful to its customers (Cash and Konsynski, 1985). Additionally, if the computing potential is combined with robotics to drive differentiation or lower costs for a specific industry, it will provide a basis for creating segmentation or focusing advantages.
To focus solely on the impact of TCP/IP technologies - Internet - on the organization, it is surprising...