Interorganizational Systems and Competitive Advantages – Lessons from History

Abstract

Global business constantly faces radical transformations stemming from advances in information technology (IT). The concept of gaining competitive advantages by linking information systems across organizations (e.g., supply chain integration) has taken on an overtone of dogma in many business circles. Such electronic linkages are known as Interorganizational Systems (IOS). Lately, the growing importance and easy accessibility of the Internet have propelled IOS to a new height. Undoubtedly, IOS can have a great impact on organizational performance and industry structure. However, IT such as the Internet is readily available to all companies, and most IOS concepts can be easily replicated. Followers often enjoy newer and better technology that enables them to offer comparable services in a short time and possibly at a lower cost. Late adopters can also learn from the experience of innovators and thus avoid problems and hiccups along the way. How, then can organizations achieve competitive advantages from IOS?This paper examines a number of successful IOS such as the SABRE reservations system from American Airlines, the Apollo reservations system from United Airlines, the ASAP Express from Baxter Healthcare Corporation, and the Wal-Mart Supply Chain system. These are some of the rare few that have managed to sustain competitive advantages (albeit some for a short period of time) as other companies installed similar electronic capabilities. The factors that contribute to the success of these systems are discussed. The paper also looks at the impact of the Internet on IOS and the strategies for IOS in the Internet era.

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