ph.d comprehensive exam response, w. w. allen huckabee

7/27/2019 Ph.D Comprehensive Exam Response, W. W. Allen Huckabee

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Comprehensive Examination Written Responses

Presented in Partial Fulfillment

of the Requirements for the Degree

Doctor of Philosophy

William A. Huckabee, Jr.

Project Management

School of Business and Technology

Capella University

November 20, 2010

City, State, Zip:Phone:E-mail: [email protected]: Dr. Mary Lind


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Comprehensive Examination for (William A. Huckabee Jr.)

1

QUESTION 1

A predicament companies face today is the challenge of finding the appropriate process for

value creation within the organization. Value creation is defined as the method used to conceive

new ideas for new products. Explore the value creation theories relating to softwaredevelopment and integrate these theories to the outsourcing of software development.


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Response to Question 1

Introduction

Sirmon, Hitt, and Ireland (2007) suggest the pursuit of every business is creating and

maintaining value (p. 273), however, with the subjective view of value, many software

development firms find it hard to define and create value for their customers. Sirmon, Hitt, and

Ireland define six dimensions of value. These dimensions can be defined in both monetary terms

and nonmonetary terms. Also, Slater (1997) defines three theories that provide the foundation for

value creation. These theories include the "transactional cost theory, resource based view of the

firm, and the value based theory of the firm" (p. 163). Each theory makes a significant

contribution to value creation, but in different ways.

Value creation in the manufacturing and service industry employs different strategies to

such as product differentiation, developing core capabilities, and streamlining processes to

reduce cost, which increase product value for the consumer. Technology firms however, can

employ many of the same methods to create value. In the software development industry, some

value creation methods employed in manufacturing and service organizations apply to the

software development industry, but will not work as well. Therefore, three major value creation

theories are explored for applicability in software development activities. These major theories

are supported with some components of other minor approaches that work together to create

value in a software development project (Thompson, Strickland, & Gamble, 2007).

Evidence suggests that value creation in the software development industry is created by

employing techniques that address requirements elicitation, stakeholder and relationship

management, and software engineering. Each area can increase the capability of a firm to create

value. However, outsourcing complicates value creation in this industry, and companies are


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struggling to increase their capabilities by using outsourcing. Because outsourcing arrangements

are complicated, an integrated approach to value creation must be taken. Instead of using a single

approach in creating value, evidence strongly suggests that combining theories is a better,

holistic approach to creating value in an outsourcing arrangement (Barney, Aurum, & Wohlin,

2008).

It is suggested that value creation is a misunderstood concept in the software

development industry. Outsourcing complicates this understanding of value creation as applied

in an outsourcing engagement. This makes it much harder for software development companies

to find innovative methods for creating value and increasing firm performance. Therefore, the

purpose of this paper is to explore value creation theories and approaches that apply to software

development and then integrate them into the outsourcing of software development activities.

Value Creation

Sirmon, Hitt, and Ireland (2007 suggest the pursuit of every business is creating and

maintaining value (p. 273). However, companies are finding it difficult to define value creation.

This could be the result of the variations in how value is defined. For instance, Nunamaker,

Briggs, and Vreede (2001) suggest there are six dimensions of value including (a) economic (b)

physical (c) emotional (d) social (e) cognitive and (f) political (p. 3). Also, Muller and Torronen

(2003) suggest that value can be defined in nonmonetary terms such as sacrifices, competitive

gains, and social relationships (p. 110).

That said, there are three theories that serve as a foundation for value creation. Slater

(1997) suggests these theories are transactional cost theory (TCT), resource-based view (RBV)

of the firm, and value-based theory of the firm (p. 163). First, TCT comes close to promoting

value creation because this theory suggests that a firm should aim for the lowest costs associated


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with market transactions. Specifically, TCT suggests that when a firm is engaged in market

activities, it should seek to minimize the transaction costs between two alternate sources of

exchange; those associated with the market and those associated with other market players. This

suggests that TCT promotes creating value through reduced transactional costs (Brickley, Smith,

& Zimmerman, 2004).

Second, the RBV is based on the thinking that value creation is a by-product of

employing firm owned resources to produce products and services. The resources, both tangible

and intangible, can be employed in configurations that facilitate effective and efficient market

transactions, which create value. This aligns with what Thompson, Strickland, and Gamble

(2007) suggest. They suggest a firm must use the full spectrum of capabilities and resources to

create value in gaining a competitive edge. Further, Sirmon, Hitt, and Ireland (2007) suggest the

resources a firm own drives value creation (p. 273). To realize value creation these researchers

suggest that a company should work to collect, combine, and take advantage of their resources to

effectively compete with rivals. Slater (1997) agrees and suggests that RBV can offer a firm

superior performance (p. 163). However, to be productive, a firm must employ resources that

are rare, invaluable, and difficult to imitate (p. 163). However, like TCT, the RBV does not

specifically address value creation.

As a final theory, Slater (1997) proposes the value-based theory of the firm (p. 163),

which specifically addresses value creation. He suggests the theory is specifically designed to

deal with the turbulent and complex competitive environment (p. 163) that businesses are

experiencing today. Slater discusses the parts of the theory, which include market knowledge,

the firms environment, and the value proposition (p. 166). For instance, a firms ability to learn

from its environment promoting continuous improvement of value creation activities. This


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allows a firm to become more innovative in meeting customer needs, which creates a sustained

competitive advantage. Finally, the ability to increase knowledge and to develop innovative

methods to meet customer needs enables a firm to maximize value creation activities (p. 165).

A strategy to influence value creation can increase performance, but such a strategy can

be complex. For instance, Slater (1997) suggests a value creation strategy can influence the

scope and scale (p. 164) of a firms operations. Further, a value creating strategy can also

influence the firms internal activities as well as those that are outside the firms boundaries.

Slater suggests that such a strategy can affect the market objectives that a firm seeks to achieve.

This mixture of complexities affects the value proposition the firm presents and the capabilities

the firm develops to translate the value proposition into and deliver value to its customers.

The evidence presented thus far suggests that value can be created by various methods.

For instance, Brickley, Smith, and Zimmerman (2004) suggest there are six methods that a firm

can employ to create value. A firm can pursue methods to reduce its transaction costs through

increasing product and service quality, bundling products, and introducing substitutes (pp.

193-196) that counter rivals products. Further, these researchers suggest that creating new

product and service offerings can create value. This can be done by creating core competencies

and capabilities that rivals cannot imitate, creating a positional advantage in the firms industry,

and developing value networks.

Also, Brickley, Smith, and Zimmerman (2004) add that increasing cooperation between

suppliers and other institutions can create value. This aligns to Moller and Torronens (2003)

suggestion that nonmonetary activities can create value. This is done by creating improved

processes that reduce costs and increase product and service quality in coordination and

collaboration with other market participants. Finally, cooperation and collaboration allows firms


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to create value because they share expertise (Hansen & Nohria, 2004, p. 5), which provides

improved capabilities for reacting to market and customer changes.

Value Creation in Software Development

Much of what has been discussed thus far addresses value creation in the manufacturing

and service industry. However, it is possible the technology industry looks at value creation

differently, which increases the complexities in defining value in this industry. However, it could

also be argued the methods used in the manufacturing and service industries still apply to the

technology industry. Complicating the issue of value creation further, the software industry can

be characterized by rapid change (Miller, & Floricel, 2004), which will require many different

strategies for creating value.

For instance, Miller and Floricel (2004) suggest that when developing software products,

technology firms can create value by offering innovative products that reduce user uncertainty

by developing products that are based on a stable architecture (p. 26). Take for example

enterprise resource planning (ERP) industry. This industry has experienced substantial growth in

recent years, but all ERPs such as "JD Edwards, Oracle, and PeopleSoft (Sprott, 2000, p. 63)

contain modular functionality that offer companies the same basic business process abilities.

However, each vendor distinguishes their products based on particular implementation processes

and source code; Oracle having open source code and SAP having proprietary source code. Thus,

ERP vendors are using the same techniques a manufacturing firm would to create value through

differentiation.

Also, Miller and Floricel (2004) suggest a technology firm will have to increase its

coordination with other market players to "align products to a dominant architecture (p. 28). For

example, Sun Microsystems (as cited in Miller & Floricel, 2004) collaborated with Microsofts


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competitors, Oracle, IBM, and over 190 other firms (p. 29) to develop a standard architecture

for running its Java platform. The move by Sun Microsystems afforded the firm with three

benefits. First, the strategic move established an industry standard (p. 29). Second, the action

created more value for customers, which resulted in an increase in demand (p. 29) for Suns

products. This evidence suggest that although the software industry involves change, old ways of

creating value still apply. However, others suggest this industry will require employing different

methods of creating value.

Value-based Requirements Engineering (VBRE)

Barney, Aurum, and Wohlin (2008) suggest that 80% of the value driven from software

comes from 20% of the software components (p. 576). This requires software developers to

find methods to create value for the firms customers to increase firm performance. This requires

a firm to be more competitive and responsive to customer (p. 576). Further, these researchers

suggest that software development is tracked and monitored by project metrics, such as project

cost and schedule (p.578), and this approach does not take value creation into consideration.

Barney, Aurum, and Wohlin suggest that to create value in such cases, active customer

participation (p. 577) in creating value is paramount. However, these researchers suggest that

only a limited number of companies can define and measure value (p. 579) from a customers

perspective.

As a result, Barney, Aurum, and Wohlin (2008) suggest value-based requirements

engineering (VBRE) is a method by which a firm can define and measure customer value. For

instance, this process exploits the concept of economic value during system requirements

elicitation processes. It also helps developers to identify stakeholders that are critical to the

success of the program, extracting their value propositions, and reconciling the value


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propositions into an agreed upon set of system objectives (p. 579). In fact, the results of their

research suggest that when this process is performed properly, a firm can create customer value.

Co-Creating Value

Prahalad and Ramaswamy (2004) suggest yesterdays focus on market exchanges was

separate from the value creation process and that these exchanges was more about value

extraction (p. 6) rather than value creation. For instance, the idea of customer relationship

management (CRM) was not designed to create value; it was designed to target and manage

the right customer and is not a source of value creation (p. 6). Also, the transparency of

todays business environment provides customers with the ability to negotiate prices and other

market terms with companies (p. 7).

This suggests that technology companies need to create a value co -creation (Prahalad

& Ramaswamy, 2004, p. 7) strategy with customers sharing in the value creation process. This

creates high-quality interactions (p. 7), which enables companies to unlock new sources of

competitive advantages. Further, value is created in a cooperative arrangement with the

customer, therefore, instead of targeting and managing the right customer, a joint effort must

occur to create value. Further, this joint endeavor is not about pleasing the customer, it is about

creating value. This increases the firm's capability of creating value and can lead to increased

innovation and new market opportunities (Prahalad & Ramaswamy).

Value Based Software Engineering (VBSE)

Software is developed in a value-neutral (Boehm, 2003, p. 1) way. Boehm suggests

that most software failures can be attributed to value-oriented deficiencies (p. 1). Among these

deficiencies are (a) a lack of user input (b) changing requirements (c) unclear objectives and (d)

unrealistic expectations (p. 1). All but one of these categories, changing requirements, can be


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aligned with Moller and Torronens (2003) nonmonetary terms, e.g. social relationships. The

value-neutral methodology of developing software is problematic when defining value. This is

because the methodology involves the differing stakeholder perspectives in defining a systems

utility functions or value propositions (p. 1).

Further, Boehm (2003) defines a seven-step process that he describes as the value based

software engineering process (p. 1) (VBSE). The process is used in the development process to

create value by injecting user participation into the development processes during the design,

cost estimation, and software investment analysis (p. 2) stages of the development lifecycle.

This can positively affect the systems value. This seven-step benefits realization results chain

(p. 2) assists developers in performing two functions that increase product value. First, the chain

allows developers and clients to work together to define functionality that is needed to influence

value creation. Second, the benefits realization chain helps developers to identify the

stakeholders that are critical to the success of the system. These stakeholders typically include

users, suppliers, developers, and maintainers (Boehm, 2003, p. 3). This process is much like

the activities of the VBRE process described earlier.

The VBSE process facilitates the removal of the stovepiped (Boehm, 2003, p. 3)

boundaries that typically exists in software development processes. Further, VBSE allows all

stakeholders to take on a more holistic view of system requirements enabling stakeholders to

identify software and non-software initiatives that are focused on creating value producing

(p. 3) results. Also, VBSE increases trust and mutual understanding of system value among the

different stakeholders for the duration of the development process. Finally, following this

framework, Boehm suggests a firm will see an increase in the number of successful software

products being produced, which lead to higher system value.


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Stakeholder Interaction

Each of the preceding theories provide different aspects of how value can be created in

the software development industry. However, there is an additional perspective that originates

from an underlying theme in the preceding theories. For instance, each theories presents a series

of actors working together to develop methods to create value from software products. These

stakeholders can, and often do, influence the value that is derived from a development project.

Also, Nunamaker, Briggs, and Vreede (2001) suggest that value is subjective, meaning that it can

only be defined and measured from a particular point of view; the point of view of different

stakeholders, users, customers, developers, and maintainers, among others. Boehm and Sullivan

(2000) agree and add that many development project failures can be attributed to the failure in

understanding how to translate system design decisions to create value from the resources

expended.

Like Nunamaker, Briggs, and Vreede (2001), Boehm and Sullivan (2000) suggest that the

stakeholders "doing the valuing" (p. 325) significantly complicate the development process. This

is because each stakeholder holds certain apprehensions about value. This follows the notion of

Bowman and Ambrosini's (2000) view of "use value" (p. 2). These researchers indicate that

stakeholders hold certain subjective perceptions about the quality of products in relation to

meeting a need. Further, Boehm and Sullivan indicate that even when a consensus can be arrived

on metrics to measure value, each stakeholder will have a different perspective with regard to the

"distribution of gains" (p. 325). For success, Boehm and Sullivan argue that reconciling

stakeholder differences is a "key factor in software development" (p. 325).


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The Basics of Outsourcing

The use of outsourcing varies by industry, however, DiRomualdo and Gurbaxani (1998)

suggest outsourcing activities are steadily increasing. They estimate that outsourcing in the

technology industry will increase from "$86 billion in 1996 to over $137 billion by 2001" (p.

67). More recent evidence suggests technology companies are spending upwards of "30%"

(Levina & Ross, 2003, p. 332) of their information technology (IT) budgets on outsourcing. The

reason for the increase is that many companies have discovered that it is more effective to

outsource many of their "key value delivery activities" (Slater, 1997, p. 165) than retaining them

in house.

In fact, outsourcing is becoming a key method of generating a competitive advantage and

creating value. Outsourcing is a strategic tool that provides a firm with several benefits. For

example, Jennings (1997) suggest that these advantages include (a) providing a firm with access

to economies of scale (b) increasing a firm's flexibility in reacting market and customer changes

(c) allowing a firm to focus on core competencies (d) enabling a firm to increase their leverage

and (e) reducing overhead costs (Jennings). According to Jennings, these advantages have

provided numerous firms the ability to "achieve outstanding performance" (p. 86).

That said, outsourcing allows firms to concentrate on developing their core competencies

and capabilities in order to "create long-term distinctiveness in the customer's mind" (Slater,

1997, p. 165). As an example, Gallo Winery (as cited in Slater, 1997) outsources all activities

that is not focused on wine making, such as "grape production, marketing, and distribution" (p.

165) functions. This allows Gallo to concentrate on their core activity of making wine. The other

activities that Gallo outsources enhances the firm's wine making competencies and creating value

for the firm's customers.


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Also, Jennings (1997) suggests that outsourcing is becoming an "area of strategic

importance" (p. 85). Outsourcing is based on the premise that vendors can provide a firm with

"state of the art skills and capabilities" (p. 72), which enhances customer value. In fact,

DiRomualdo and Gurbaxani (1998) suggest that many firms are struggling to maintain a strategic

mix of technical and business skills that are necessary to "exploit technology" (p. 72). Therefore,

technology firms are reaching out to vendors for the skills necessary to increase their capabilities

and flexibility.

Further, Htnen and Eriksson (2009) suggest that firms are motivated to outsource

business activities for two reasons. First, there is the potential to reduce costs and as a byproduct,

increase the firm's control over costs. Outsourcing can assist a firm in "lowering operational

costs" (p. 146) in some areas of the firm. This allows management to redirect the savings to other

more profitable areas of the organization, which can improves core competencies. Second, there

is the process perspective. Companies increase the level of outsourcing so that they can "improve

internal process and core competencies" (p. 146), which increases organizational flexibility. This

allows a firm to "accelerate projects, reduce time to market, and gain access to a more flexible

workforce" (p. 146).

While this evidence suggests that outsourcing can provide great benefits to technology

firms, other evidence suggests that many firms are unable to realize the potential benefits of this

strategic tool. Levina and Ross (2003) suggest there is a great need for technology firms to

reduce costs, improve IT management, and access outside talent. These researchers indicate that

upwards of "54%" (p. 332) of outsourcing arrangements fail to provide firms with any cost

savings.


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Creating Value Through Outsourcing

Evidence suggests that there are both positive and negative aspect of using outsourcing to

create value. In order to compete effectively in today's market, technology firms must engage

outsourcing to increase their strategic position. However, is no single theory, model, or concept

that would work best to create value in an outsourcing relationship. Further, it could be

postulated that an integration of multiple value creation methods would best suit a client-vendor

relationship in order to maximize value creating among all parties. For instance, Miller and

Floricel (2004) proposed that a stable systems architecture reduces customer uncertainty and

creates value. Also, Barney, Aurum, and Wohlin (2008) posited that requirements elicitation

increases a firm's value creation capabilities. Meanwhile, Prahalad and Ramaswamy (2004)

suggest that high-quality interactions are needed in the client and vendor relationship to generate

new sources of competitive advantages. Further, stakeholders influence what is defined as value

with regard to the end product's value.

Value can be created by establishing strong vendor-client relationship. For instance,

Moller and Torronen (2003) suggest that when firms focus on their core capabilities, the will rely

on partnerships to perform critical value creating functions external to the firm. However, to be

successful, Moller and Torronen stipulate that a firm must develop a "strong relationship" (p.

109) with vendors in order to create value. These researchers indicate that the client and vendor

must make "significant adaptations and commit significant resources" (p. 109) to the

relationship. Also, relationships in the technology industry are dynamic and interrelated and can

create significant value for the for customers. Further, these relationships are based on both

"direct and indirect relationship functions" (p. 110), which affect value creation. For instance, a

direct impact originates from "profit, volume, and safeguard functions" whereas an indirect


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impact, which is subjective, originates from "innovation, market, scout, and access functions" (p.

110) of the relationship. The latter are harder to define and measure, but can influence value

creation in a vendor-client relationship.

That said, if the vendor-client relationship starts with a stable systems architecture to

work from, value creation will be increased. For example, Helander and Kukko (2009) suggests

that having a stable architecture does create value. In their study of "value creation networks" (p.

76) they found that a stable systems architecture can support value creation activities in an

outsourcing arrangement. This is because a stable architecture provides a "framework for

integrating" the software components of the project. Further, architecture acts as a "value system

router" (p. 83) that gathers the streams of value throughout the development process. This

provides the client with a single software solution that is the focal point of value. Also, these

researchers suggest that in a vendor-client relationship, architecture is the "most specific feature"

(p. 83) that positively influences the relationship, thus creating value for all parties in the

arrangement.

Once a comprehensive and stable system architecture is created, systems requirements

are developed, analyzed , and are aligned to a technical solution. In fact, requirements are the

bases of the relationship because they define the vendor-client contract (Boehm, Bose, Horwitz,

& Lee, 1994). Hickey and Davis (2003) suggest that requirements often "determine the success

or failure" (p. 169) during system development. Therefore, value is created when both the vendor

and client have a thorough understanding of the specifications that meet the customer's needs.

However, requirements elicitation and development is no easy task. Crowston and

Kammerer (1998) suggest that the "hardest single part" (p. 227) of software development is

designing what to build and that conceptually, no other part of software development processes


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are more difficult. In fact, a Standish Group report (as cited in Crowston & Kammerer, 1998)

reports that the most important factor that leads to success in software development process is

"clear requirements" (p. 227). Also, the report suggests that the leading cause for software

development failures are "incomplete requirements," which often leads to "project termination"

(p. 227) which detracts from user value.

This is because requirements elicitation "always requires a coordinated group effort" (p.

228). Crowston and Kammerer (1998) suggest that the problems with developing system

requirements originate in this group effort as a result of poor communication and coordination

and "fluctuating and conflicting requirements" (p. 230). Therefore, it could be postulation that

much of the value created in a vendor-client arrangement is increased in the process of aligning

stakeholder interaction during requirements elicitation process. This includes obtaining more

user participation. For instance, Crowston, and Kammerer found that the two companies in their

study on group processes during the requirements elicitation process discovered that user input

"cannot be over emphasized" (p. 233). This is because users determine the system's "fit" (p. 228)

once it is put into service.

Further, as suggested by Prahalad and Ramaswamy (2004), allowing stakeholders to

participate in the requirements process, value is co-created. Levine (2005) describes this as the

"voice of the customer" (p. 293) and can be the "key to product success" because facilitating

"cross-functional stakeholder" (p. 294) input increases the ability of the vendor and client to

define the product's specifications. This also provides a link to responsibility. For instance, when

the product is co-created, all stakeholders are accountable for product's end result. Co-creating

value in this way adds additional benefits. For instance, Levine suggests that during requirements


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elicitation, waste can be removed from the process of creating the product, increasing its quality

and fit within the organization.

In agreement with Crowston and Kammerer (1998) and Levine (2005), Boehm and

Sullivan (2000) suggest that stakeholders are an important part of the value creation process.

These researchers suggest it is important in obtaining consensus and suggest that when working

with stakeholders, the vendor and client can take three perspectives in reaching consensus. First,

there is a "utilitarian perspective" (p. 325), which suggests that to create value for any one

stakeholder, the system must create value for any one stakeholder. Second, a "non-utilitarian

perspective" (p. 325) can be used. This follows "Rawlsian ethics of fairness" (p. 325), which

suggests that each stakeholder's view of value is given equal weight. Finally, the final method,

which aligns to the "spiral development lifecycle" is the "win-win" (p, 326) concept.

Conclusion

Sirmon, Hitt, and Ireland (2007 suggested that it is the responsibility of every firm to

create value in order to realize increased performance. However, value creation is a subjective

topic, and many software development firms find it hard to define and create value. Three major

value creation theories were explored, VBRE, Co-creating value, and VBSE. These major

theories were supported by components of other theories, such as stakeholder interaction and

relationship management. However, it was found that not one single theory would allow a firm

to create value in the turbulent and changing environment that is associated with software

development, even if the firm was working alone. Outsourcing complicates value creation in this

industry.


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Also, when creating value in an outsourcing arrangement, the vendor and client should

work to create a strong relationship that nurtures the relationship factors that are addressed by

Moller and Torronen (2003), which includes fair distributions of profit based on contributions of

each player in the arrangement. Also, using a stable systems architecture, developing system

requirements through a consensus of stakeholder agreement allows the client and vendor to co-

create value, allowing the different stakeholders to take responsibility. Applying the theories

presented here in integrated fashion will allow the joint arrangement increase value for both

firms, allowing for increased performance. Finally, using an integrated approach provides both

firm's with a specific set of requirements that drives the contract arrangement, the development

work, and end the end, a product that is value by the customer by meeting their needs and time

requirements.


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Introduction

Total quality management (TQM) provides organizations with a unique approach to

improving organizational effectiveness and has a sound conceptual foundation (Hackman &

Wageman, 1995, p. 310) and has become popular in most industrialized nations (Samson &

Terziovski, 1999, p. 396). TQM is an integrated comprehensive approach that involves every

member of an organization. Further, Shin, Kalinowski, and El-Enein (1998) suggest that TQM is

not a "short-term quick fix" (p. 13) because it requires sweeping reforms to a firm's culture,

leadership style, and other core features (Powell, 1995, p. 21) of an organization. TQM is an

important part of business strategy because it can produce increased profits and market share,

improved products and services, and improved employee moral (Deming, 1981, p. 12).

Although organizations can reap great rewards from the program, many TQM

implementations have failed. In fact, Siegal, Church, Javitch, and Waclawski, et al (1996)

suggest as many as 63 % (para. 2) of implementations have failed to provide the benefits that

leaders planned for. Dean and Bowen (1994) suggest that this is because there is no underlying

theory for TQM's use. Additionally, Siegal, et al (1996) identified the leading causes of TQM

failure. Among them is the lack of leadership's involvement in the TQM implementation.

Therefore, many researchers (Beer, 2003; Rui, Emerson, & Luis, 2010; Siegal, et al; Shin,

Kalinowski, & El-Enein, 1998) and practitioners (Crosby, 1996; Deming, 1994; Juran, 1978;

1981; 1994) suggest that leadership could be the root cause of TQM failures. In fact, Savolainen

(2000) suggests leadership can increase the chances of successfully implementing a TQM

program, which is supported by Samson and Terziovski (1999), who suggest that leadership is

the primary driver (p. 326) of TQM success.


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Since leadership is identified as a leading cause of TQM failure, which form of

leadership can best contribute to a successful implementation? TQM and leadership literature

discuss many leadership styles that are congruent with TQM implementation and sustainment,

however, there are too many to discuss in the constraints of this project. Therefore, two

leadership styles are the primary focus of this project; transactional and transformational

leadership. This is because much of TQM literature discusses these styles as being conducive to

TQM. Further, Beer (2003) and Emery and Barker (2007), among others, discuss the importance

of both transactional and transformational leadership to the success of a TQM implementation.

Most research indicates that transformational leadership would be the best form of

leadership that organizations should employ for successful TQM implementation. For instance,

Howell and Hall-Merenda (1999) indicate that both transactional and transformational

leadership, although conceptually distinct (p. 682) are both significantly and positively related

to follower outcome, and that transformational leadership is more positively related (p. 682)

than transactional leadership and can positively affect the successful outcome of a TQM

implementation.

As evidenced above, leadership is a major cause of TQM failure as well as a major

contributor to its success. Moreover, research indicates that both transactional and

transformational leadership can increase the success of TQM. Therefore, the purpose of this

paper is to discuss these two leadership styles and their impact on quality improvement programs

and to provide a comparison of the effects of transactional and transformational leadership for

successful TQM implementation, and then provide an assessment for which leadership style is

the best suitable for successful TQM implementation.


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Total Quality Management Basics

TQM can be traced back to the Union of Japanese Scientists and Engineers (JUSE)

(Powell, 1995, p. 16) in 1949 and was a method used by the Japanese Government to increase

post-war productivity. Additionally, TQM has become just as important as a firms quarterly

financial results (p.15). Hackman and Wageman (1995) suggest there is a sound conceptual

basis (p. 310) for TQM that can produce visible benefits. Others would suggest that there is a

faddish element (Dean & Bowen, 1994, p. 33) associated with the program, however, Juran

(1994) suggests that TQM can be used to achieve world-class quality (para. 54). Further,

Deming (1981) and Powell (1995), among others, discuss the benefits that leaders can gain

through a successful TQM. In fact, empirical evidence provided by Powell suggests that TQM

does produce value (p. 17) for a firm through the realization of a variety of benefits including

improved product quality, greater productivity, increase profits, reduced costs, improved

employee moral (Deming, p. 12) and satisfied customers (Powell, p. 16).

TQM can be defined in various ways such as a management philosophy (Powell, 1986,

p. 16) or as a series of management obligations (Deming, 1981, p. 17). However, for this

project, Crosbys (1996) definition of TQM is the best definition. For instance, he defines TQM

as a deliberate action taken by organizations to create an organizational and personal culture

where all transactions are accomplished correctly, on time, [and] where relationships with

employees, suppliers, and customers are always successful (p. 18). This definition fits because

the program can be applied in any organizational setting including the service industry and at

the department level such as purchasing, billing, and product development (Powell, p. 16).


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As suggested earlier, Dean and Bowen (1994) stipulate there is no underlying theory that

provide the basis for TQM. To address this issue, Anderson, Rungtusanatham, and Schroeder

(1994) conducted a Delphi study to develop a total quality management theory based on

Deming's management method (p. 472) to aid researchers and practitioners in implementing

TQM. Based on Deming's 14 imperative statements targeted at top-level management (p.

474), the theory was subsequently empirically tested. The results demonstrated empirical

support for several relationships in the proposed theory (Anderson, Rungtusanatham,

Schroeder, & Devaraj, 1995, p. 655). The findings of the study suggest that visionary leadership

had a strong and direct effect on internal and external cooperation and learning (p. 648), among

other relationships.

Implementing TQM will be complex because of the level of change that associated with

the program. Implementing TQM requires a fundamental shift in the organizations

management practices and culture (Beer, 2003, p. 624) as well as in the core features of the

firms leadership. Further, TQM requires significant changes in the firms structure, such as

moving from a more centralized organizational structure to a less hierarchical and less

controlling (Savolainen, 2000, p. 215) structure where employees take on a broader role through

participation and team efforts (p. 216). To ensure that a TQM implementation is successful,

leaders need to understand that making such changes will take time. In fact, Powell (1995)

suggests corporate perseverance and leaderships' ability to commit may be a crucial element of

success; without a long-term commitment from senior leaders, TQM programs have no

foundation for success (p. 22).


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Leadership

As evidenced above, leadership can be a contributing factor of TQM failure. In fact, a

lack of leadership can be directly credited for the failure of TQM (Beer, 2003; Dean & Bowen,

1994; Siegal, et al, 1996; Soltani, Liao, Singh, & Wang, 2010). For instance, Waldman, Lituchy,

Gopalakrishnan, and Laframboise, et al (1998) conducted a study of three organizations that

implemented TQM. Poor leadership in two of the three organizations directly contributed to the

failure ofthe organizations TQM program. Forexample, in the hospital case, middle

management did not feel compelled to promote or sell the QI philosophy on a hospital-wide

basis (para. 54). Here the researchers suggest that the form of leadership espoused was laissez

faire (para. 55), which was the root cause of the TQM failure in this case.

In contrast, in the National Police Force (para. 63) case, leadership fully supported the

TQM initiative down to the lowest level. The initiative was a top-down driven program and the

physical presence (para. 53) of leadership was a contributing factor for its success. This

suggests the level of leadership commitment has a direct impact on TQM's success. In fact, Hug

(2005) suggests TQM implementations require the commitment of top leaders (Hug, 2005, p.

454) because they need to assess the status of the change throughout the implementation process.

Waldman, et als (1998) evidence suggests leadership can have both a positive and

negative impact on TQM's implementation. Further, Eisenbach, Watson, and Pillai (1999)

suggest that implementing TQM requires leaders to create new systems and approaches while

Shea and Howell (1998) suggest that the primary focus of TQM is the involvement of all

organizational members in continuous improvement (para. 2). This suggests that leaders must

create an environment that is conducive to cooperation and trust, which fosters employee

involvement (para. 3). Here leaders must establish a solid business case for change to


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communicate the need for change to all organizational members to obtain buy-in (Hug, 2005,

p. 454).

Also, Dancin, Goodstein, and Scott (2002) suggest that old norms and practices (p. 46)

must be deinstitutionalized and new ones justified and diffused throughout the organization

(p. 48). To institutionalize the changes, Siegal, et al (1996) suggest that leaders must create a

vision (para. 16) for transitioning to the future organizational state and that the barriers to

implementing the program be eliminated. Finally, Kavanagh and Ashkanasy (2006) suggest for

leadership to be effective, leaders must behave differently in different situations (p. S82),

which calls for leaders to move between different leaderships styles effectively without losing

the momentum of change. This suggests both transactional and transformational leadership styles

are conducive to successful TQM implementation.

Transactional Leadership

Emery and Barker (2007) define transactional leadership as being a bureaucratic form of

authority and legitimacy (p. 79). Howell and Hall-Merenda (1999) define transactional

leadership as a series of exchanges and negotiations between leaders and followers. Antonakis

and House (2002) suggest that transactional leadership is associated with self-interests and that

transactional leaders are often unable to influence the higher-order motives (p. 7) of followers.

Also, Jung and Avolio (1999) suggest the focus of transactional leadership is on setting goals

(p. 208). Waldman, et al (1998) suggest that transactional leadership follows the contingent

reward theory, which suggests that leaders engage in behaviors that clarify follower roles and

goals (p. 520) to obtain favorable follower behavior. This is the core component of effective

leadership behavior(Bass, Avolio, Jung, & Berson, 2003, p. 208) and the basis of trust


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toward leaders and the organization. This results in a reduction of effort and lower levels of

performance (p. 681). This is supported by the evidence presented earlier by Waldman, et al

(1998), where leadership's laissez faire behavior led to the failure of a TQM implementation.

Transactional leadership requires much effort on the leader's part. For instance, Emery

and Barker (2007) suggest that leaders must work to acquire information in order to determine

the needs of the individual in order to increase the motivational levels (p. 81) of followers.

Navahandi (2006) suggests further that transactional leaders must clearly state their goals, and

communicate extensively (p. 240) with, and monitor the behavior of followers to ensure that

there is a quality exchange. This could explain why Kavanagh and Ashkanasy (2006) postulated

that transactional leadership facilitates cultural changes. Also, Navahandi suggests that

transactional leadership can be highly satisfying and beneficial (p. 240) to all organizational

stakeholders. Finally, Antonakis and House (2002) suggest that transactional leadership is used

more often in a stable context, therefore, it could be suggested that transactional leadership

would not be conducive to a TQM implementation because it associated with a low level of

change (Navahandi).

The evidence presented thus far suggests that transactional leadership can be effective in

implementing TQM. However, TQM demands intense CEO commitment (Powell, 1995, p. 17)

because the responsibility for quality is in rests in their hands (Choi & Behling, 1997, p. 38).

To realize the benefits of TQM, it requires commitment of leadership to ensure that the changes

are implemented in accordance with their vision and strategy (Douglas and Judge, 2001). This

suggests that the short-term goal oriented transactional leadership style can represent an obstacle

to a successful TQM implementation.


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Transformational Leadership

Leaders displaying charismatic or transformational behaviors are symbolic leaders who

develop and communicate visionary and inspirational messages (Shamir, House, & Author,

1993, p. 578) that appeal to followers. Their attitude transcends everything (Antonakis &

House, 2002, p. 5) and they are seen to be courageous because they challenge the status quo that

is seen undesirable (p. 6) to others. They are self-confident and display pro-social

assertiveness (p. 6) and show strong moral conviction toward specific goals, which followers

can identify with, and idolize (p. 6). Further, transformational leaders have the ability to

transform the needs, values, and aspirations of followers from self-interests to collective

interests (Shamir, House, & Author, p. 577), which is important for a TQM implementation that

is associated with teamwork and empowerment. Also, transformational leaders are associated

with more satisfied and highly motivated followers than any other type of leadership, and

according to Shamir, House, and Author, they are rated as being more effective leaders (p.

578). Trofino (2000) and Navahandi (2006) suggest these behaviors are indicative of the

components associated with transformational leadership, which are such as individualized

influence (b) inspirational motivation (c) intellectual stimulation and (d) individualized

consideration (Navahandi, pp. 242-243). Leaders abilities of combining these components and

displaying transformational leadership gives meaningfulness to work by infusing followers and

organizations with moral purpose and commitment (Shamir, House, & Author, 1993, p. 578).

Further, these behaviors enhance a leader's abilities to motivate followers toward a

particular mission or goal. Motivating others towards a common goal starts with creating,

articulating, and communicating a clear and compelling vision (Waldman, et al, 1998, p. 521).

This provides followers with a focal point for change efforts, and according to Navahandi (2006)


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Leadership Style Comparison

Transactional leadership provides an organization with a lower order of change (p. 8)

based on leader-follower exchanges. Further, the ability of transactional leaders to influence

follower productivity depends on the leader's power (Bass, Avolio, and Goodheim, 1987, p. 8)

to reinforce follower behavior. In contrast, transformational leadership provides a higher-order

of change that facilitates a higher level of follower motivation; these researchers call this self-

reinforcement (p. 8). Also, transactional leadership is focused on short-term goals (Dean &

Bowen, 1994, p. 399) and is based on the observation of task completion and employee

compliance (Emery & Barker, 2007, p. 79), suggesting transactional leaders could be change

agents because they are good at improving productivity (p. 79). However, because of

transactional leaders task-orientation, they may not be good at providing a vision of the future

direction of the organization. Also, Waldman, et al (1994) suggest in some cases, group oriented

goals could be negatively affected, especially in the case of MBE leadership behavior.

There is evidence that transactional leadership would not be good for change. For

example, at Metco (as cited in Redman & Grieves, 1999), a transformational leader known as

being ruthless but fair (p. 53) initiated a TQM implementation led by a successful vision (p.

53). His vision and motivation of the workforce led to early realization of benefits. However, this

leader was promoted and replaced with a more directive and task-driven style (p. 54) of leader.

This change in leadership was a factor in Metcos failure inimplementing TQM because new

ideas were no longer cascaded down to the workforce (p. 53). As a result of the leaders

transactional leadership behaviors, many of the benefits realized early disappeared as did many

of the TQM initiatives. This leadership behavior also negatively affected the commitment of the

workers. For example, employees who were known to go the extra mile no longer strived for


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excellence. Therefore, evidence suggests that transactional leadership negatively impacted this

TQM effort. In contrast, transformational leadership provides the entire organization direction

and motivation through the establishment of a long-term vision of the future as well as a strategy

to get there (Navahandi, 2006). This is critical to the success of a TQM implementation;

commitment of the entire organization as well as the organization's leadership is required for

successful TQM (Beer, 2003).

Additionally, Ehigie and Akpan (2004) suggest that leaders must instill a shared vision

throughout the organization. Transactional leaders do not look beyond the task at hand while

transformational leaders communicate their vision throughout the organization. For instance,

these researchers suggest that when lower level employees share the vision of those at the top,

change is implemented more effectively, which leads to success. In fact, Waldman, et al, (1998)

provided evidence that shared vision is critical to the success of a TQM initiative. For example,

in the National Police Force (para. 63) case of their study, the senior leaders persistent

leadership effort (para. 63) instilled a shared vision in lower level leaders and employees, which

led to the success of their TQM effort. In fact, one respondent stated that Ive seen the deputy

commissioners more in the last six months.so thats a cultural change, people at the top are

willing to come down and talk to you (para. 67). This indicates that the communication of a

vision to the lowest organizational element will lead to TQM success.

Also, Ehigie and Akpan (2004) suggest that reward and incentives should be aligned to

the change processes to effectively motivate organizational members in implementing the

change. Transformational leaders help employees perform their best work by adequately

developing rewards and incentives that match the level of effort by keeping them technically

and behaviorally engaged (Soltani, Liao, Singh, & Wang, 2010, p. 678). Redman and Grieves


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modify the values and beliefs of followers to collective interests toward the goal of change. They

set clear standards and behaviors and then set the example by becoming a role model, thereby

influencing followers to adopt the leaders behaviors. Finally, as evidenced in the Waldman, et al

(1998) case study, being persistent, talking with followers to communicate their vision,

transformational leadership can and does positively impact the success to TQM implementations.


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QUESTION 3

Porter and Millar (1985) discuss how information gives organizations a competitive advantage.

Identify, explain, and analyze the competitive advantage given by information to organizations.

Evaluate how information technology allows organizations to compete on multiple competitivepriorities. Compare and contrast the competitive benefits given by information to organizations

with the alternative views of Carr's (2003), "IT Doesn't Matter."/ Porter, M., & Millar, V.

(1985). How information gives you competitive advantage. Harvard Business Review, (63,4),149 - 160/ Carr, N. (2003). IT Doesn't Matter. Harvard Business Review, (81,5), 41 - 50.


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Introduction

Over the past twenty five years, information has changed the way organizations conduct

business. Porter and Millar (1985) suggest that no firm can "escape its effect" (p. 149). Drucker

(1999) suggests that information is "key" (p. 123) to the competitiveness of a firm, and that

organizations must gain control of information to be successful. As a strategic resource,

information can be used to improve the firm's decision making process, provide signals that

markets or competitors are changing activities. Also, information can be used to create new

products, provide access to new markets, and attract new customers; information has a wealth of

strategic uses if managed properly. For instance, Cachon and Fisher (2000) suggest the

information contained in many of the logistics processes can be used to reduce lead time, reduce

the frequency of shipping material, and material processing time and costs, creating a

competitive advantage over rivals.

In recent times, organizations have found that Information technology (IT) can be used to

improve information and help organizations streamline business processes, add value to existing

processes, and expand operations and reduce costs. IT can improve the way firms use

information, but IT is misunderstood. In fact, Porter and Millar (1985) suggest that IT

encompasses many aspects of an organization, from the "information that businesses create and

use" to the technologies that businesses use to "process the information" (p. 149). In fact,

organizations are realizing the competitive benefits of IT by expanding its use in supply chain

management (SCM) and customer relationship management (CRM) products to increase their

strategic positioning (Lummus & Vokurka, 1999; Rigby & Ledingham, 2004). The trick to IT


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to "leverage its resources into all markets that it wants to compete" (p. 149). Grant also suggests

that to create a strategic advantage, a firm must effectively manage the linkages between these

resources. This suggests there are "trade-offs" (Porter & Millar, 1985, p. 150) in performing

these activities and information is the key to making these trade-offs.

Porter and Millar (1985) and Grant (1991) suggest there are two ways for a company to

compete strategically. Grant suggests the first method is by creating a cost advantage by

"increasing the scale" of operations, which requires "efficient manufacturing plants with superior

process technologies and access to low cost inputs" (pp. 117-118). The second method is through

differentiation, which requires "brand reputation, extensive sales, service, marketing and

distribution networks, (pp. 117-118). Many of these components, low cost inputs, sales, service,

marketing, and distribution are part of Porter and Millar's value chain. The information gained

from these value activities can increase the firm's competitive position.

Using Information to Create a Cost Advantage

Inbound logistics activities will provide management with the ability to manage the costs

of the raw materials needed for production activities. This enables the firm to create a cost

advantage from upstream value chain activities. For example, the information gained from these

activities provides a firm with a wealth of strategic information, such as information about the

inputs into the company's operations. Thompson, Strickland, and Gamble (2007) add that

information about the "assets" used in these activities as well as the "costs" (p. 111) that are

associated with the purchase of raw material, storage, and product quality are retrieved from the

inbound logistics activities. Further, Lummus and Vokurka (1999) suggest that this activity

provides a firm with information allowing it to manage "every effort involved in producing and

delivering" (p. 11) a product or service.


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be true for technology based infrastructures. Kettinger, Grover, Guha, and Segars suggest a

specific combination of these assets can create a proprietary like mix preventing imitation.

Finally, a competitive advantage can be achieved through exploiting intangible resources, which

are created through a good mix of infrastructure and HR capabilities. Some examples are

"customer orientation, synergy, and superior organizational knowledge" (Bharadwaj, 2000, p.

176). Firms that can create this capability through a good mix of these resources can enjoy

"superior financial performance and decreased costs" (p. 176). However, information is the key

to all these activities and it must be managed properly for any strategy to be successful.

Competitive Advantages of Using Information Technology

Porter and Millar (1985) suggest that a firm's competitive strategy is firmly based in the

way it "configures and links" the various value chain activities "relative to its competitors" (p.

102). Rockart and Short (1989) highlight that this arrangement must be continually enhanced to

improve the value chain's effectiveness. This helps to preserve the firm's competitive positioning.

To increase the effectiveness of the value chain, strategic literature points to IT as a tool for

preserving its effectiveness. IT creates competitive advantages by reducing coordination costs,

improving information quality and organizational flexibility, which helps in creating a

sustainable competitive advantage (Cachon & Fisher, 2000; Henderson, 1990; Porter & Millar,

1985; Rigby & Ledingham, 2004; Rockart & Short, 1989).

IT increases the strategic capability of an organization's value chain by integrating the

entire value chain inducing "value-added" (Henderson, 1990, p. 7) components into the value

chain, which reduces costs and improves product and service quality. For example, Rockart and

Short (1989) suggest that IT introduces "electronic markets and hierarchies" (p. 9) into the value

chain allowing organizations to share information creating what they called "value-adding


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Carr (2003) describes IT as being "invisible" (p. 42) and immaterial because the

technology has lost its effectiveness in providing a firm with a competitive benefit over rivals.

Further, he suggests that "scarcity, not ubiquity" is a characteristic of strategic resource and that

because IT has spread throughout many industries, it is becoming a commodity versus a strategic

resource. According to Carr, IT is "a cost of doing business" (p. 42) rather than a distinctive

capability. Further, he further makes a distinction between "proprietary and infrastructural

technology" and describes IT as an "infrastructural technology" (p. 42) that provides more

benefits as a shared resource versus a resource held by individual companies.

Some would agree with this assumption. For instance, Clulow, Gerstman, and Barry

(2003) conducted research in the financial services industry and found that senior management in

an Australian financial firm stipulated that "IT systems are an important tangible resource" (p.

225). However, these managers suggested the resource was "easily replicated" and that IT did

not provide much benefit except for its "back-up" capability, which "does not set the firm apart"

(p. 225). In contrast however, Bharadwaj (2000) suggests technology itself may not provide

benefits directly. However, he suggests IT provides many intangible benefits such as "improved

customer service, enhanced product quality, increase market responsiveness, and increased

coordination between buyers and sellers" (p. 174). All of these benefits can be strategic

advantages.

Carr (2003) also suggested IT provides firm's with the ability to increase the effectiveness

of their internal processes, which leads to "broader market changes" (p. 43). Porter and Millar

(1985) agree as they also identified that IT can create market changes and a firm's ability to

influence market changes is a competitive advantage. Also, they suggested that IT can change

the "competitive scope" of many industries, and creating interrelationships among industry


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partners are changing markets. They suggest the "merging of the banking, insurance, and

brokerage industries" (p. 157) were changing the context of the market. Here, one could suggest

that IT is not so invisible or immaterial after all.

Further, Carr (2003) suggests that IT is becoming a commodity much like that of other

utilities that are bought and consumed. It appears that this is the case, however, the evidence that

supports such a position does not exist. For instance, Slater (1997) suggest that when using IT in

this fashion it would require the firm to consider the benefits of "both the customer and costs" (p.

165); this would include outsourcing key IT activities. However, Marguis (2006) suggest that

using an IT utility is achievable where the IT capability being outsourced is easy, with repeatable

tasks. Also, "most IT utilities cannot handle the complex tasks related to the core business

practices of a firm" (p. 14). Marguis suggests that many organizations are unsatisfied with the

performance of IT utilities and the problem is complicated when the activities are regulated by

legislation such as the "Sarbanes-Oxley Act" (p. 14), for example.

Further, Shell (as cited in Marquis, 2006) revamped its processes and migrated much of

its outsourced IT support functions back into its control. By doing this, the company saved

"5,000 working hours or about $5 million in costs" (p. 15). Also, Liberty Mutual (as cited in

Marquis) reduced their outsourcing activities and reorganized their IT support activities and

aligned them with the firm's business strategy. This move resulted in an "increase in their 2006

first-quarter revenue by $477 million" (p. 15). According to Marquis, this provides evidence

there is still room for using IT to create a competitive advantage and that the commoditization of

IT as a utility is not yet sustainable.

To address Carr's (2003) final point that IT should be used defensively versus

offensively, there are those that disagree. For instance, Ray, Muhanna, and Barney (2007)


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conclude that taking such a stance on IT restricts a firm's innovative activities, which can stall

further competitive actions the company wants to pursue. In particular, they suggest the benefits

of an offensive stance outweighs the risks of a defensive stance. This can be done by aligning IT

assets with non-IT assets. They cite "Wal-Mart" (p. 88) as an example. This firm aligned their

non-IT assets, their "distributed stores" with its IT assets, "hardware and software" to create an

"economy of scale" (p. 88) that cannot be matched. This would suggest that by taking a

defensive stance, organizations would miss potential competitive opportunities.

Conclusion

Information is a key resource that organizations can use to create a competitive advantage

over rivals. The strategic importance of this information is not the fact the organization has the

information, it is because the information is actionable against market and competitor changes.

Further, there are three ways that factual information can be used as a competitive advantage.

For instance, the information can be used for better decision making, evaluating market actions

that can affect the organization's operations and industry, and to create new products or improve

current products. It could also be postulated the information could be used to attract new

customers as in the Aviall (as cited in Rigby and Ledingham, 2004) case reviewed earlier.

Therefore, information is strategically important, and if managed correctly, provides an

organization with to create a competitive advantage through cost reduction, product

differentiation, and market gains.

Further, all the information needed to create a competitive advantage over rivals is

created and consumed in the company's value chain activities. This information is used to reduce

the coordination costs between activities, which create cost advantages. This information is used

to enhance processes and product quality, which also contributes to a cost advantage and


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increased sales. Further, this information, if processed effectively, provides the firm with

actionable information increasing flexibility. Further, actionable information is used to

coordinate the interrelationships between the firms supplier, distributors, and customers

increasing trust between players increasing the competitiveness of the value chain. Further,

mismanagement of this information or the interrelationships between activities can be

catastrophic to a firm's survival.

IT is used to enhance the interrelationships between internal and external value chain

links, reducing the coordination costs and enhancing actionable information generated in the

different activities. IT also decreases the management of the interdependencies and adds value-

added components to the interrelationships. Further, IT enables the firm to integrate the

information along the value chain increasing information sharing among all activities, bolstering

organizational revenues and reducing market costs. Nonprofits are also benefiting from the used

of IT. For instance, these organizations are exploiting IT to conduct research for obtaining new

sources of funding as well as creating new partnerships, which increases their strategic standing

among other nonprofit organizations.

Finally, in reaction to Carr's (2003) assumptions that IT no longer offers a competitive

advantage. His assumptions suggested that IT is invisible and immaterial and that a company

cannot achieve a competitive advantage using IT. The research presented here refutes his

propositions. IT may be a cost of doing business, however, with the exception of a limited few

examples, Marguis (2006), Porter and Millar (1985), and Grant (1991) suggests otherwise. IT

mixed with other non-IT resources enable a firm to move beyond the cost of doing business to

create more distinctive capabilities; Wal-Mart's unmatched economy of scale is evidence that IT

still provides companies with competitive advantages (Ray, Muhanna, and Barney, 2007).


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