Competing with telecommunications and information technology: Rivalrous responses to strategic IT network applications and the degree of innovation

This research examines the question: “What aspects of strategic networked information technology (IT) applications increase responses from competitors and what aspects reduce their response?” Competitive behavior is observed by the public announcement of the actions and responses resulting when firms use networked IT to carry out innovative applications pertaining to their products, services, or core business processes. Data were derived from published articles describing networked IT applications across multiple industries, accounting for a total of 124 “action” applications in the time period from 1993 to 1994, and a total of 513 “response” applications within a 2-year sliding window from the date of the action. The applications were classified into four types of innovations: product, service, process, and innovations that extend beyond the firm\u27s boundaries. Independent variables measured factors attributed to the industry environment, the degree of innovation of the application, the extent of business functions integrated by the application, and the use of publicly available networks. A tobit regression model was used to analyze the number of single responses per key competitor, and a negative binomial regression model was used to analyze the total number of responses. When controlling for the main and interaction effects of the different types of innovative applications, the results revealed that competitive responses vary according to characteristics of the competitive environment and the way in which the technology is used. This suggests that the firm can plan ways to reduce competitive responses to its networked IT applications. Innovative service applications appear to have the greatest potential for sustaining a competitive advantage, due to the difficulty that competitors have in responding to these applications. Internal process innovations also appear to have the potential for sustaining a competitive advantage. Product innovations appearing in industries that are not traditionally information intensive are also able to sustain a competitive advantage, possibly due to the fact that competitors are less familiar with ways in which to use the technology. Finally, public telecommunications networks can successfully be used successfully, and their use does not necessarily incite responses from competitors