The Linkage of Competitive Strategy, Information Technology (IT) Maturity and Size With Strategic Response to Financial Liberalization: An Investigation of Thai Financial Institutions

Thailand embarked on a course of deregulation and financial liberalization in the early 1990s. Starting with the acceptance of Article 8 of the International Monetary Fund, Thailand phased in liberalization of capital flows, deregulation in the scope of operation of financial institutions, and partial entry of foreign competitors into the domestic financial system. Also many firms in the financial industry were encouraged to integrate their information systems. The linkage of competitive strategy, information technology (IT) maturity and size has received much attention in recent years. The primary objective of this study is to investigate the state of IT application in Thai financial institutions and to examine the impact of competitive strategy, information technology maturity, and size on strategic responses to the liberalization of financial markets. Mintzberg (1973) conceived of strategy as a pattern or a stream of important decisions. This study operationalized strategy through the use of Miles and Snow’s (1978) typology, which identifies four archetypes of strategic adaptation: defenders, analyzers, prospectors and reactors. This study examines the relationships between strategic changes in IT investment patterns and the factors of competitive strategy, IT maturity, and size. Financial executives from three groups of financial institutions: (1) Thai commercial banks (N = 13), (2) foreign banks (N = 14), and (3) finance and securities companies (N = 23), responded to the researcher constructed questionnaire. Statistical methods used in this study included independent-samples t-test. One-way ANOVA were conducted to determine the significance of the differences of the mean responses among Thai commercial banks, foreign banks, and finance and securities companies. Pearson correlation coefficients were used to identify the significant relationships among the relevant variables. The results revealed that different IT factors impact the relationships between the linkage of competitive strategy, information technology maturity and size with strategic response to financial liberalization differently. The analysis of strategy provides strong support for Miles and Snow\u27s (1978) typology. Finally, the results show that a firm\u27s competitive strategy significantly affects change in its IT investment. The practical implication of this finding relates to issues of strategic response to financial liberalization in Thailand