chapter  6
14 Pages


In this book we have examined the relationship between IT and competitive advantage from the perspective of economic theory in general and that of Schumpeterian economic theory in particular. Beginning with a theoretical and prima facie case that IT cannot be the source of sustained competitive advantage (because IT is neither heterogeneous nor inimitable), we distinguished between what McAfee (2005) has called the ‘raw materials’ of IT (hardware, software and networks) and the ‘finished goods’ of IT (technology that can be used productively to add value). We concluded that although the raw materials of IT are becoming more of a commodity, the finished goods of IT are not. On the contrary, even as IT hardware, software, networks and processes become more of a utility, the use and management of IT resources becomes more, not less, important. Only the use and management of IT can deliver superior firm performance and sustained competitive advantage.