Scandinavian Working Papers in Economics

Working Papers,
Copenhagen Business School, Department of Informatics

No 2004-2: Make or buy of IT-enabled innovation

Volker Mahnke
Additional contact information
Volker Mahnke: Department of Informatics, Copenhagen Business School, Postal: Department of Informatics, Copenhagen Business School, Howitzvej 60 , DK-2000 Frederiksberg, Denmark

Abstract: IT-enabled innovations are of increasing importance for competitive success in most sectors today. This paper offers a novel theoretical and empirically illustrated explanation of why IT-outsourcing strategies differ between innovative first-movers, fast followers and late entrants. In particular, an analysis of three companies in the financial sector - Charles Schwab, Fidelity Investment, and Merrill Lynch - reveals that governance choices influence a company’s ap-propriable learning curve advantage to slow down or speed up adoption and imitation of IT-enabled innovation. Moreover, we discuss the implications of governance choices in techno-logical environments characterised by either accumulation or disruption.

Keywords: IT-enabled innovation; outsourcing; technological regime; strategic posture; first-mover advantages; financial services; online brokerage

JEL-codes: O30

36 pages, September 20, 2004

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