Article Review: Information Technology and Corporate Strategies in Small and Medium Enterprises

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Date: January 8th 2013
Link: I. Brief description of the article

The article picked is “Information technology and corporate strategies in Small and Medium Enterprises” by Poolad Daneshvar, Research Scholar, Department of Business Administration, University of Mysore, India and Dr.H.N.Ramesh, Director Kuvempu University, PG Center, Kadur, Karnataka, India. It is, to be more precise, a synthesis of different researches about the subject: “How does Information Systems create competitive advantages for the enterprise?” The article, however, focuses on the competitive advantages for the Small and Medium Enterprises (SMEs). The difference between Information Systems (IS) and the Information Technology (IT), from the authors’ point of view is the orientation. If IT is most likely technical and supply oriented, IS is the way business makes use of IT depend on the enterprise’s needs. So IS is more demand oriented and business grounded. In the article, the authors rarely separate these two notions, considering that IS is based on IT and the authors’ point is to present how the application and utilization of information can be used to create competitive advantage. The authors also discussed about why SMEs should seize the opportunities to create competitive advantages brought by the IT/IS development. In fact, the main reason for the creation of many large companies that regroup vertical value chain (from raw material, production to sales and customers services) is the transaction costs between the steps in a value chain, due to information asymmetric and assumption of opportunistic behaviors. When big companies are able to set up a whole value chain, they will gain considerable advantages from cost decrease and from the fact that they avoided, at some stages, the pressure from the suppliers and customers. In order to maximize efficiency, the SMEs can only concentrate in certain activities and thus can...
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