The Strategic Role of Information Systems in Shaping Competitive Advantage: Internal and External Impacts on Business Environments

Xinyi Liu

doi:10.71222/b64n6c41

Authors

Xinyi Liu Durham University, Stockton Road, Durham, DH1 3LE, United Kingdom Author

DOI:

https://doi.org/10.71222/b64n6c41

Keywords:

information systems, competitive advantage, organizational change, porter's five forces, digital transformation

Abstract

In the contemporary business environment, information systems (IS) have evolved from simple operational tools into strategic assets that shape how organizations compete, innovate, and adapt to market challenges. This paper investigates the multifaceted influence of IS on both organizational performance and industrial competition. Rather than merely improving efficiency, information systems now function as catalysts for strategic transformation and sources of sustainable competitive advantage. Within internal operations, the integration of IS supports data-driven management and facilitates the reconfiguration of traditional workflows. By digitizing core processes and enhancing communication across departments, organizations can achieve greater coherence, transparency, and adaptability. The transformation of DP World exemplifies this process—its adoption of intelligent digital infrastructure has optimized global trade logistics, reduced redundancy, and strengthened its position in international markets. Such developments demonstrate that the strategic use of technology extends far beyond automation; it redefines how value is created and delivered. Externally, IS reshape competitive interactions within industries by altering entry barriers, customer expectations, and cost structures. Porter’s Five Forces framework offers a theoretical lens to understand this phenomenon. A prominent illustration is Ocado, an online grocery enterprise that integrates artificial intelligence, robotics, and machine learning to enhance fulfillment accuracy and operational agility. Through technological sophistication, Ocado not only achieves superior service quality but also constructs a resilient competitive shield that limits new market entrants. Although the financial and organizational costs of implementing advanced IS can be considerable, their long-term benefits are profound. Beyond cost savings, these systems contribute to strategic differentiation, continuous innovation, and the cultivation of dynamic capabilities. Ultimately, businesses that recognize and leverage the strategic potential of IS are more likely to maintain relevance and leadership in an era defined by digital transformation and rapid technological evolution.

References

1. V. Arvidsson, J. Holmström, and K. Lyytinen, "Information systems use as strategy practice: A multi-dimensional view of strategic information system implementation and use," J. Strateg. Inf. Syst., vol. 23, no. 1, pp. 45–61, 2014, doi: 10.1016/j.jsis.2014.01.004.

2. Y. Merali, T. Papadopoulos, and T. Nadkarni, "Information systems strategy: Past, present, future?," J. Strateg. Inf. Syst., vol. 21, no. 2, pp. 125–153, 2012, doi: 10.1016/j.jsis.2012.04.002.

3. J. Peppard and J. Ward, The Strategic Management of Information Systems: Building a Digital Strategy, 4th ed. Hoboken: Wiley, 2016.

4. M. E. Porter, Competitive Advantage. Riverside: Free Press, 1998.

5. M. Hemmatfar, M. Salehi, and M. Bayat, "Competitive advantages and strategic information systems," Int. J. Bus. Manage., vol. 5, no. 7, pp. 158–169, 2010.

6. K. C. Laudon, J. P. Laudon, and J. P. Laudon, Management Information Systems Managing the Digital Firm, 16th ed. Harlow, England: Pearson, 2020.

7. I. Gamayanto, "Porter’s five forces model Scott Morton’s five forces model Bakos & Treacy model analyzes strategic information systems management," J. Inform., vol. 5, no. 2, pp. 127–134, 2004.

8. P. Norton, Autonorama: The illusory promise of high-tech driving. Island Press, 2021.

9. M. E. Porter and V. E. Millar, “How information gives you competitive advantage: The information revolution is transforming the nature of competition,” Knowledge and Special Libraries, Routledge, pp. 85–103, 2009.

10. G. D. Bhatt and V. Grover, “Types of information technology capabilities and their role in competitive advantage: An empirical study,” Journal of Management Information Systems, vol. 22, no. 2, pp. 253–277, 2005.