Visible IT in Credit Unions: Strategic Advantage and Disadvantage in Two Web Eras

Visible IT in Credit Unions: Strategic Advantage and Disadvantage in Two Web Eras

H. James Nelson
Copyright: © 2011 |Pages: 14
DOI: 10.4018/irmj.2011010102
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Abstract

Research indicates that rapidly evolving technology and markets do not provide a first mover strategic advantage but favor the second mover. This paper introduces a third variable: hype. In a time of rapid technology and market evolution, hype overrides the expected results and gives the first mover a strategic advantage. This study examines a homogeneous set of medium-sized information-dependent and information-intensive organizations as they implement visible information technology in two eras: during a time of intense hype and during a more normal time where technology has become commonplace. One hundred matched triples of credit unions were examined as they chose to remain offline, implement an informational website, or implement a transactional website during the highly hyped Internet expansion time of 1998 through 2002. One hundred matched pairs of credit unions were then examined during the more normal time from 2003 through 2007. Results indicate that credit unions that embraced the hyped technology gained significant strategic advantage. Second-moving credit unions that waited for the more mature technology survived, whereas the credit unions that did not adopt the technology were at a significant strategic disadvantage.
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Background

Credit unions are the cooperative not-for-profit branch of the banking industry. The goal of a credit union is generally not maximizing shareholders’ wealth as in the standard theory of the firm, but rather maximizing its members’ benefits. The services that credit unions can offer members are limited by federal charter, so credit unions can be easily compared to each other with the vast majority of these services being variations on deposit and loan instruments. In addition, all US credit unions are required by law to report financial results, management actions, and the use of information technology. They are information intensive and are highly dependent on information technology. Their primary operational task is to track the flow and storage of (primarily digital) money to and from its members. With a relatively low level of complexity, highly substitutable business processes, and a high degree of visibility in their usage of IT, credit unions are excellent organizations to examine the of value of information technology.

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