Most pre-1990 literature on businesses' use of information : GMAT Reading Comprehension (RC)
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# Most pre-1990 literature on businesses' use of information

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20 May 2005, 07:36
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Question 1
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46% (03:13) correct 54% (04:28) wrong based on 13

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Question 2
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64% (01:37) correct 36% (00:39) wrong based on 11

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Question 3
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60% (01:34) correct 40% (00:11) wrong based on 10

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Question 4
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90% (01:33) correct 10% (02:56) wrong based on 10

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Most pre-1990 literature on businesses' use of information technology (IT)- -defined as any form of computer-based information system--focused on spectacular IT successes and reflected a general optimism concerning IT's potential as a resource for creating competitive advantage. But toward the end of the 1980's, some economists spoke of a "productivity paradox": despite huge IT investments, most notably in the service sectors, productivity stagnated. In the retail industry, for example, in which IT had been widely adopted during the 1980's, productivity (average output per hour) rose at an average annual rate of 1.1 percent between 1973 and 1989, compared with 2.4 percent in the preceding 25-year period. Proponents of IT argued that it takes both time and a critical mass of investment for IT to yield benefits, and some suggested that growth figures for the 1990's proved these benefits were finally being realized. They also argued that measures of productivity ignore what would have happened without investments in IT--productivity gains might have been even lower. There were even claims that IT had improved the performance of the service sector significantly, although macroeconomic measures of productivity did not reflect the improvement.
But some observers questioned why, if IT had conferred economic value, it did not produce direct competitive advantages for individual firms. Resource-based theory offers an answer, asserting that, in general, firms gain competitive advantages by accumulating resources that are economically valuable, relatively scarce, and not easily replicated. According to a recent study of retail firms, which confirmed that IT has become pervasive and relatively easy to acquire, IT by itself appeared to have conferred little advantage. In fact, though little evidence of any direct effect was found, the frequent negative correlations between IT and performance suggested that IT had probably weakened some firms' competitive positions. However, firms' human resources, in and of themselves, did explain improved performance, and some firms gained IT-related advantages by merging IT with complementary resources, particularly human resources. The findings support the notion, founded in resource-based theory, that competitive advantages do not arise from easily replicated resources, no matter how impressive or economically valuable they may be, but from complex, intangible resources.

The passage is primarily concerned with
A.describing a resource and indicating various methods used to study it
B.presenting a theory and offering an opposing point of view
C.providing an explanation for unexpected findings
D.demonstrating why a particular theory is unfounded
E.resolving a disagreement regarding the uses of a technology
[Reveal] Spoiler:
C

The passage suggests that proponents of resource-based theory would be likely to explain
IT's inability to produce direct competitive advantages for individual firms by pointing out that
A.IT is not a resource that is difficult to obtain
B.IT is not an economically valuable resource
C.IT is a complex, intangible resource
D.economic progress has resulted from IT only in the service sector
E.changes brought about by IT cannot be detected by macroeconomic measures
[Reveal] Spoiler:
A

The author of the passage discusses productivity in the retail industry in the first paragraph
primarily in order to
A.suggest a way in which IT can be used to create a competitive advantage
B.provide an illustration of the "productivity paradox"
C.emphasize the practical value of the introduction of IT
D.cite an industry in which productivity did not stagnate during the 1980's
E.counter the argument that IT could potentially create competitive advantage
[Reveal] Spoiler:
B

According to the passage, most pre-1990 literature on businesses' use of IT included
which of the following?
A.Recommendations regarding effective ways to use IT to gain competitive advantage
C.Information about ways in which IT combined with human resources could be used to
D.A warning regarding the negative effect on competitive advantage that would occur if
E.A belief in the likelihood of increased competitive advantage for firms using IT
[Reveal] Spoiler:
E

[Reveal] Spoiler: Question #1 OA
[Reveal] Spoiler: Question #2 OA
[Reveal] Spoiler: Question #3 OA
[Reveal] Spoiler: Question #4 OA

Last edited by JarvisR on 02 Jul 2015, 00:40, edited 1 time in total.
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20 May 2005, 22:02
1. The passage is primarily concerned with
C.providing an explanation for unexpected findings

2. The passage suggests that proponents of resource-based theory would be likely to explain IT's inability to produce direct competitive advantages for individual firms by pointing out that
A.IT is not a resource that is difficult to obtain

3. The author of the passage discusses productivity in the retail industry in the first paragraph primarily in order to
B.provide an illustration of the "productivity paradox"

4. According to the passage, most pre-1990 literature on businesses' use of IT included which of the following?
E.A belief in the likelihood of increased competitive advantage for firms using IT
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21 May 2005, 01:00
My answers are same as above
C,A,B,E
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21 May 2005, 03:10
Have some doubts about Q1-think it should be E)
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21 May 2005, 03:58
Good Job guys.
Its C,A,B,E indeed
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23 Mar 2014, 19:08
Hi,

I have a question in regards to the first question. How does this passage consist of unexpected??? findings. I understand that something new way of thinking the IT's effectiveness was found but where in the passage does it say 'unexpected'??? Paradox just means contradictory but not 'unexpected'

Thanks.
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07 Sep 2014, 06:15
Why option B in Q2 is wrong.

The author clearly states that "economically valuable, relatively scarce, and not easily replicate"
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30 Sep 2014, 22:41
rohitmanglik wrote:
Why option B in Q2 is wrong.

The author clearly states that "economically valuable, relatively scarce, and not easily replicate"

HEY rohitmanglik,

option B says eacxtly opposite of what is stated.. please read bold red part.
And infer the green part. As in the question suggest means infer.

But some observers questioned why, if IT had conferred economic value, it did not produce direct competitive advantages for individual firms. Resource-based theory offers an answer, asserting that, in general, firms gain competitive advantages by accumulating resources that are economically valuable, relatively scarce, and not easily replicated. According to a recent study of retail firms, which confirmed that IT has become pervasive and relatively easy to acquire, IT by itself appeared to have conferred little advantage.
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20 Mar 2015, 06:13
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11 Feb 2016, 10:36
Good one:-
Time taken (~9 mnts) 1 incorrect, 3 correct.
B
A
B
E
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03 Apr 2016, 19:21
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Why is option E in question 1 wrong?

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10 May 2016, 08:01
good question , but no explanations of the answer choice in the comments given. Cant understand why 1C is correct since there are no unexpected finding , its a paradox that author is talking about but cant be convinced its unexpected. Also why 4A is incorrect ? . Please explain would really appreciate your help on this. Thanks in advance.

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20 May 2016, 09:26
megha_2709 wrote:
good question , but no explanations of the answer choice in the comments given. Cant understand why 1C is correct since there are no unexpected finding , its a paradox that author is talking about but cant be convinced its unexpected. Also why 4A is incorrect ? . Please explain would really appreciate your help on this. Thanks in advance.

Regards
Megha

Unexpected finding is demonstrated with the help of percentage 1.1% B/w 1973 and 1989 vs previous 2.4% in the preceding 25 years period
Resolving is just way too distorting, ultimately author hasn't described things in resolving tone

In 4A : literature never recommended any path like couple of measures with the IT usage will lead to desired numbers

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06 Jun 2016, 22:25
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~10 mins. All correct.
2nd question(~2 mins).
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26 Sep 2016, 21:22
Took 8 mins , including 2 mins 50 seconds to read .

-The author talks about how IT was perceived in a certain light earlier
-He then introduces the views of some economists who believe that IT investments are not related to productivity
-The author then provides explanations for the “productivity paradox”
1. The passage is primarily concerned with …
The Key Takeaways clearly suggest that option (C ) is the right answer choice.

2. The passage suggests..
“According to a recent study of retail firms, which confirmed that IT has become pervasive and relatively easy to acquire"
The above excerpt clearly suggests that IT had become commonplace and was easy to acquire thereby making it a resource that is not difficult to obtain. Hence option (A) is the right answer choice.

3. The author of the passage..
“But toward the end of the 1980’s, some economists spoke of a ―productivity paradox: despite huge IT investments, most notably in the service sectors, productivity stagnated. In the retail industry, for example, in which IT had been widely adopted during the 1980’s "
The author is using the retail industry example to illustrate the productivity paradox he talks about. Hence option (B) is the right answer choice.

4. According to the passage..
“Most pre-1990 literature on businesses’ use of information technology (IT)—defined as any form of computer based information system—focused on spectacular IT successes and reflected a general optimism concerning IT’s potential as a resource for creating competitive advantage"

Option (E) is a clear word justification of the above excerpt and is hence the right answer choice.
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Re: Most pre-1990 literature on businesses' use of information   [#permalink] 26 Sep 2016, 21:22
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