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# Most pre-1990 literature on businesses' use of information

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Intern
Joined: 31 Jul 2013
Posts: 16
Location: Viet Nam
Concentration: General Management, Entrepreneurship
GMAT 1: 650 Q49 V28
GPA: 3.46
WE: Sales (Computer Software)

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24 Oct 2017, 22:11
Hi, I still don't get why answer C is true in Question 1. Passage clearly defines old belief -> paradox -> proponent of old belief -> why paradox -> resource based theory explain. Answer E clearly shows that passage resolves disagreement. Answer C has words "unexpected findings". What ARE findings in this passage? and where passage shows unexpected? Please help to clarify. Thanks
Manager
Joined: 01 Feb 2015
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25 Oct 2017, 02:21
mikemcgarry,

I am unable to understand how option A is the answer for question no 2?

From this statement towards the end of passage: "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." I inferred that option C was the answer.

I see that few of them have quoted this from the passage: "According to a recent study of retail firms, which confirmed that IT has become pervasive and relatively easy to acquire". How does this relate to resource based theory? Also, in the statement just before the one I stated talks about resource theory but I feel that also bends toward option c.

Thanks!
Magoosh GMAT Instructor
Joined: 28 Dec 2011
Posts: 4678

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26 Oct 2017, 15:36
2
KUDOS
Expert's post
hoangphuc wrote:
Hi, I still don't get why answer C is true in Question 1. Passage clearly defines old belief -> paradox -> proponent of old belief -> why paradox -> resource based theory explain. Answer E clearly shows that passage resolves disagreement. Answer C has words "unexpected findings". What ARE findings in this passage? and where passage shows unexpected? Please help to clarify. Thanks

Dear hoangphuc,

I'm happy to respond.

My friend, in this context, a "finding" is simply a fact, something that all of us find to be true in our experience. The big "unexpected finding" in this passage is in sentence #2, what is called the "productivity paradox." Before 1990, humans naively assumed that more IT would be better--more IT would bring more productivity across the board. Instead, with more IT, productivity went down. That was unexpected.

The passage presents this "unexpected finding," discusses the responses & explanation from proponent of IT in the rest of paragraph #1, and then a very different take on the paradox from "resource-based theory" in paragraph #2. In other words, the passage introduces this paradox, and then spends the rest of the time talking about possible explanations of this paradox.

Now let's compare (C) & (E).
(C) providing an explanation for unexpected findings
(E) resolving a disagreement regarding the uses of a technology

The difference here is one of tone. The passage subtly implies that the second explanation, the one deriving from "resource-based theory," is better. It definitely provides an explanation, and we readers may walk away with some sense that this second explanation is plausible. It simply "provides an explanation," and some people may be convinced by that. Here's the explanation: you can believe it or not.

The language to "resolve a disagreement" is much much stronger. That language implies that even the people who initially disagreed were won over and persuaded to agree. Who would those who disagreed? Presumably, the proponents of IT, who presented their arguments in the second half of paragraph #1. We got no response from those people in this passage--we don't hear from them or about them again. We have no idea whether they agree with the explanation from resource-based theory." Maybe they have been persuaded, but we have no evidence of that. Thus, we have no evidence that a disagreement has be "resolved." Do you see how this is much stronger language than (C)? Yes, an explanation was provided, but that doesn't necessarily mean that every last person on the planet was persuaded, putting an end to the disagreement and resolving it.

Does this make sense?
Chef wrote:
mikemcgarry,

I am unable to understand how option A is the answer for question no 2?

From this statement towards the end of passage: "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." I inferred that option C was the answer.

I see that few of them have quoted this from the passage: "According to a recent study of retail firms, which confirmed that IT has become pervasive and relatively easy to acquire". How does this relate to resource based theory? Also, in the statement just before the one I stated talks about resource theory but I feel that also bends toward option c.

Thanks!

Dear Chef,

I'm happy to respond.

My friend, I'm sorry to say that you fell for a brilliant trap answer. This is a beautifully constructed question, as virtually all the official questions are.

We have to look at a few things here. From the passage:
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.

This is very clear. "Resource-based theory" says that if everyone can get something, it confers no comparative advantage to anyone. Immediately after that sentence, it cites the example: this is precisely what happened in retail firms with IT: everybody got it, so nobody had any advantage with it. We get what RBT says and immediately after that the clear example in retail firms. This is solid support for (A).

Later in the passage, it says:
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. = IT on average did not good, and hurt some places.
However (change in direction), 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 (in other words, the clever humans using the IT made the difference!).
The findings support the notion, founded in resource-based theory, that competitive advantages do not arise from easily replicated resources (like IT), no matter how impressive or economically valuable they may be, but from complex, intangible resources (like the clever humans who figure out how to spin IT to their advantage).

This is a very sophisticated and difficult passage, so by the end, many people lose track of what is what in the comparison between "easily replicated resources" and "complex, intangible resources." The passage refers to IT as the former, but you interpreted IT as the latter. That is precisely the trap around which choice (C) is constructed.

Does all this make sense?
Mike
_________________

Mike McGarry
Magoosh Test Prep

Education is not the filling of a pail, but the lighting of a fire. — William Butler Yeats (1865 – 1939)

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Joined: 18 Aug 2016
Posts: 630
GMAT 1: 630 Q47 V29
GMAT 2: 740 Q51 V38

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26 Oct 2017, 18:21
Time:7:14
1 Wrong, 3 Right
Wrong = 1
_________________

We must try to achieve the best within us

Thanks
Luckisnoexcuse

Intern
Joined: 31 Jul 2013
Posts: 16
Location: Viet Nam
Concentration: General Management, Entrepreneurship
GMAT 1: 650 Q49 V28
GPA: 3.46
WE: Sales (Computer Software)

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26 Oct 2017, 21:32
thanks mikemcgary for your clear explanation. I'm non-native speaker so that for me, "resolve a disagreement" sounds just logical and not very strong. Moreover, one reason for me to eliminate C is the plural findingS, because I only see 1 finding here which is paradox, not many findings.
Re: Most pre-1990 literature on businesses' use of information   [#permalink] 26 Oct 2017, 21:32

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