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Most pre-1990 literature on businesses' use of information technology
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Updated on: 30 Jun 2018, 00:04
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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.
(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
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 (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
3. 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
4. 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 (B) Explanations of the advantages and disadvantages of adopting IT (C) Information about ways in which IT combined with human resources could be used to increase competitive advantage (D) A warning regarding the negative effect on competitive advantage that would occur if IT were not adopted (E) A belief in the likelihood of increased competitive advantage for firms using IT
Re: Most pre-1990 literature on businesses' use of information technology
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20 May 2005, 23:02
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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23 Mar 2014, 20:08
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'
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30 Sep 2014, 23:41
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 advantagesby 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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10 May 2016, 09:01
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, 10:26
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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Re: Most pre-1990 literature on businesses' use of information technology
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26 Sep 2016, 22:22
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Took 8 mins , including 2 mins 50 seconds to read . Was not sure about first answer and finally got it wrong
-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 technology
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01 Apr 2017, 04:20
Took 8 min 10 sec all correct. including 3 min 50 sec to read . Good passage . Hope This type doesn't come in my GMAT exam. Takes lot of time to understand passage
Re: Most pre-1990 literature on businesses' use of information technology
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29 Jun 2017, 03:59
1
1)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. Moreover, this is passage is neither opinionated nor detailed, it is providing clear cut explanation. Hence C is correct. 2)option B says exactly opposite of what is stated."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". Hence A is correct and option B is wrong. 3)“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)“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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My friend, with all due respect, I am going to chide you. Think about the question you wrote. How much time did it take to compose that question? How much thought and effort went into that question? This is not a high quality question. A high quality question is one that demonstrates incredible diligence and thoughtfulness on your part. It makes clear everything you were considering and every step of your thought process. If you were to specify all this, you would help an expert to answer your question more precisely. More importantly, though, this reflection is absolutely essentially to the education process. Asking excellent questions is one of the habits of excellence. See: Asking Excellent Questions In this question, you put in very little effort, and you demanded attention and effort from two different experts. This is not very respectful. Furthermore, it demonstrates a significant misunderstanding of the entire education process. Education is NOT something experts do to you. It is NOT something you get from experts. Instead, education is something you do to yourself, by yourself, and for yourself, and the experts only can provide support to how you are carrying out the process. You are 100% responsible for your own learning, and everything you do should reflect this completely. How you do anything is how you do everything.
Here's my challenge to you. First, read the text of that linked blog very carefully. Then, come back to this thread, and read every post that discusses question #1. Synthesizing all of this, ask an excellent question in which you explain everything you understanding and what you feel you you still don't understand. After all this, you may answer your own question, which is great, but if you don't, ask an excellent question here, and I will be more than happy to answer it.
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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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