Competition and cooperation in information systems innovation

Abstract Information systems may be strategic and may have competitive impact on a firm and its industry. Properties of an innovation or an environment that may predict the competitive impact have already been studied; now the process of determining an information systems strategy must be addressed. Recent work in economics addresses a game theoretic approach to selecting strategy for an innovation, where the decision maker's key choice is when to adopt the innovations. A strategy can be selected, based upon: beliefs concerning cost of development as a function of time of introduction; and estimates of profits, with and without the innovation, and with and without introduction by competitors. This work can be modified to relate more closely to the selection of a strategy for an information systems innovation. Most specifically, since many information systems are expensive, offer scale advantages, and are available to all members of an industry, cooperation through consortium development may make more sense than competition. Thus the key aspects of an investment decision in strategic information systems are timing, as an early or late developer, and cooperation, as an independent innovator or as a member of a development consortium.