Information and Communication Technology Strategies to Improve International Competitiveness in the Wholesale and Retail Trade Sector

Content

Introduction

Purpose of the study

Conceptual Framework

A Review of the Professional and Academic Literature
Geographical Context of the Study
The Caribbean Environment: Small and Constrained
Use of ICT in Wholesale and Retail Trade
ICT Strategies Used in Wholesale and Retail Businesses
Information Technology and Context
Information Technology and Business Performance
Use of RBV in Information System Research
RBV Concepts
The Role of Inhibitors
Summary of Important Points

Presentation of the Findings

Summary of Findings

Applications to Professional Practice

Implications for Social Change

Recommendations for Further Research

Summary and Study Conclusions

References

Abstract

The study explored the Information and Communication Technology (ICT) strategies that managers of Barbados’s wholesale trade businesses use to improve international competitiveness in Barbados. The resource-based view theory was the conceptual framework for this study. Data collection included semistructured interviews with 15 business managers, participant observation, and organizational document analysis. Data analysis and methodological triangulation revealed 4 themes that helped to understand the findings within the context of the research question and the purpose of the study. These themes included competitive position and response, internal factors, IT-specific factors, and ICT experiences. Implications of social change include providing business managers with specific knowledge on ICT strategies used to improve international competitiveness in Barbados and an understanding of desirable and undesirable perspectives held regarding these strategies.

K e ywords: Information and Communication Technology; International Competitiveness; Wholesale and Retail; Globalization; Organizational Environment; Economic Partnership

Introduction

Caribbean private sector businesses face a number of new challenges because of the changing global economic environment, particularly regarding globalization, trade liberalization, and changing international trade regulations (Kunz, Lavenex, & Panizzon, 2011; Mayo, 2013; Vooren, Blockmans, & Wouters, 2013). In 2008, the signing of the economic partnership agreement (EPA) with the European Union (EU) forced Barbados and the Caribbean Forum (CARIFORUM) to find new ways to become more globally competitive (Bishop, Heron, & Payne, 2013; Heron, 2011). By the 2020 deadline, the EU EPA will enforce the removal of preferential access to goods and services coming from CARIFORUM (Bernal, 2013).

In Barbados, the wholesale and retail trade sector, which is a major contributor to the gross domestic product (GDP), experienced a significant reduction in international trade and increased international competition since the signing of the EU EPA in 2008 (CARICOM, 2013; Ministry of Finance and Economic Affairs, 2012). Seventy percent of private sector Caribbean businesses also reported a 50% reduction in profits in the wholesale and retail trade sector (Caribbean Center for Money and Finance, 2014; Khadan & Hosein, 2012). CARICOM heads of government has promoted ICT as a vehicle for mitigating the regulatory changes and improving private sector competitiveness (CARICOM, 2013). However, some wholesale trade businesses still experience reduced revenue, because of their inability to use ICT to improve their international competitiveness. Wholesale trade businesses not only compete on a local and national level but also compete with organizations from outside the Caribbean (Ministry of Finance and Economic Affairs, 2012).

Purpose of the study

The purpose of this qualitative single case study was to explore the ICT strategies that managers of Barbados’s wholesale trade businesses use to improve international competitiveness in Barbados. The target population consisted of 15 managers from a wholesale trade business in Barbados that had ICT strategies to improve international competitiveness. Results of this study may provide business managers with insight into specific ICT strategies needed to improve international competitiveness in Barbados’s wholesale and retail trade sector. A contribution to social change this case study may provide is to better understand specific ICT strategies needed to improve the international competitiveness of organizations. Efforts to address undesirable actions, whether through the implementation of new strategies or improvement and change of existing ICT strategies, can improve the economy of the Barbadian society and ensure accompanying benefits to citizens of Barbados.

Conceptual Framework

The conceptual framework for this study was the resource-based view (RBV) theory (Barney, 1991). The RBV theory offered a way to explore ICT and to attain sustained organizational competitiveness. Barney formulated the primary assertion that heterogeneous and imperfectly mobile organizational resources lead to sustained competitive advantage if organizational resources are (a) valuable, (b) rare, (c) imperfectly imitable, and (d) and nonsubstitutable (Eisenhardt & Martin, 2000). Barney explained that an organizational resource must have four attributes: (a) the resource must be valuable, in the sense that the resource exploits opportunities or neutralizes threats in an organization's environment; (b) the resource must be rare among an organization's current and potential competition; (c) the resource must be imperfectly imitable; and (d) there cannot be strategically valuable equivalent substitutes (nonsubstitutable) for this resource, neither rare nor imperfectly imitable. In that regard, the RBV of the organization forecasts certain types of resources owned and controlled by the organization that has the potential and promise to create competitive advantage and improved business performance.

The RBV offered a suitable conceptual foundation for this research. First, RBV provided a framework to explore organizational competitiveness by focusing on the internal characteristics of the organization, as opposed to environmental conditions. Second, the RBV retained enough flexibility for combining with other conceptual concepts. Third, RBV provided a good precedent for use as a basis for empirical research in information system literature relevant to this research.

A Review of the Professional and Academic Literature

Geographical Context of the Study

The word Caribbean refers collectively to islands and continental territories that fall within or border the Caribbean Sea, an expanse of ocean falling between North and South America (Puntigliano & Briceño-Ruiz, 2013). These countries are either former or current dependencies of the UK, France, Spain, the Netherlands, or the United States (Puntigliano & Briceño-Ruiz, 2013). The Caribbean refers to countries or territories within the Caribbean basin that meet both of the following criteria: (a) are former or current dependencies of the UK, France, Spain, or the Netherlands; and (b) are full members of CARICOM and by extension the CARIFORUM (Niles & Lloyd, 2013; Puntigliano & Briceño-Ruiz, 2013).

The member countries of CARICOM are signatories to a treaty and other agreements among themselves that cumulatively have the practical effect of coordinating their activities in several spheres and in pursuing similar economic development policies (CARICOM, 2013). These countries also fall into the category referred to as Small Island Developing States (SIDS; Crossley & Sprague, 2014; Santos-Paulino et al., 2013). Within the international development community, this category shares a peculiar set of economic characteristics (Crossley & Sprague, 2014; Santos-Paulino et al., 2013). This research was conducted in Barbados, which is a CARICOM member country.

The Caribbean Environment: Small and Constrained

The UN acknowledged particular problems of SIDS since 1994, after the UN advocated special consideration of islands in developing countries for 20 years (Crossley & Sprague, 2014). In this context, the UN uses an unofficial list of 52 SIDS for analytical purposes, 43 of which are in the Caribbean and Pacific regions (Crossley & Sprague, 2014). Jaunky (2011) identified four major characteristics of SIDS: (a) small size; (b) vulnerability to natural hazards; (c) dependence on marine resources; and (d) short-term exploitation of resources.

These countries, because of their small size and resource constraints, face a peculiar set of challenges in trying to compete and survive in the world economy (Bishop, 2012). The economic vulnerability of Caribbean SIDS is a major disadvantage (Antrobus, 2011). Also contributing to fewer competitive organizations than those in developed and even in other developing countries (Iyare & Moseley, 2012).

Use of ICT in Wholesale and Retail Trade

ICT is instrumental in the growth of economies in the wholesale and retail trade sector (Strange, 2011). Effective use of ICT in wholesale and retail trade connects locations and eliminates time constraints in acquiring information (Schivardi & Viviano, 2011). The retail trade sector is a transaction and information intensive industry (Oh & Teo, 2012). In Barbados, daily retail transactions number in the thousands (Ministry of Finance and Economic Affairs, 2012). During 2012, the wholesale and retail trade sector made a substantial contribution (BDS $741.9 million) to Barbados’s GDP (Ministry of Finance and Economic Affairs, 2012). Oh and Teo (2012) contended that large volume of transactions provides increased opportunities for pinpointing strengths, restructuring procedures, and targeting efforts.

ICT enhances productivity in the retail trade sector through enhanced product planning and management as well as improved logistics, including boosting routing, cross-docking distribution centers, and use of barcodes and radio frequency identification (RFID) to track and redeploy shipments (Magesa, Michael, & Ko, 2014; Wamba, 2012). For example, retail giant Mark and Spencer has used RFID tags to track goods along the entire supply chain to optimize orders and inventory management, to avoid out-of-stock situations, and to reduce costs (Smith, Gleim, Robinson, & Kettinger, 2014). ICT also enhances productivity in the retail trade sector through a mechanization of procedures via scanning and management technology (Magesa, Michael & Ko, 2014). New developments in ICT and the Internet, specifically the cloud, mobile solutions, and collaboration tools do the following: (a) decrease expenses, (b) drive progress, and (c) increase yield and jobs (De Vries & Koetter, 2011). Business managers, as well as governments, need to identify how technology leads to increased productivity (Ollo-López & Aramendía-Muneta 2012). Ollo-López and Aramendía-Muneta (2012) contended that the use of ICT favors innovation within organizations. The authors also noted that organizations need to do more than simply invest their finances in ICT; organizations must strengthen crucial enablers, that is, the environment that supports the integration of technologies (Ollo-López & Aramendía-Muneta, 2012). Businesses require strengthening enablers that support technology integration for achieving and sustaining a mature digitized platform (Ollo-López & Aramendía-Muneta, 2012). A mature digitized platform is a blend of homogenous and shared ICT infrastructure, the internal business procedures of an organization, and the data the organization produces (Evgeniou, Fonstad, Merdikawati, & Rodriguez-Montemayor, 2013). Abdullah and Abdullah (2012) contended that strong business enablers are also needed to increase productivity and competitiveness and prevent wastage of investment in new technologies.

Four primary business enablers that support technology investment include the following: (a) the effect of managerial decisions in technology investment; (b) businesses with access to persons who thrive mostly in technical activities; (c) businesses with access to successful managers who place ICT at the core of both strategic and operational management activities and influence corporate vision and strategy to maintain operational efficiency; and (d) the degree to which the technology, business process, and data components become regulated, shared. and integrated, that is, digitized platforms (Evgeniou et al., 2013). Evgeniou et al. contended that an organization’s digitized platform also consists of the mass of applications and digitized business processes the organization invested in and accumulated over time. The authors also noted that organizations that can organize and properly regulate technologies, procedures, and information across business units have mature digitized platforms, but uncoordinated organizations have immature digital platforms (Evgeniou et al., 2013).

A mature digitized platform includes a strong link to new technologies and competitiveness (Evgeniou et al., 2013). For example, 74% of high investors in cloud with mature digitized platforms had a competitive advantage, while those with immature digitized platforms experienced no advantage over low investors in cloud (Evgeniou et al., 2013). Evgeniou et al. contended that organizations should strive to achieve and sustain maturity in their digitized platforms to obtain increased execution from technologies. Organizations can achieve and sustain maturity in any digitized platform by synchronizing investments in new technology with organizational changes (Evgeniou et al., 2013). Maintaining a mature digitized platform includes increasing demands and constantly balancing direct requirements of business divisions and project teams with long-term organization requests (Evgeniou et al., 2013). Ciocoiu (2011) contended that businesses in developing countries, as is in the case of Caribbean SIDS, can gain export opportunities from the digital economy, which includes e-applications and e-commerce. The swift changes and large investments required may prevent some countries from adopting and using ICT to compete in the global economy (Ollo-López & Aramendía-Muneta, 2012).

A consideration regarding changes that e-commerce and e-business will introduce to the competitiveness of organizations is fluctuations in the market structure and operations (Andoh-Baidoo, Osei-Bryson, & Amoako-Gyampah, 2012) . Diffusion of vast information on markets improves transparency and increases the number of buyers and sellers resulting in successes as well as failures (Alt & Klein, 2011). Lack of corporate involvement in the Internet market results in businesses losing opportunities for obtaining their resources cheaply and trading their products internationally (Ho, Wu, & Xu, 2011). Similarly, organizations that market their products and services more efficiently have the distinct advantage of increasing sales, rather than losing existing sales. In developing countries such as the Caribbean SIDS, small, medium and microsized enterprises (SMEs) are under threat (Bourletidis & Triantafyllopoulos, 2014; Marques, Acosta, & Merigo, 2014). Marques et al. contended that SMEs in developing countries have smaller markets, where they cannot achieve the required economies of scale from the use of ICT achieved by the retail giants such as Walmart and Tesco.

ICT Strategies Used in Wholesale and Retail Businesses

Several possible ICT strategies exist to improve competitiveness in wholesale and retail businesses. One such strategy is the integration of supply chain management (SCM), which creates strategic assets for the organization (Madhani, 2012). The primary assertion of the RBV is strategic resources or organization assets that are rare, valuable, and difficult to imitate or substitute allows an organization to achieve and maintain a competitive advantage (Barney, 1991). An organization that leverages SCM in this context can improve their competitiveness if used correctly (Madhani, 2012).

The use of ICT has high potential in SCM to reduce costs and improve service levels for customers (Christopher & Holweg, 2011). SCM increases the ability of organizations to outsource business activities and improve the efficiency of their operations (Xu, 2011a). Khan, Liang, and Shahzad (2014) posited that SCM creates value for organizations by combining buyers and sellers, generating market liquidity, and decreasing transaction costs. Integration of SCM to improve competitiveness in wholesale and retail businesses include: (a) upstream supply chain: e-procurement, (b) in-house supply chain: internal ICT systems, and (c) downstream supply chain: e-retailing and e-marketing.

Upstream supply chain: e-procurement. The use of ICT in upstream supply chain enables organizations to increase transparency of processes and information flows (Talib, Rahman, & Qureshi, 2011). Retailers and wholesalers have to exchange information with suppliers, and they can use ICT to facilitate the information flow (Stephen, Sonya, Zhiwei, & Siva, 2012). Stephen et al. also posited that retail and wholesale businesses can procure goods online and improve their general readiness for e-business.

To this end, retailers can use data networks with access to electronic data interchange (EDI) and extranets (Alt & Klein, 2011; Oh, Yanga, & Kim, 2014). Digital integration between retailers and manufacturers can go to different levels by using applications such as e-invoicing (Kivijärvi, Hallikainen, & Penttinen, 2012; Ollo-López & Aramendía-Muneta, 2012). Many companies are also implementing traditional EDI applications and e-invoicing to administrate invoicing activities as part of their supply chain (Kivijärvi et al., 2012).

In-house supply chain: internal ICT systems. Effective internal business processes are a source of competitive advantage for retailers (Sirmon, Hitt, Ireland, & Gilbert, 2011). ICT presents many opportunities to retailers and wholesalers for improving their processes and operations (Azevedo & Carvalho, 2012). One common problem faced by organizations is duplication of data, because of the lack of system integration and lack of alignment with business strategies (Xu, 2011b).

To reduce these problems, businesses can use systems such as enterprise resource planning, RFID, business process management, and customer relationship management (Azevedo & Carvalho, 2012; Liu, Liu, & Xu, 2013). Azevedo and Carvalho (2012) contended that RFID has received much attention because of its potential for innovation in various processes including distribution, store operations, and information system. Azevedo and Carvalho also noted that fashion retailers stand to gain much from the deployment of RFID. Liu et al. contended that organizations can generate market intelligence, differentiate their products in the market, and create competitive advantage by adopting CRM technology.

Downstream supply chain: e-retailing and e-marketing. Retailers face electronically enabled downstream supply chains because of increases in online sales (Stephen et al., 2012). The downstream supply chain consists of all activities retailers have with their customers (Stephen et al., 2012). Focus areas are actual sales transactions and marketing activities. Retailers can use online platforms to sell their goods and extend their sales to international markets as well as regional markets because of the increase in Internet technology (Stephen et al., 2012). Stephen et al. contended that retailers and wholesalers can deploy e-marketing channels such as online advertisements and search engine optimization to increase their market reach.

ICT offers robust means for creating and sustaining competitive advantage to retail and wholesale businesses because of the immense opportunities, both internally and externally (Schivardi & Viviano, 2011). Businesses can easily move their customers from stores to web stores (Enrique & Pradeep, 2011). Enrique and Pradeep contended that businesses could leverage their existing infrastructure to fulfill e-tailing requirements. A perfect example of a retailer using ICT tools to build upon the competitive advantage is Walmart (Marques et al., 2014). In that regard, retailers and wholesalers can learn much from Walmart and use ICT as a business tool to reduce costs, create stronger links with customers, and create innovative products.

The review of the literature showed that ICT supports the wholesale and retail trade sector to improve efficiency and productivity regarding achieving competitiveness and ensuring growth in the marketplace (Lindner & Wald, 2011). ICT supports retail businesses in tracking their supply chain activities, which ensures long-term growth and competitiveness in the market (Smith et al., 2014). Several possible ICT strategies exist to improve competitiveness in wholesale and retail businesses including SCM, upstream supply chain: e-procurement, in-house supply chain: internal ICT systems, and downstream supply chain: e-retailing and e-marketing.

Information Technology and Context

Orlikowski (1992) discussed the lack of consensus about the definition of technology or any particular role of technology in organization affairs. Orlikowski proposed a structurational model of technology to interpret the results of a field study that investigated the use of IT in a large multi-national software consulting company. The author used the model and contended that the implementation of technology and the context in which technology implementation takes place are linked. Webster (2011) supported this position and indicated that technology over time can either reproduce or change the structure of the organization subject to how users within the organization appropriate technology.

Avgerou (2001) also noted the issue of context and contended that IS research and practice must associate technology innovation within the embedded context. Avgerou contended that relevant arguments exist for countries that pursue IT-based development planning under the perceived imperatives of the global economy and by emulating other regions’ successful techno-economic policies. Such a position supports Caribbean countries seeking to imitate benefits derived from IT in developed countries. Haynes and Westrup (2012) also contended that context and how formulation occurs in the processes of development may have implications for the conceptualization of future studies regarding information and communication technology for development. Context is a dynamic perception produced out of processes of connection and disconnection and not an entity awaiting representation (Haynes & Westrup, 2012).

The review of the literature about the significance of context and the peculiarities of the Caribbean business environment indicates a need for Caribbean specific exploration of IT at the organization-level. Limited Caribbean literature exists that determines how organizations use IT, what benefits organizations derive, and why expected benefits may not exist (Spector, Merrill, Elen, & Bishop, 2013). In a literature review of research regarding IT in developing countries, Walsham and Sahay (2006) identified literature specific to several geographic regions of the world including South-East Asia, Africa, Middle East, and South America, but did not identify any literature that was specifically related to the Caribbean.

Information Technology and Business Performance

A significant volume of literature debating the existence of a causal relationship between IT investment and business performance exist (Karanja, 2011). Subriadi, Hadiwidjojo, Djumahir, and Sarno (2013) provided an overview of literature that suggested that the large investments made in computer technology did not result in expected corresponding growth in productivity. Also, noting that the shortfall of IT productivity results from deficiencies in the measurement and methodological toolkit mismanagement by developers and users of IT (Subriadi et al., 2013). The findings of a quantitative correlation study that investigated the relationship between IT expenditure and financial performance in the Nigerian banking sector also revealed the existence of the IT productivity paradox, which underscored the importance of recognizing the measurement and methods for determining the value derived from IT investments (Ekata, 2011). A review of literature in these debates about the productivity paradox is outside the scope of this review. The existence or non-existence of the IT productivity paradox is worth noting in the context of this study as an underpinning for organizations seeking to improve their competitiveness.

Karanja (2011) focused on the relationship between IT investment and organization performance and noted that a number of the past studies used quantitative measures of IT investment benefits that often did not capture the intangible benefits of IT. Discussions moved from whether a general causal link between IT and business performance exists, toward how IT can contribute to business performance in particular circumstances (Nevo & Wade, 2011; Ravichandran & Liu, 2011; Wiengarten, Humphreys, Cao, & McHugh, 2013). Interest in the effect of organization-specific characteristics to determine what value an organization derives from its IT investments also exist. Ho et al. (2011) investigated the effect of corporate governance on the relationship between IT investment and organization performance in the Taiwanese electronics’ industry, where they found that IT contributed to organization performance only in the presence of complementary corporate governance structures. An argument such as this supports the view that addressing organizations’ problems is an important undertaking in this discourse.

[...]