Abstract:  A company’s ability to innovate in IT over time is a key competitive advantage. Empirical results from the study of a dataset consisting over 2000 firms support the belief that the ability to innovate in IT over time is not easily replicated by competing firms. Results from the study suggest that the probability that a firm will remain innovative in IT in the following year is relatively high (68%), while the probability that the firm will transition from its non-innovative state and become innovative in IT is relatively small (9%). This article concludes that the firm’s ability to innovate is diffused across people, processes, and products, and based on the decisions taken in prior years.

This articles conclusion is that systematic innovators tend to take a long-term view and continue to experiment and innovate in IT even during the period of falling IT budgets. Experience of companies like Intel and Global Crossing shows that the capability to innovate with IT is neither instant and nor inexpensive. Thus, business managers should invest to innovate in IT only if it makes sense in the context of company’s business strategy and not because of pressure from peers, vendors or external sources.

Published: Communications of the ACM, May 2010

Authors: Theophanis C. Stratopoulos, and Jee-Hae Lim

Link: IT Innovation Persistence