RBV Framework Analysis of Schwab's Business and IS/IT Strategy
2009/// Filed in: Management IS
The resource-based view (RBV) is useful to complement Porter's competitive forces model focused on the industry structure analysis. The RBV framework proposed by Barney and others provides a theoretical model to analyze the idiosyncratic attributes of the firm and their impact on its competitive position (Barney.91).
From the RBV framework it is important to note that by the time Schwab was ready to implement the E-business strategy in 1995, it already possessed significant technological resources, systems, know-how, and capability. Ever since its inception in 1971, Schwab had been a technological front-runner. Dave Potturck (Former Schwab President) preferred to think of Schwab as a technology firm which operated in the financial services industry. Robert Duste (Senior VP, 97) remarked that technology was not a sideline but a core part of the brand and a core part of the business (``almost every business decision involves a discussion of how we're going to use technology to do things for our customers that no-one else can do"). In fact, Schwab introduced services to enable stock trading through PCs in 1985 before it started using the telephone for trading in 1989. By 1985 Schwab posessed core competencies that were difficult to replicate, transfer, and appropriate by traditional full-service financial service firms such as Merryll Lynch. Consequently, they 1) leveraged their unique technological resources to improve value, 2) differentiated their product (discount brokerage targeted to individual investors) based on core competencies (IS/IT capability), and 3) changed the rules of competition by creating new customized products based on their IS/IT leadership (Barney.91).
Beyond the actual physical IT infrastructure that Schwab already possessed by 1995 (hardware and networks), it also had three other critical resources, namely 1) the ability to mobilize and rapidly deploy new IS/IT to achieve business objectives (e.g. a 30 member team developed, prototyped, tested, and launched e.Schwab in less than 12 months), 2) human IT infrastructure (skills and management capability), and 3) intangible IT resources such as IS culture assets, customer-focused orientations, and excellent management practices capable of aligning IS and business strategy. Research has shown that precisely these intangible IT-based resources (e.g. corporate culture, customer orientation, environmental orientation, know-how, change management) deeply embedded in the firms social fabric are a major contributor to competitive advantage and superior performance (Bharadwaj.00).
From the RBV framework it is important to note that by the time Schwab was ready to implement the E-business strategy in 1995, it already possessed significant technological resources, systems, know-how, and capability. Ever since its inception in 1971, Schwab had been a technological front-runner. Dave Potturck (Former Schwab President) preferred to think of Schwab as a technology firm which operated in the financial services industry. Robert Duste (Senior VP, 97) remarked that technology was not a sideline but a core part of the brand and a core part of the business (``almost every business decision involves a discussion of how we're going to use technology to do things for our customers that no-one else can do"). In fact, Schwab introduced services to enable stock trading through PCs in 1985 before it started using the telephone for trading in 1989. By 1985 Schwab posessed core competencies that were difficult to replicate, transfer, and appropriate by traditional full-service financial service firms such as Merryll Lynch. Consequently, they 1) leveraged their unique technological resources to improve value, 2) differentiated their product (discount brokerage targeted to individual investors) based on core competencies (IS/IT capability), and 3) changed the rules of competition by creating new customized products based on their IS/IT leadership (Barney.91).
Beyond the actual physical IT infrastructure that Schwab already possessed by 1995 (hardware and networks), it also had three other critical resources, namely 1) the ability to mobilize and rapidly deploy new IS/IT to achieve business objectives (e.g. a 30 member team developed, prototyped, tested, and launched e.Schwab in less than 12 months), 2) human IT infrastructure (skills and management capability), and 3) intangible IT resources such as IS culture assets, customer-focused orientations, and excellent management practices capable of aligning IS and business strategy. Research has shown that precisely these intangible IT-based resources (e.g. corporate culture, customer orientation, environmental orientation, know-how, change management) deeply embedded in the firms social fabric are a major contributor to competitive advantage and superior performance (Bharadwaj.00).