l culture and skills, and other 'invisible assets' (Chamberlin 1933, Itami 1987). Competition therefore means cultivating unique strengths and capabilities, and defending them against imitation by other firms. Another alternative sees competition as a process linked to innovation in product, market, or technology (Schumpeter 1950). Porter's Strategic Theory The context within which SIS theory emerged was the competitive strategy framework put forward by Porter (1980, 1985), which was based on industrial organisation economics. For developments along that path, see Kaufmann 1966, Kantrow 1980, Pyburn 1981, Parsons 1983, EDP Analyzer 1984a, 1984b, McFarlan 1984, Benjamin et al 1984, Wiseman & Macmillan 1984, Ives & Learmonth 1984, Cash & Konsynski 1985, Porter & Millar 1985, Keen 1986, King 1986). This first section outlines the basis of that theory. Strategic information systems theory will then be shown to be concerned with the use of information technology to support or sharpen an enterprise's competitive strategy. Competitive strategy is an enterprise's plan for achieving sustainable competitive advantage over, or reducing the edge of, its adversaries. In Porter's view, the performance of individual corporations is determined by the extent to which they cope with, and manipulate, the five key 'forces' which make up the industry structure: the bargaining power of suppliers; the bargaining power of buyer; the threat of new entrants; the threat of substitute products; and rivalry among existing firms. Porter's classic diagram representing these forces is reproduced in Exhibit 1. Enterprises, through their strategies, can influence the five forces and the industry structure, at least to some extent. There are two basic strategic stances that enterprises can adopt: low cost; and product differentiation. In the long run, firms succeed relative to their competitors if they possess sustainable competitive advantage in either of these two, su...
