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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/14285
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| Title: | Appropriating Value From CRS Ownership in the Airline Industry |
| Authors: | Duliba, Katherine A.
Kauffman, Robert J.
Lucas, Henry C. , Jr. |
| Keywords: | Appropriability
agency automation
airline performance
computerized reservation systems
CRS
corporate strategy
IT value
market share models |
| Issue Date: | Nov-1999 |
| Publisher: | Stern School of Business, New York University |
| Series/Report no.: | IS-99-13 |
| Abstract: | It is difficult for the firm competing through information technology
(IT) resources to gain a sustainable advantage because systems are easy
to imitate and often substitute resources are available to competitors.
The innovator may be unable to appropriate all of the benefits from IT
investments. Airlines have installed computerized reservations systems
(CRSs) in travel agencies in order to appropriate the returns from their
investments in information technology. The airlines expected to obtain a
number of benefits from this strategy including increased efficiency,
possible bias in favor of the CRS owner on the part of the travel agent,
and fees from other airlines for making reservations for them. The
purpose of this paper is to evaluate the appropriation of value by CRS
owners from deploying systems in travel agencies. These benefits, beyond
fees from travel agents, should be seen in the vendor airline's market
share between cities and in the overall performance of the airline at an
industry level. This paper models airline performance as a function of
CRS ownership at two levels: for selected city-pairs and at the overall
level of the firm. The city-pair analysis employs a multinomial logit
(MNL) market share model that analyzes five years of data on 72
city-pair routes. The industry model uses longitudinal data for a panel
of ten airlines for twelve years. The results of both analyses support
hypotheses that CRS ownership is positively related to airline
performance. It appears that strong airlines have appropriated the
benefits of their CRSs, turning them into highly specialized assets for
further travel-related innovation. This work offers useful theoretical
extensions and methodological approaches for the study of similar kinds
of network technology innovations that are currently being deployed in
association with electronic commerce on the Internet. |
| URI: | http://hdl.handle.net/2451/14285 |
| Appears in Collections: | IOMS: Information Systems Working Papers
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