Information Systems Use and Firm Competitive Advantage : A Case of Small and Medium Tourism Enterprises in Tanzania

Abstract: The role of Small and Medium Enterprises for the economic well being of developing countries is indisputable. The increased use and demand for information in various fields and sectors coupled with globalization, make IS critical for firm performance. The performance and survival of firms in information intensive industries such as tourism enterprises depend very much on how well they can develop, nurture and deploy information systems in their daily activities among others.Differences in performance exist among small and medium enterprises operating in a similar markets, environment and social context based on how they use information systems. Even as theories that attend to the analysis of the information systems-firm performance are dominated by the market based and the resource based view of the firm, there is a clear paradigm shift to this effect. Researchers to a large extent have used these theories in isolation, and some suggest that the two contradict. But few recent studies contend that these theories complement rather than conflicting each other. The major underlying differences in these theoretical underpinnings are the level of analysis and the constructs used in analyzing the relationship between information systems use and firm performance.Furthermore, most of the studies in which these theories have been empirically tested are based on large firms and if small and medium enterprises they are mostly dominated by firms from developed countries. Since there is an evident paradigm shift and paucity of findings on the same from developing countries, a more recent and context specific study which attend to these theoretical, and methodological controversies is imperative.This study takes the first important step by staging a theoretical and methodological framework which is perceived as a significant milestone in attending to the above inaptness. The framework suggested echoes from the market based and resource based view, and small and medium enterprises uniqueness by highlight on the constructs thought of being relevant for SMEs information system use for competitive advantage. The constructs of the model attend to both firm information systems resources and capabilities, and the human resource factors necessary in building firm competences which ultimately could lead into better performance. The constructs embrace on both the inside-out and outside-in perspectives as they complement each other, thus attending to the use of information systems for the positional and source advantages respectively.This study proposes a multivariate analysis using structural equation modeling, to evade the missing link between information systems and firm performance by considering the role of information systems in developing, nurturing, deploying and releasing other firm resources and competences. Taking into consideration both the nature of small and medium enterprises and the novelty of information systems, tour operators are thought of being the most appropriate firms in Tanzania for validating the model in the subsequent stage. Upon its validation the study envisages that, answers to the question about what make some firms, specifically SMEs exhibit better performance through information systems and others not, will be known.