1998 Reports

Pharmaceuticals: Merck: Sustaining long-term advantage through information technology

Amari, Hiroshi

This case study of Merck was completed under a three year research grant from the Sloan Foundation. The project's purpose is to examine in a series of case studies how U.S. and Japanese firms who are recognized leaders in using information technology to achieve long-term sustainable advantage have organized and managed this process. While each case is complete in itself, each is part of this larger study. This pharmaceutical industry case together with other cases support an initial research hypothesis that leading software users in both the U.S. and Japan are very sophisticated in the ways they have integrated software into their management strategies and use it to institutionalize organizational strengths and capture tacit knowledge on an iterative basis. In Japan this strategy has involved heavy reliance on customized and semi-customized software (Rapp 1995) but is changing towards a more selective use of package software managed via customized systems. In turn, U.S. counterparts, such as Merck, who have often relied more on packaged software, are doing more customization, especially for systems needed to integrate software packages into something more closely linked with their business strategies, markets, and organizational structure. Thus, coming from different directions, there appears some convergence in approach by these leading software users. The cases thus confirm what some other analysts have hypothesized, a coherent business strategy is a necessary condition for a successful information technology strategy (Wold and Shriver 1993). These strategic links for Merck are presented in the following case.