Firms invest in a variety of information technologies and seek to align their IT asset portfolios with two key performance outcomes: efficiency and innovation. Existing research makes the universalistic assumption that both outcomes will always be realized through firms' IT asset portfolios. There has been limited research on the conditions under which firms' IT asset portfolios should be oriented more toward efficiency or innovation.Here, we argue that the nature of the industry where a firm competes will have a significant moderating effect on the link between firms' IT asset portfolios and efficiency or innovation outcomes. Using panel data that covers a wide range of industry environments, we find that at lower levels of dynamism, munificence, and complexity, IT asset portfolios are associated with a greater increase in efficiency. In contrast, in envinronments with higher levels of complexity, IT asset portfolios are associated with a greater increase in innovation (i.e.,development of new products and processes, and exploration of growth opportunities). These results provide insights about how firms could realize strategic alignment by tailoring their IT asset portfolios toward an efficiency or innovation focus
Extant research considers the IT governance choice to be a trade-off between the cost-efficiency of centralization and the responsiveness provided by local information processing. This view predicts that firms tend to decentralize IT governance in more uncertain environments. We investigate this issue by studying the relationship between environmental uncertainty and IT infrastructure governance in a sample of business units from Fortune 1000 companies. The key proposition in this paper is that the relationship between environmental uncertainty and decentralization in IT infrastructure governance is best characterized as a curvilinear relationship. That is, when environmental uncertainty increases from low to high, firms tend to first decentralize their IT infrastructure decisions to the business units to enhance their responsiveness; and then centralize their IT infrastructure decisions to the headquarters as uncertainty increases further, to achieve the benefits of coordination and to mitigate the potential agency problem in uncertain environments. Moreover, the study proposes that business unrelatedness between business units and their headquarters moderates the curvilinear relationship between environmental uncertainty and IT infrastructure governance. We find that both the propositions are supported by the data.
Current knowledge management (KM) technologies and strategies advocate two different approaches: knowledge codification and knowledge-sharing networks. However, the extant literature has paid limited attention to the interaction between them. This research draws on the literature on formal modeling of networks to examine the interaction between knowledge codification and knowledge-sharing networks. The analysis suggests that an increase in codification may damage existing network-sharing ties. Anticipating that, individuals may hoard their knowledge to protect their network ties, even when there are nontrivial rewards for codification. We find that despite the aforementioned tension between the codification and the network approach, a firm may still benefit from combining the two approaches. Specifically, when the future sharing potential between knowledge workers is high, a combination of the two approaches may outperform a codification-only or a network-only approach because the codification reward causes fewer network ties to break down, and the benefit from increased codification can offset the loss of some network ties. However, when the future sharing potential is low, an increase in codification reward can quickly break down the whole network. Thus, firms may be better off by pursuing a codification-only or a network-only strategy.
The information systems (IS) literature suggests that by lowering coordination costs, information technology (IT) will lead to an overall shift towards more use of markets. Empirical work in this area provides evidence that IT is associated with a decrease in vertical integration (VI). Economy-wide data, however, suggests that over the last 25 years the average level of VI has, in fact, increased. This paper studies this empirical anomaly by explicating the moderating impact of two measures of competitive environment, demand uncertainty, and industry concentration, on the relationship between IT and VI. We examine firms included in 1995 to 1997 InformationWeek 500 and the COMPUSTAT database. Consistent with the IS literature, the analysis suggests that IT is associated with a decrease in VI when demand uncertainty is high or industry concentration is low. However, contrary to the IS literature, IT is found to be associated with an increase in VI when industry concentration is high or demand uncertainty is low. Furthermore, as demand uncertainty increases, less vertically integrated firms invest more in IT, while as industry concentration increases, more vertically integrated firms invest more in IT. The analysis also suggests that firms' choice of the level of VI and IT investment, under different levels of demand uncertainty and industry concentration, are rational. When demand uncertainty is high or industry concentration is low, increase in VI may increase coordination and production costs. Thus, less VI is rational. However, when industry concentration is high or demand uncertainty is low, increase in VI may decrease coordination and production costs. Thus, firms choose more VI in such industries. The implications for research and practice are discussed.
The Internet provides an additional channel for manufacturers to provide information about and sell their products. The electronic channel has the advantage of reduced search cost and its reach is increasing, but it has limited capability to provide product information. This paper examines how Internet technology affects a monopoly manufacturer's distribution problem in an environment where product information is important for consumers to identify their ideal product. The model suggests that a manufacturer uses the electronic channel in addition to the physical channel when the product information is very valuable and product information is largely about digital attributes, or when the product information is not valuable. The model also suggests that when the manufacturer chooses to sell through both channels, there is an increase in price competition between the two channels such that the manufacturer need not sell through the electronic retailer with the highest reach. Also, when a large proportion of consumers have access to both channels, the manufacturer may sell through only one channel. The paper also examines the case where the manufacturer operates in the electronic channel and the case where the retailers are integrated.
Delivering quality customer service has emerged as a strategic imperative, one that is increasingly tied to a firm's information technology resources and capabilities. This paper presents an empirical study that examines the extent to which IT impacts customer service. More specifically, this study investigates the differential effects of various IT resources and capabilities on the performance of the customer service process across firms that compete in the North American life and health insurance industry. The paper builds on (1) information systems work that suggests that the effects of IT are best documented at the level of processes within a firm, (2) information systems work that suggests that the performance effects of IT are likely to be contingent in nature, and (3) developments in the resource-based view, which describes the kinds of IT resources and capabilities that are likely to enable a process in one firm to outperform the same process in competing firms. The findings suggest that tacit, socially complex, firm-specific resources explain variation in process performance across firms and that IT resources and capabilities without these attributes do not. Of particular interest to IS scholars, it is found that shared knowledge between IT and customer service units--an important driver of how IT is implemented and used in the customer service process--is a key IT capability that affects customer service process performance and moderates the impacts of explicit IT resources such as the generic information technologies used in the process and IT spending, which--consistent with resource-based predictions--were not found to be directly and positively associated with relative process performance. The implications of the findings for research and practice are discussed.