Research

Abstract: We have entered an era where, in addition to us humans, systems can also think. It is imperative to decide how decision rights and authorities are allocated and distributed across interconnected co-cognitors: things that think. To address this question vital to the redesign of organizations, we reconceptualize cognitive reapportionment as the dynamic reallocation of decision rights and authorities across human and system co-cognitors capable of independent decision making. We articulate the Helix Model of Decision Journeys, wherein decision journeys, comprised of decision elements allocable to human or system co-cognitors, interweave and integrate business processes. The dynamic reapportionment of cognitive responsibilities across co-cognitors is dependent upon the type of scientific reasoning - deduction, induction, or abduction -  at each decision element. We further propose two intertwined mechanisms for the art of letting go that facilitate the adoption of the Helix model. First, the nexus of omnipresent systems co-cognitors collectively needs to evoke trust. Only when Technology Trust Thresholds are exceeded can decision making be reorganized and control relinquished to system co-cognitors. Second, the world of omnipresent cognitors will compel us to redesign, reprogram, and remix our workflow and business processes. Only through a purposeful effort to Redesign in the Remix Regime can the deduction-induction-abduction nature of decision tasks serve as the basis for their reapportionment.

Keywords: Artificial intelligence, organizational design, decision rights, cognition, intelligent systems.

Abstract: Firms must allocate resources effectively to cope with uncertainty, which can manifest as a disruption and an opportunity. Although information technology (IT) is a means to cope with uncertainty, chief executive officers (CEOs) may not always support IT investments due to the risky nature of IT, especially when facing uncertain conditions. While prior research suggests that CEO long-term compensation positively incentivizes IT investments, little is known about how different loci of uncertainty impact this relationship. To address this research gap, we study how firm-specific uncertainty and competitive uncertainty shape the influence of CEO long-term compensation on a firm’s IT capital investment. Drawing on agency theory and prospect theory, we develop two hypotheses. First, we hypothesize that firm-specific uncertainty and competitive uncertainty positively moderate the influence of CEO long-term compensation on firm IT capital investment. Second, we hypothesize that competitive uncertainty has a stronger positive moderating effect than firm-specific uncertainty on the influence of CEO long-term compensation on firm IT capital investment. Our analysis of secondary longitudinal data from 2000 to 2007 of 357 public firms in the United States supports our hypotheses. In exploratory analyses, we found that CEO long-term compensation results in a higher risk- oriented dominant logic in the firm, particularly in conditions of firm-specific uncertainty and competitive uncertainty, with competitive uncertainty having a stronger positive moderating effect. These findings uncover risk-oriented dominant logic as a theoretical mechanism that explains how CEO long-term compensation positively influences firm IT capital investment in uncertain conditions. We also conducted exploratory analyses using a different secondary dataset of 286 U.S. public firms from 2004 to 2019 to consider firm investments in transformative IT applications and found support for our theory. This finding triangulates our results across different time periods and different types of IT investments. This study contributes to theory and practice by providing a nuanced understanding of boundary conditions surrounding CEO long-term compensation, and decisions CEOs make vis-à-vis IT capital investments.

Keywords: CEO long-term compensation, IT investment, chief executive officer, business value of IT, firm uncertainty, competitive uncertainty, dominant logic.

Abstract: Innovation is vital for the growth of small and medium-sized enterprises (SMEs). However, SMEs face deficiencies that hinder their innovation output. This study examines how Information Technology (IT) helps SMEs address two salient deficiencies: technological deficiency (deficiency in internal technical knowledge and skills) and government support deficiency (deficiency in favorable government policies and incentives). Although IT can be used in a closed manner (within the firm’s boundary) or open manner (beyond the firm’s boundary) to enable innovation, the closed and open approaches to IT-enabled innovation pose advantages and challenges for SMEs, resulting in a tension regarding which approach better addresses these two deficiencies. In this study, we investigate how IT Use for Closed Innovation Activities (ITC) and IT Use for Open Innovation Activities (ITO) help SMEs overcome these two deficiencies to achieve innovation output. Drawing on the theoretical concepts of internal and external absorptive capacity metaroutines, we hypothesize that ITC and ITO reduce the harmful effects of technological deficiency and government support deficiency on innovation output. Further, we hypothesize that ITC is more effective than ITO in reducing the harmful effect of technological deficiency on innovation output. In contrast, we hypothesize that ITO is more effective than ITC in reducing the harmful effect of government support deficiency on innovation output. Our empirical analysis of a unique multi-year archival dataset of 319 manufacturing SMEs in Mexico broadly supports our hypotheses. We conduct further exploratory analysis that sheds light on several underlying mechanisms included in our theorization. Our main contributions lie in addressing the tension between ITC and ITO and highlighting that neither approach to IT-enabled innovation outperforms the other in combating technological deficiency and government support deficiency of SMEs. Rather, SMEs achieve greater innovation output by appropriately orienting their IT-enabled innovation efforts in a closed or open manner to address specific deficiencies.

Keywords: Business value of IT, marketing, IT and innovation, firm-level research, innovation, SMEs, emerging economies.

Abstract: Firms’ multilevel access to information plays a significant role in improving operating performance. Increasingly, firms are enhancing their operational integration through information technology (IT) as they grapple with intense competition. Competition networks are an essential but often overlooked source of information that, if leveraged correctly, can provide firms with significant competitive and operational advantages. In this study, we develop a multilevel research model of operating performance (firm level) that simultaneously considers the effects of IT for operational integration (ITOI, firm level) and competitive brokerage (competition network level). We explicate how ITOI and competitive brokerage afford firms’ synergy through complementarities and relatedness of competitive actions, information, and resources to improve their operating performance. We assess the model using a 7-year longitudinal secondary data set that includes firms from multiple industries and find support for our thesis that ITOI and competitive brokerage have a synergistic effect on operating performance. Our exploratory analysis uncovers innovation efficiency as a theoretical mechanism underlying the relationships between ITOI, competitive brokerage, and operating performance. Further exploratory analyses with disaggregated measures of ITOI highlight that synergies arise from IT-enabled coordination and integration across the supply chain and within functional areas of an organization. These findings are robust to concerns of endogeneity and alternative model specifications. We make three critical contributions to our collective understanding of the relationship between IT and operating performance—synergy as a means through which operating performance is realized, a multilevel model of relationships, and a nuanced understanding of the relationships between ITOI, competitive brokerage, and operating performance. Overall, we provide a summative view of the multilevel effects of IT on operating performance.

Keywords: IT for operational integration, competition networks, operating performance, competitive brokerage, synergy.

Abstract: Family owned businesses comprise a large stratum of the global economy. These firms differ in their strategic intent and behavior as they serve as a reservoir of wealth and social status for their family owners. Family owned businesses demonstrate relatively conservative strategic decision making that aspires long-term wealth preservation and enhancement. For family owners, investments in information technology (IT) raise a predicament as they are risky, yet a long-term imperative. We propose three hypotheses that build upon the thesis that family owners combine a deep understanding of the business with a strong influence on stakeholders within and beyond the firm’s boundaries to exert strategic control in the extended enterprise. First, family ownership negatively influences IT investment, because family owners are likely to avoid investments in IT that are frivolous, reduce information asymmetry, or leave auditable digital trails. Second, the negative influence of family ownership on IT investment is weakened when a career professional is appointed in the senior-most executive position of a family owned business. This is because professional executives strive to utilize IT for control and performance benefits, and family owners desire to use IT to monitor and control the non-family professional executive. Third, family ownership weakens the negative influence of environmental hostility on the relationship between IT investment and firm performance, as family owned businesses incur less dynamic adjustment costs and maintain better alignment between IT and business strategy. Empirical analysis, consisting of panel regression estimations, on archival data of publicly listed Indian firms in the years 2006 to 2018 provides broad support for our theory. We contribute to research by advancing nature of ownership and executive management as sources of heterogeneity in IT investment and its business value. We also highlight how IT for control acts as a noneconomic motivation for the strategic IT behavior of firms.

Keywords: IT business value, digital transformation, IT strategy, IT investment, control, family ownership, professional executives, environmental hostility, emerging markets.

Abstract: Rapid improvements in underlying technologies coupled with the diminution of contact-based interactions are resulting in commensurate increases in the supply of and demand for innovative electronic services over self-service technologies (SSTs). This situation raises critical questions regarding value creation as prior research suggests mixed effects of SSTs on customers and unclear implications of SSTs for firm customer growth. These implications are accentuated when firms offer innovative electronic services due to customers’ unfamiliarity with the services. In turn, this dynamic raises vital questions about a) how SSTs influence firm customer growth, particularly when the firm’s electronic services are more innovative, and b) what complementary investments help firms achieve customer growth from SSTs and innovative electronic services. In this study, we conceptualize the theoretical mechanisms underlying these relationships and empirically examine seven-year longitudinal secondary data of over 3800 credit unions in the United States to obtain three main findings. First, consistent with prior views of SSTs, we find no significant unconditional effect of SSTs on firm customer growth. Second, we find that the innovativeness of the firm’s electronic services (IES) negatively moderates the influence of SSTs on firm customer growth, suggesting that SSTs may positively influence growth when IES is low but may deter growth when IES is high. Third, marketing intensity and human capital intensity positively moderate the influence of IES on the effect of SSTs on customer growth. In supplementary analysis, we find similar results using cross-sectional primary data from a sample of 186 U.S. credit unions and their customers matched with secondary data. Our unique theoretical contribution lies in highlighting that innovative electronic services on SSTs aimed at bringing the enterprise to the customer may not be enough for firms to achieve customer growth unless those services are accompanied by complementary investments in marketing and human capital.

Keywords: Self-service technologies, IT-enabled services, business value of IT, marketing, human capital, credit unions, innovation, firm performance.

Abstract: IT-based information management and collaboration networks are both important sources of competitive information. Despite anecdotal evidence, limited research examines their contemporaneous impact on firms’ ability to compete effectively. We take an information asymmetry perspective to examine the mechanisms through which the firm’s information management capability and the structure of its collaboration network influence the structure of its competition network in product markets. We argue that taking a brokerage position in competition networks has a positive influence on a firm’s performance. We then explain how the firm’s information management capability and its position in collaboration networks each have a direct positive influence on its brokerage position in the competition network. Finally, we propose that information management capability and a central position in collaboration networks act as substitutes. We empirically test our model using a longitudinal competition network, a longitudinal collaboration network, and longitudinal secondary data about firms’ information management capability, drawn from 262 firms over a 15-year period. Our findings, robust to endogeneity concerns and alternative model specifications, reveal the direct and substitution effects of information management capability and collaboration networks on competition networks. This research contributes to the information systems and strategy literatures by offering insights into how IT enables firms to design competitive strategies by facilitating analyses of competitors’ information, and how the information gained by firms as they collaborate can enhance their ability to compete. 

Keywords: Information management, information management capability, competition network, collaboration network, competitive brokerage, collaborative centrality, firm performance, business value of IT, weighted network.

Abstract: Digital platforms have transformed various industries, with profound changes witnessed in settings characterized by repeated, low value, and novel transactions, such as ride sharing, household services, and food delivery. Platform providers need to understand the factor(s) that suppliers consider before choosing to participate on their platforms. We argue that multi-level theorizing is necessary to explain the patterns of decision criteria that constitute the complex, yet boundedly-rational decision of platform participation. We draw on multiple theoretical perspectives which include predictors from firm-level strategic behavior, firm-level digital predictors, institutional predictors, and platform level, competition and contextual (environmental) predictors to model restaurant’s decision to participate on food delivery platforms, which are an exemplar of platforms that digitize transactions of ubiquitous and episodic nature. The population of 95,735 restaurants, serving a total of 135 different cuisines, located in the 37 largest cities of India, forms the dataset for developing our multi-level theory. Our decision tree induction methodology, which employs high levels of pruning, empowers us to discover context-specific rules that serve as credible approximations of the partial ordering of decision flows tacitly used by restaurants in deciding to participate on platforms. We identify six combinations of predictors, that is, decision rules, which are situated in at least four theoretical perspectives, to succinctly explain supplier participation on digital platforms. Finally, we abduct away from these specific decision rules to develop generalizable theoretical propositions. The decision trees, context-specific rules, general forms of the rules, and generalized propositions together form our multi-level theory for supplier participation on digital platforms. Our findings aid platform providers identify suppliers who can be the focus of efforts to increase platform participation, and help suppliers identify the participation status of competitors. For policymakers, our findings imply that incentives at the ends of the pricing spectrum can increase supplier participation on digital platforms.

Keywords: Digital platforms; multi-level theory; induction; abduction; decision trees; big data; emerging markets; platform growth; platform participation.

Abstract: Although the ability to produce exploratory innovations is important for firm performance, firms face difficulties in producing exploratory innovations because knowledge is often distributed across cultures and geographies. In this study, we examine whether information technology (IT) helps firms to overcome the liabilities of global operations particularly when it comes to creation of exploratory innovations. We argue that information technologies that promote social integration facilitate more novel knowledge recombinations that help to overcome the difficulties arising from global operations. We draw on the knowledge-based view of the firm and hypothesize that IT-enabled social integration capacity influences exploratory innovation by enabling firms to leverage global cultural diversity and global geographical dispersion. Our empirical analyses using archival panel data from 120 public U.S. manufacturing firms from 2003 to 2014 support these hypotheses. A key implication of our results is that IT helps firms to achieve greater exploratory innovation by turning the potential liabilities of cultural diversity and geographical dispersion associated with global operations into assets. 

Keywords:  Exploratory innovation, information technology, social integration capacity, globalization, liabilities of globalization, capabilities, globalization, global cultural diversity, global geographical dispersion, Hofstede, cultural distance.

Abstract: Emerging economies present attractive opportunities to foreign firms. However, internationalization risk faced by foreign firms can have significant implications for their performance relative to local firms. Information Technology (IT) and IT-enabled capabilities help firms overcome internationalization risk and compete globally. Marketing Capability and Relational Capability also mitigate this risk through access to information related to markets and the business environment. We examine how foreign firms and local firms compare in leveraging synergies between such IT and firm capabilities. We focus on two kinds of IT-enabled capabilities: IT-enabled Flexibility in Customer Services, and IT-enabled Flexibility in Partner Services, and develop hypotheses for their complementary effects with Marketing Capability and Relational Capability respectively, to positively influence firm performance. We then draw on the firm-specific advantages framework to argue that foreign firms face a comparative disadvantage relative to local firms in leveraging the synergy between IT-enabled Flexibility in Customer Services and Marketing Capability. In contrast, foreign firms enjoy a comparative advantage relative to local firms in leveraging the synergy between IT-enabled Flexibility in Partner Services and Relational Capability. Empirical analysis using matched-pair survey and secondary data of 182 foreign and local firms in India supports our hypotheses. Our findings highlight important differences in how foreign and local firms benefit from IT, thus contributing towards a better understanding of how context and contingencies influence IT implications in emerging economies. 

Keywords: Emerging economies, foreign firms, internationalization risk, firm-specific advantage, firm performance, firm capabilities, IT-enabled capabilities, IT-enabled flexibility.

Abstract: Cloud-based information management is one of the leading competitive differentiation strategies for firms. With the increasing criticality of information management in value creation and process support, establishing an integrated capability with cloud computing is vital for organizational success in the changing landscape of business competition. These issues have received scant attention, however. We draw on the resource-based view, dynamic capability hierarchy concepts, and the perspective of operand and operant resources to suggest a cloud value appropriation model for firms. We argue that, to appropriate business value from cloud computing, the firm needs to effectively deploy cloud computing and leverage cloud operant resources as firm capabilities in a hierarchical fashion toward the development of cloud computing-based service models in order to reliably achieve the desired business outcomes. We propose a model encompassing the principles of infrastructure and cloud platform deployment, integration and service orientation, and alignment with business processes that explain the linkage from cloud computing to firm performance. We test this approach to value creation with a cloud computing implementation assessment model using a sample of 147 firms that have implemented cloud computing in India. Our analysis uncovers a strategic value appropriation path from cloud technological capability to firm performance via cloud integration capability, cloud service portfolio capability, and business flexibility. This research offers new insights regarding the underlying mechanisms for how cloud computing affects firm performance via cloud-enabled capabilities and the business functions that are supported by cloud capabilities. 

Keywords: Cloud computing, firm capabilities, IT services, IT strategy, organizational management, operand and operant resources, resource-based view, synchronization, technology implementation, strategic value appropriation path.

Abstract: Although attractive to foreign and domestic firms, Bottom-of-Pyramid (BOP) markets pose unique challenges. Research suggests that IT-enabled supply chain information integration (IT-SCII) helps firms collaborate with suppliers and clients in broad business activities, operate in the unique context, and overcome salient challenges in BOP markets. Anecdotal evidence and research suggest that foreign and domestic firms have differing advantages: while foreign firms have considerable global experience, domestic firms have substantial local market knowledge. We draw on Ownership-Location-Internalization (OLI) framework to theorize that domestic and foreign firms leverage IT-SCII differently due to their differing ownership-based advantages in BOP markets. We hypothesize that the a) influence of IT-SCII on Client Business Collaboration, and b) influence of Client Business Collaboration on firm performance are stronger for domestic firms than for foreign firms. Conversely, we hypothesize that the a) influence of IT-SCII on Supplier Business Collaboration, and b) influence of Supplier Business Collaboration on firm performance are stronger for foreign firms than for domestic firms. We test our hypotheses in the automotive parts manufacturing BOP market comprising foreign and domestic firms in India. Partial least squares and econometric analyses of 172 firms reveal broad support for our hypotheses. By incorporating the OLI framework into IT-enabled supply chain literature, our study contributes to theory and practice by highlighting that IT-SCII has differing implications for foreign and domestic firms in BOP markets. 

Keywords: IT-enabled supply chain information integration; Client Business Collaboration; Supplier Business Collaboration; BOP markets; IT-enabled supply chains; partial least squares; OLI framework.