«Researchers have endeavored to increase understanding of the relationships between investments in information systems (IS), competitive advantage, ...»
share from a competitor. An action may fragment a previous market sector, leading customers to switch to a new firm. Firms will generally develop a range or ―repertoire‖ of competitive actions (Ferrier et al., 1999; 2001) that will fit the competitive context.
In the contemplation of competitive action by a firm, it is important to evaluate possible responses to the action by the firm‘s competitors (Chen & MacMillan 1992;
Chen et al. 1992). In a firm‘s repertoire of actions, some actions are provocative of response, while others are not. Similarly, some rival firms are prone to competitive response, while others are more docile. Furthermore, some firms will be quick to respond, while others will respond in a laggardly fashion (Miles & Snow, 1978; Smith & Grimm, 1989). Actions deemed more threatening by competitors will be more likely to evoke a response than actions that are more subtle or less obvious (Chen & Miller, 1994).
While the competitive dynamics literature does acknowledge that the very reason firms engage in competitive action and response is to facilitate positive impacts upon firm performance, this stream of literature has largely disregarded any role played by information systems in the competitive dynamics in which firms engage.
2.1.3. Interpretive Sociology. Few studies have examined the influence of key organizational players in the context of information systems or firms‘ competitive actions. MacMillan et al. (1985), Smith et al. (1989) and Chen et al. (2007) found that managers‘ perceptions will influence the response time of a particular competitive action.
Should a manager perceive an action as threatening or directly attacking the firm‘s competitive position, the quicker the response by the firm.
researchers to understand human thought and action in social and organizational contexts…‖ While Alavi and Kane (2005) suggest, ―Individuals are not simply users of information systems, but are social actors, influenced by a number of different environmental forces that affect the way in which they interact with and value information systems‖ (p. 233).
Despite the growing body of literature on IT investment and firm performance, understanding of the impact of information systems investment on firm performance through conceiving, enacting and executing competitive actions is limited due to the complexity in studying this phenomenon. Lamb and Kling (2003) suggest that extant IS research has been concentrated around the single-user concept and posit that ―…by focusing on individualism, it provides relatively little detail about the contexts that shape ICT use, and so diminishes the importance of organizational structures and complex social environments‖ (p. 198).
Although prior research has demonstrated that IT investments do have beneficial performance and productivity impacts (for example, Bharadwaj et al. 1999; Hitt & Brynjolfsson 1996; McAfee & Brynjolfsson, 2008), theoretical frameworks are yet to explain how and why these investments enhance firm performance (Sambamurthy, Bharadwaj & Grover, 2003). Part of this limitation may originate from the assumption that strategy is ―deliberate‖ (Mintzberg, 1978, pp. 934-948) and reflects only the conscious, well-planned intentions of executives. However, it is suggested that strategy also has an unplanned, ‗emergent‘ character (Mintzberg, 1978). ―Conventional strategic
starts from a positivist, rationalistic model of the strategic planning process‖ (Smircich & Stubbart, 1985, p. 733). Similarly, most IS studies ignore the interpretations of key players, relying on variance models and cross-sectional quantitative data that cannot capture process (Orlikowski, 1993; Markus & Robey, 1988). Interpretive research can be used to explore what managers were thinking, why they acted as they did, and what they wanted to accomplish within the organizational context.
Simon (1973) posits that ―An organization is a social system that exists and adapts in a larger social environment. It is a system of interpersonal behavior, which survives when the participants in it are motivated to maintain their patterns of behavior, and which changes or dies when they are not‖ (p. 347). Interpretive sociological literature suggests that organizations are socially constructed systems of shared meaning (Burrle & Morgan, 1979; Pfeffer, 1981; Weick, 1979). An interpretive perspective on strategic management and the environment asks questions about the processes of knowing – those social processes that produce the rules by which an organization is managed and judged (Smircich & Stubbart, 1985). Organizations are ―systems of interpersonal behavior…‖ (Simon, 1973, p. 347). Organizational participants make sense of their situation by engaging in an interpretive process that forms the basis for their organizational behavior. Managers provide a vision to account for the events and actions that occur – a universe within which organizational events and experiences take on meaning (Smircich & Stubbart, 1985). Rather than trying to merge the incompatible views of multiple actors into a single objective explanation, interpretive research
stated, interpretive research is based upon the interpretation of information and events by the people experiencing them (Gioia & Chittipeddi, 1991). Understanding and action, therefore, depend upon the meaning assigned to any set of events (Daft & Weick, 1984).
This approach is consistent with the notion that understanding the factors that shape the manner in which top managers interpret their strategic environment is critically important since such interpretations ultimately affect organizational actions (Dutton, Fahey & Narayanan, 1983).
Past actions are stored in a ―retained set‖ (Hall, 1984, p. 907) of organizational knowledge consisting of the memories of organization members, archival records, and organizational structures. This retained set provides frameworks for deciding what data to attend to and how to interpret those data. Both the cognitive processes of an organization‘s members and the contextual features of the organization embody these frameworks.
Past research has demonstrated that the way top level managers perceive a strategic issue affects the range of solutions (or actions) considered in an organization (Billings, Milburn, & Schaalman, 1980), and influence the amount of resources committed to a particular course of action (Staw & Ross, 1978). Knight and McDaniel (1979) have suggested that information-processing influences top managers‘ interpretation of strategic issues or contemplated actions.
Isabella (1990) suggests that four critical assumptions are necessary in interpretive studies. The first assumption is that organizational members actively create
organizational members creates a collective logic of the occurrence of events. Third, the interpretive literature has identified managerial views of phenomena as critical (Isabella, 1990; Keisler & Sproull, 1982). As managers are leaders within their organizations, their interpretation of reality has tremendous influence upon the construed reality of other organizational members. Finally, interpretations are based upon what has already occurred. Therefore, interpretive research is built upon events that have already transpired and a collective viewpoint has had time to emerge.
To gain an understanding of the relationship between information systems and firm performance through the lens of competitive dynamics, an interpretive tradition of research has been employed. The research strategy used in this dissertation allowed the managers of a dominant firm to describe and discuss specific competitive actions or responses that had been carried out by the firm and the role of information systems in the conception, enactment and execution of those actions or responses, and then the impact of those actions of response upon firm performance. These bodies of literature investigating the relationship between information systems and firm performance, and competitive dynamics and firm performance have been focused at the organizational level. Thus, current knowledge has not benefitted from the richer interpretive introspective of the role of information systems in the context of competitive actions and their impacts upon firm performance.
Following Orlikowski (1993), grounded theory has been used in this study, as it allows focus on context and process as well as the interpretations by the key players associated with organizational competitive actions/responses, elements often omitted in IS studies that rely on variance models and cross-sectional, quantitative data (Markus & Robey, 1988; Orlikowski & Baroudi, 1991).
Grounded theory was chosen as the study‘s methodology, as it is a ―theory discovery methodology‖ (Martin & Turner, 1986, p.141), and no theory has been formulated to date which explains the relationship of information systems and firm performance through the lens of competitive dynamics.
3.1. Grounded Theory Grounded theory (Corbin & Strauss, 2008; Glaser & Strauss, 1967; Strauss & Corbin, 1990; Strauss & Corbin, 1998) has been used in this investigation. The aim of grounded theory research is to derive theory from data rather than force-fitting data to a priori theory and hypotheses (Corbin & Strauss, 2008). By formulating theory within this approach, the theory is so intimately tied to the data, the resultant theory is likely consistent with empirical observation (Eisenhardt, 1989). The goal is to develop a rich, descriptive and explanatory theory rather than give an objective and static account of the phenomenon (Orlikowski & Baroudi, 1991). Additionally, the complexity of the
results. Most IS studies rely on variance models and cross-sectional quantitative data that cannot capture process (Orlikowski, 1993; Markus & Robey, 1988). Thus, the goal of this research is to construct a process theory, not a variance theory, in order to address the process of the use of information systems in formulating and enacting competitive actions, which, in turn, impact firm performance.
The major objective of this research endeavor is to build theory from the data (Orlikowski 1993; Corbin & Strauss, 2008); however, the intent is to not only to describe a phenomenon, but also to address the ―how‖ of the phenomenon within an organization.
Furthermore, the intent is to develop a deep and rich understanding of a phenomenon (Dyer and Wilkins, 1991). Thus, following Fairbank et al. (2006), who suggest that the IT-firm performance relationship is so complex that the answer may well hinge upon micro-examinations of practices and procedures within certain companies, and Blaize and Kaarst-Brown (1999), Brown (1997) Isabella (1990), Lee (1994), and Mintzberg and Waters (1982), who investigated strategic business phenomena within a single firm, this research investigated the role of information systems in the context of multiple and varied competitive actions or responses conceived, enacted and executed by one firm to sustain its dominant position and performance in its industry. The unit of analysis in this study is the competitive action or response of the firm. The role of information systems within the conception, enactment, and execution of specific competitive actions is examined, including but not limited to introducing new products to existing markets, new market entry with existing products, creating substitute products for existing as well as new
basic components: theoretical sampling and site selection, data collection, data analysis, and validation (Corbin & Strauss, 2008; Glaser & Strauss, 1967; Strauss & Corbin, 1990;
Strauss & Corbin, 1998).
3.1.1. Theoretical Sampling and Site Selection. Given the notion of theoretical sampling, Glaser and Strauss (1967) posit that attention must be paid to theoretical relevance, purpose, similarities and differences across data sources with regard to appropriateness of the data sources for the study. In terms of relevance, a site was chosen that fit within the boundaries of the research objective. Following the logic of Chen (1996) who chose to study the airline industry due to its competitive nature, it was important to identify a firm that operated within a competitive environment and, for purposes of addressing the research question, regularly utilized various forms of information systems in their operational and strategic activities. An organization was identified by various trade publications and the broader financial news media as the dominant firm within a well established but growing industry. Secondly, the firm had recently implemented an ERP system and its organizational participants regularly used information and communication technologies in their normal course of business.
Therefore, it was concluded that this site would fulfill the requirement of relevance for the study.
As the purpose of the research was to develop theory that could be extended toward the role of information systems in the formation and execution of competitive actions in various organizations, differences were required in the conditions under study.
competitive action would be carried out with inherent procedure similarities and organizational philosophies. However, difference conditions were derived by examining different types of competitive actions and the role of information systems within these very different phenomena. This triangulation across various types of competitive actions provides multiple perspectives of the research objective, various types of information on emerging concepts, and provides validation of the constructs (Glaser & Strauss, 1967;
The site selected in which to conduct the analysis is a global firm in the manufacturing sector with administrative offices and manufacturing facilities in the United States, Europe and China. To protect the identity of the organization, it will be referred to in the context of this dissertation by the pseudonym, FCI. FCI has been identified by various trade and financial publications as the global leader in developing, designing, manufacturing, marketing and distributing of an intermediate product line.
Trade publications and financial reports describe FCI‘s product lines in terms of high quality.