«Researchers have endeavored to increase understanding of the relationships between investments in information systems (IS), competitive advantage, ...»
In the second stage of validation, following Eisenhardt (1989), findings were compared with extant literature in the areas of organizational information processing (Argyres, 1999; Anandarajan & Arinze, 1998; Andres & Zmud, 2002; Bento & Bento, 2006; Fairbank et al., 2006; Francalanci & Galal, 1998; Galbraith, 1974; Goodhue et al., 1992; Gattiker & Goodhue, 2004a, 2004b; Jarvenpaa &Ives, 1993; Kim et al., 1993, 2005; McCann & Galbraith, 1981; Mendelson & Pillai, 1998; Premkumar et al., 2005;
Sabherwal, & Sabherwal, 2005; Thompson, 1967; Tractinsky & Jarvenpaa, 1995), decision-making (Clark et al., 2007; Gorry & Scott Morton, 1971; Huber, 1981; Leidner & Elam, 1994; Newell & Simon, 1972; Simon, 1960; Watson et al., 1991; Vandenbosch & Huff, 1997), and IT/firm performance (Aral & Weil, 2007; Barua et al., 2004;
Bharadwaj, 2000; Bhatt & Grover, 2005; Chen & Zhu, 2004; Chi et al., 2007, 2008;
Jenster, 1986; Li & Ye, 1999; Melville et al., 2004; Oh & Pinsonneault, 2007; Overby et
Sambamurthy et al., 2003; Santhanam, 2003; Sircar, et al., 2000; Straub et al., 2004;
Tanriverdi, 2005). As suggested by Eisenhardt (1989), such a comparison sharpens generalizability and provides an additional layer of theoretical relevance by examining the similarities and differences inherent in the derived theory versus existing literature.
Furthermore, this practice is significant, as grounded theory can help to expand existing construct space by adding a new perspective (Locke, 2001; Mills, 1959).
In the third phase of the validation process, interpretations and documentation garnered through securities analysts from Jeffries & Company, Inc., PiperJaffray, and Roth Capital Partners were used to confirm managerial interpretations of impacts of competitive actions upon firm performance (Chen, Farh & MacMillan, 1993). Chen, Farh and MacMillan (1993) reviewed the use of outside informants, or individuals not employed by the firm under study, in terms of their level of expertise in providing information about the firm. Among four groups of outside informants – consultants, securities analysts, stakeholders and academics – securities analysts were found to be the most accurate and were highly reliable. Lastly, two of the study‘s participants (interviewees) reviewed and legitimated the findings.
Chapter 4 provides a graphical depiction of the grounded theoretical model, along with an extensive explanation of the categories and concepts indicated in the model.
4.1. Process Model of Information Systems, Competitive Dynamics, and Firm Performance The results of this study suggest a process model for understanding how information systems enable a process of Conceiving-Enacting-Executing-Firm Performance. Specifically, the Process Model of Information Systems, Competitive Action and Firm Performance illustrates how information systems enable a process of information and knowledge dissemination and sharing among managerial decisionmakers, how information systems enable a collective competitive action decision-making process, how information systems enable a message channeling toward competitive actions enactment, and thus, how firm performance is indirectly impacted by information systems. The model describes four distinct categories: IT-Enhanced Information Processing, Information-Driven Competitive Action Decision, Execution/Abandonment of competitive action, and Firm Performance, and defines important concepts within each category. This study goes beyond many existing grounded theory studies, as each category is supported by and related toward prevailing theory and existing literature. In doing so, this dissertation builds upon existing work by emphasizing both the strengths
Specifically, this research substantiates and extends much of the important work done in the areas of information processing, decision-making, and competitive dynamics.
Grounded theorists (Corbin & Strauss, 2008; Glaser & Strauss, 1967; Strauss & Corbin, 1990; Strauss & Corbin, 1998) suggest that one category arise as the central category in theories that are grounded in the data. IT-Enhanced Information Processing
that were examined in the organizational data stem from and relate to this foundational category. Conventional information processing theory (Galbraith, 1974) would suggest that information processing capabilities must be increased in response to increasing levels of organizational uncertainty. While this research does not discount conventional theory, it does extend the premise of theory in the context of a technologically advanced dominant firm. The information provided, shared and disseminated through information systems is often the catalyst for competitive action, thus reducing organizational uncertainty. Furthermore, while information flow has been recognized as playing a central role in information processing capability in many existing studies utilizing organizational information processing theory (Smith et al., 1991; Bento & Bento, 2006), this study finds information flow as a separate and distinct concept within the boundaries of information processing.
Many studies that incorporate information processing theory emphasize the fit between information processing needs or organizational uncertainty, and information processing capability. The data show that in the context of FCI, fit can be conceptualized as complex decision-making phenomenon that can only occur when Information Flow has been effectively achieved. Furthermore, while much of the work in the decisionmaking literature points to the fact that decision-making is largely non-rational, findings indicate that the way in which information systems are used by managerial decisionmakers creates a highly rational decision-making environment. Simon‘s (1955, 1956) theory of bounded rationality suggests that environmental complexity, time and space
against rational decisions. Newell and Simon (1972) suggest that due to the bounds upon the rational abilities of the decision-maker, individuals faced with unstructured decisions in an environment of risk and uncertainty impose a structure that leads to a solution that is good enough, or a ―satisficing‖ decision. Research has suggested that factors such as environmental competitive threat, perceived external control of the organization, and the uncertainty of strategic issues affect the rationality of decision making (e.g., Mintzberg & Waters, 1982; Dean & Sharfman, 1993).
The findings of this research parallel the work of Simon (1979) who suggests that managerial decision-making before computerization was quite difficult, given the unstructured nature of managerial decisions and the number of variables that go into the decision-making process. This research adds to current literature by revealing the role of information systems in the context of enabling a more rational process of decisionmaking. In fact, the decision-making process inherent in the enacting stage parallels the work of Simon (1960) and Newell and Simon (1972) who depict a highly rational decision-making system in their three-stage decision-making model. However, Simon‘s (1960) three-stage decision-making model is insufficient when taking into account the organizational context and in the milieu of competitive decisions. Information systems provide the channel through which the competitive action decision process can move efficiently back into the IT-Enhanced Information Processing Category where the driver for competitive action may be reevaluated, additional knowledge from within the organization can be obtained, or perhaps an additional information system has been
or novel avenue toward competitive action. Furthermore, the selection of competitive action may be moderated by the various factors, such as growth strategy, managerial style, commitment to quality, or organizational culture.
The findings of this research show that managers at FCI work collectively toward competitive actions that will have positive impacts upon either the market or financial performance of the firm. As emphasized by Ferrier et al. (1999), Schumpeter (1934, 1950), Porter (1980), firms are constantly embroiled in competitive struggles wherein one firm will emerge as the dominant player. The managers in this organization, in their effort to remain the dominant firm in their industry, have almost unconsciously integrated the presence of information systems to allow them to continually communicate, collaborate and share information on competitive strategies. In doing so, they have created an environment wherein firm performance is impacted by the use of information systems through the competitive actions upon which the firm relies. In fact, managers at FCI are dependent upon effective use of information systems in providing the mechanisms to formulate and enact competitive actions or responses with speed and efficiency.
4.2. Explanation of Model Similar to Mintzberg and McHugh (1985) and Ferrier (2001) in their conceptualization of strategy as process, the grounded theory analysis revealed the relationships between information systems, competitive actions, and firm performance as embedded within streams of competitive actions, or ―the sequential patterns of
Managers interpret the relationship between information systems, competitive actions and firm performance as evolving through a series of stages that can be
systems as relevant to the model‘s concepts are explained and characterized, and each category is defined within its significance to the four stages of a competitive dynamics process deriving from the research question in this study: Conceiving, Enacting, Executing competitive actions/response and impacts upon Firm Performance.
Conceiving – IT-Enhanced Organizational Information Processing and 4.3.
Competitive Action The following sections provide an explanation of each of the concepts relevant to IT-Enhanced Information Processing and Competitive Action, the category which addresses the Conceiving stage of competitive action and response. The initial formation of competitive actions requires a driver or motivation toward competitive action, the exchange of internal and external information and tacit and explicit knowledge among FCI‘s managerial participants about competitive activity, and information flexibility, or the adaptability of informational conditions when internal or external circumstances change within or around the competitive environment; thus, at a point defined as Information Flow, antecedent conditions have been met to proceed toward a complex decision process.
4.3.1. Internal/External Information Sources on Competitive Actions.
Managers interpret internal and external sources of information as vital at the most basic level of idea generation with regard to competitive actions and responses at FCI. Cyert and March (1963) suggest that organizations are information processing systems that are perpetually receiving data from internal and external sources. Similar to this
internal and external information sources provided through the information systems inherent in FCI. Internal sources includes information from employees about a customer or potential customer, results from testing to show the viability of a given competitive action, and reports from systems such as sales forecasts. External sources include information such as the results of Internet research on new end uses of products, expert consultants on processes and formulations, trade organizations on new developments in the industry, governmental and industry collaborations on implementing product standards, new product customer inquiries, or even news from competitors on new developments. Information systems in the form of the ERP system, Blackberry devices, data repositories and the Internet serve as channels toward information acquisition and dissemination from both internal and external sources across the managerial team.
Sources of both internal and external information must be in place before the firm‘s ―process of deciding‖ can begin toward such actions as the development of new product that is hard to imitate by other firms (Barney, 1991), which in turn becomes a competitive
advantage for FCI. This practice is explicated by one of FCI‘s managers:
We develop ideas for new products through Internet research on novel end-uses for our products or through interactions with our customers. Recently sales had a customer request for a product using new alloys. When we get requests like that from a customer or come up with something through our own research we have to immediately begin the process of deciding if it can be done with our current processes. If it can‘t, it goes to R&D for further evaluation. (FCI manager, new product development)1 1 Excerpts from interviews may be followed by the name of the competitive action to which they pertain.
information sources and information resources centric to this firm.
4.3.2. Tacit and Explicit Knowledge Resources on Competitive Actions.
Before beginning the ―process of deciding,‖ managers at FCI rely upon a continuum of tacit and explicit organizational knowledge and historic information. Managers interpret the knowledge resources held by this firm as necessary in achieving effective information flow as it relates to specific competitive actions. Furthermore, managers interpret that information systems are used as the conduit in knowledge sharing and dissemination and
also as a mechanism for ―who knows what‖ in the organization: