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4.3.5. Information Flexibility Related to Competitive Actions. The collective interpretations representing effective information processing with regard to the ERP system are tightly integrated with the degree of effective interdependence among organizational subunits, or the degree to which information exchange is necessary to
There are people here who do not effectively use [the ERP system]. They have a very narrow view of its capabilities. We are putting policies into place to require people to use the system for certain things, such as putting in new customer information, putting in prospects, putting in new product information, using certain reports to base their decisions, and so forth. I have said we have to stand firm on enforcing this. If they would just use the system effectively, it would speed up a lot of the stuff going on here and eliminate a lot of the miscommunications. (FCI Manager) However, information processing at FCI goes beyond inputs, outputs, processing and storage; it includes the availability of information, enforcement of policies, the integration of systems and units, and system flexibility. Perceptions that this ERP system
meets FCI‘s particular information needs are widespread:
For what we do and in the time frames we do things, I don‘t think any other ERP system could do what this one does for us. It is capable of handling our global operations in such a way that as soon as the sales people get a lead they can enter that information from anywhere in the world. I can access reports I need from anywhere in the world. I can broadcast information to the whole organization from anywhere in the world. All of our information is stored off-site at [data warehouse location] and they have backup sites around the country. It is very secure. I don‘t think we could manage what we do with a system that was less flexible. (FCI Manager) Such perceptions are significant because they provide a view that information systems are unique to organizations. The manager‘s quote above indicates the manager‘s view of the fit of this particular information system to the organization‘s particular needs.
In terms of information flexibility, managers at FCI see opportunities for
would bring certain information processing in-house:
We found out that [a United States university] had bought this multimillion dollar electron microscope in their engineering department. One of our metallurgists went to school there, so she went to talk to them about doing some testing for us.
The head of the department is really interested in what we are doing so he is going to run the tests himself. Then they provide the data back to us. What we really need is to generate information from that data. I have approved two $35,000 expenditures on this. So for a $70,000 investment, we get the use of a multimillion dollar piece of technology. We‘re doing some testing for products containing certain alloys, so rather than investing in that kind of testing technology ourselves we can outsource it. (FCI Manager, new product development).
Enacting – Information-Driven Competitive Action Decision 4.4.
In the quote below, one manager explains the collective and rational decisionmaking process through the lens of presumptions built upon the enabling presence of ITEnabled Information Processing:
Our decisions with regard to certain actions we are going to take are dependent upon us being able to gather information coming in from all over, internally and externally, and then using that information to help us make effective decisions for the stakeholders of this organization and for our own bottom line. And we need to be able to do it in a timely manner. That‘s a big part of where technology comes in. We have to be swift in our decision-making due to the competitive environment right now. And we have to make sure our decisions are as error-free as possible. That again is where technology comes in. The technology helps us get away from the human error associated with the decision-making process.
When all of the pieces come together, we can feel pretty confident in the overall result. Also, without the technology giving us the objective view of how things really are, we rely too much upon gut instinct. Gut instinct is important, but it can sometimes be wrong or in conflict with the truth. Another thing the technology does is allow us to keep results. We can look back and say ok this is how we
Managerial dependency upon information technology is evidenced through the data in this study and supported by extant IS literature which provides many examples of the influence of technology on decision-making (Clark et al., 2007; Gorry & Scott Morton, 1971; Huber, 1981; Leidner & Elam, 1994; Watson et al., 1991; Vandenbosch & Huff, 1997). Interestingly, however, the data suggests that the managers use technology to provide a clearer and more objective view of reality than would be available in the absence of information systems, creating a highly rational decision-making process.
Managers have their own opinions and ―gut instincts‖ about the way in which actions should be carried out. However, while not discounting managerial instincts, managers interpret the role of technology as bringing a collective and rational dynamic to the decision process, wherein the ―numbers don‘t lie.‖ Additionally, the data provides further evidence in the utilization of technology in the facilitation of organizational memory. The digitization of organizational memory facilitates success and augments managerial skills in terms of competitive actions crafted by FCI.
The decision-making category is analogous to the concept of fit inherent in organizational information processing theory (Thompson, 1967; Galbraith, 1974) which declares that a fit between information processing needs and processing capability is necessary to reduce organizational uncertainty. The Fit concept has been addressed in a great deal of IS research (Anandarajan & Arinze, 1998; Francalanci & Galal, 1998;
many studies that examine Fit in the context of the fit between needs and capabilities, in the context of competitive actions at FCI, managers construe decision-making as a more complex, multi-dimensional union.
4.4.1. Collection and Availability of Information Related to Competitive Actions, Evaluation of Competitive Action Repertoire, and Choice of Competitive Action. Miller and Chen (1996) suggest that competitive decisions such as price changes, product line or service alterations, and changes in the scope of operations formulate a firm‘s competitive repertoire. These competitive decisions evolve through the ongoing competition between rivals that largely shapes a firm‘s competitive strategy.
Effective information flow is necessary for the managers at FCI to begin the process of competitive decision-making. Managers are cognizant that enactment of a competitive action will have either positive or negative influences upon firm performance. They want
only to engage in actions that will result in positive influences upon firm performance:
We have to evaluate whether taking this action is in the best interests of the company. There is a growing demand for this product in the industry, but we knew we would have to go after it in a big way, make a big commitment. We had to look at everything we are doing and weigh the costs and benefits of doing this.
(FCI Manager, new product development).
With competitive decision-making comes risk, as the enactment of a competitive action can often have serious and far-reaching consequences. To mitigate risk and enhance decision-making, managers at FCI use computer technology to extend the bounds of the human decision-making process (Simon & Newell, 1972). Computer
competitive actions; such decisions are often quite complex, relying on a myriad of internal and external information sources, organizational information resources, the sheer volume of which may confound human cognitive and computational capabilities.
While information systems are seen primarily in this study to facilitate decisionmaking among FCI‘s managers, reliance upon information systems produces negative implications as well. Interestingly, however, in the example quote below, information
systems were used to address the very difficulty they created:
We found that [Manager] was being left out on some pretty important information being passed by email. We figured if he was being left out, others were being left out too here and there. This created a real problem when we were trying to decide what to do about [new customer acquisition]. So we had [IT staff] set up some storage for information about [new customer] to hopefully alleviate this problem.
(FCI Manager, new customer acquisition).
In the context of competitive decision-making, managers at FCI interpret decisionmaking as a process, somewhat in the tradition of Simon‘s (1960) and Newell and Simon‘s (1972) three-stage decision-making process. The environment is scanned and all relevant information is gathered and processed into preliminary alternatives. The managers then analyze alternatives in an attempt to determine which competitive action will result in the most satisfactory outcome of the decision process. A competitive action is chosen when managers make final judgments about the alternatives and collectively choose the best course of action for desired impact upon firm performance. Simon‘s three-stage decision-making model assumes that once a choice has been made, decisionmakers may return to the Intelligence or Design Phase for additional information. While
within itself sufficient in the context of selecting a competitive action by the managers at FCI; a return to the information processing category is often necessary. Information systems provide the platform for a better than ―satisficing‖ decision, as it is efficient and effective to return to one or more of the concepts in IT-Enhanced Organizational Information Processing to update or reevaluate various forms of information or knowledge. The eventual action may entail not only additional environmental scanning or the introduction of additional information, but may also require a new driver of competitive action or newly formed information flow. One manager expresses evidence
of this phenomenon:
We had decided not to pursue offering [a new type of product] to the market, but we found out last week that [competitor] is trying to make it, which would allow them to enter the automotive market. We don‘t want to allow that to happen. So now we are going back to the drawing board. We are having some outside testing done, doing some more market analysis and demand forecasts. Once we process the data from testing, and evaluate all information again we may rethink our decision not to offer [new type of product]. (FCI Manager, new customer acquisition).
As the above quote indicates, a competitive reaction drives the decision back down into the information processing category before the choice of pursuing a competitive action can be realized. Not only is additional information necessary, but information about a new driver of competitive action has been introduced in the form of the awareness a competitor‘s action. This new information requires additional tests and data processing.
The quality inherent in the firm‘s processes drives a recent price increase which challenges the status quo of the market process (Ferrier et al., 1999; Miller, 1990).
information from differing sources but also during the decision-making process:
We decided recently to raise our prices. Of course our kind of quality costs more and we have to be sure we are covering those costs through our pricing. After looking at various alternatives, some market analysis and our own internal data, we decided to do this to send a message to the market, customers and competitors, about our quality. We are above the competition in terms of pricing, and this is where I want us to be. Someone has to be the best and that is us. (FCI Manager, price changes).
While we consider price decreases a classic form of competitive action (Vilcassim, Kadiyali, & Pradeep, 1999), managers at FCI interpret the quality inherent in processes an avenue toward competitive action as well. Interestingly, quality is communicated to the competitive environment through increased pricing. This move has been correctly
classified as a competitive action due to the clear and evident market reaction:
When we raised our prices, actually some of our competitors also raised their prices. This is good. The competitors need to be learning from us, learning how to price themselves. Of course, others keep pursuing a low quality, low price strategy. That‘s fine with us. That just helps set us apart. (FCI Manager, price changes).
Furthermore, while the motivation and capability for choice of action are generally conceptualized in extant literature as market commonality and resource similarity (Chen, 1996), scant attention has been given to the way in which firms arrive at the information necessary to evaluate the factors that motivate action and provide capability for action.
The presence and utilization of information systems in competitive interaction provides
influence the motivation of a rival to erode rival‘s position.
4.4.2. Organizational and Competitive Factors Moderating Choice.
Manager‘s perceptions and interpretations of environmental events will largely dictate how their companies act and respond, which will impact firm performance. Although our findings suggest the rationalizing influence of information systems on decision-making, our findings do deviate from a purely rationalistic model of decision-making, implying that several factors will moderate the rational choice of competitive action taken by managers at FCI. Factual evidence has its limitations; ―…human judgment is needed to interpret the findings and determine their relevance for the future‖ (Barnes, 1984: p. 129).