Information Technology Reference
In-Depth Information
2.4 Model Overview: Complementarities, IT Innovation
Investments, and Business Value
In this section, we summarize the structure of our complementarities-based model
of IT innovation and business value. We also comment on some of the finer points
of the model structure and the theoretical assumptions behind it. Then, in the fol-
lowing sections, we give a more detailed explanation of our theoretical constructs
and linkages.
Our proposed model operates at two levels of analysis: a micro-level that con-
cerns the details of a specific innovative initiative and a macro-level that concerns
firm-level variables affecting a whole class of IT. We envision four separate chains
of causation in the model, labeled A-D in Fig. 2.1. One of these chains operates at
the micro-level (A), while the other three (B, C, D) involve macro-level variables.
The micro-level of our model concerns a specific initiative to deploy some
emerging IT - for example, PLM to support product development projects, where
deployment refers to the breadth and depth of use of the technology itself (see
Table 2.1 for suggested measures for IT deployment).
In our first causal chain (link A in Fig. 2.1), we argue that organizations
will be better positioned to gain business value from such initiatives when they
have coupled the deployment of the technology with a complementary set of
initiative-related organizational elements: organizational strategies, structures, pro-
cesses, policies, skills, and so forth. These initiative-related organizational elements
could be pre-existing, co-implemented with the technology, or introduced after
implementation.
Many scholars have argued that the scope of “technology” implementation
should be expanded to include associated organizational changes (Leonard-Barton,
1988; Orlikowski, 1996). We contribute to this prior work by providing a formal
and comprehensive argument relating complementarities to organizational design
and change. More specifically, we posit that IT deployment and certain initiative-
specific organizational elements will be supermodular, i.e., their combined impacts
on business value will be greater than the sum of their individual impacts.
D
IT Innovation
Investment
IT Innovation
Deployment
IT-Enabled
Business Value
Initiative-Level
Organizational
Complements
A
Innovation
Implementation
Business Strategy
IT Capabilities
C
Modern
Organizational
Architecture
B
Firm - Level Organizational Complements
Fig. 2.1 A complementarities-based model of IT innovation and firm value
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