Variable use of standards-based IOS enabling technologies in Australian SMEs: an examination of deliberate and emergent decision making processes

Abstract

Use of inter-organizational systems (IOS) is widely recognized as pivotal to organizational success. However, the nature of decision making processes regarding the adoption and use of IOS-enabling technologies has received little research attention. The authors explore approaches to decision making relating to SMEs’ use of these technologies and outline the drivers and implications of such decision making. Data were collected through two crosssectional surveys and multiple case studies. The surveys allowed for the identification of two groups of three SMEs each—the first group increased and the second group decreased the use of IOS-enabling technologies over time. This identification provided the context of strategic change or transition in the use of these technologies over time. The study’s results challenge widely held assumptions about the performance benefits of higher-level, deliberate planning over functional-level, emergent decision making regarding SMEs’ technological choices. Results also show that SME managers mainly use flexible IOS technology adoption and implementation strategies to promote organizational performance. Further, two main factors drive flexible decision making: a lack of managerial power and a lack of financial resources. Overall, the study offers insights into the link between IOS-enabling technology use and organizational strategy, and advances research concerning the contingencies influencing SMEs’ decision making in this context.

Appendices

Appendix A

GS1 definitions for generic levels of Implementation (EAN Australia, 1998)

Three generic levels of implementation of these technologies are promoted by GS1 as being characteristic of how companies approach their application to supply chain management. The definitions used by GS1 are outlined below:

• Reactive Purely satisfying a request from a trading partner. This level is viewed as the lowest level of implementation and is generally restricted to applying barcodes to finished goods, with perhaps some EDI transactions included. Such implementations can be considered as merely adding cost to the business.

• Tactical This approach seeks to extend implementation to specific processes within the business to improve efficiencies in, for example, production or inventory control. At this level, adequate planning, costing, and definition of the project are recommended, and real cost savings are a primary objective.

• Strategic Implementations of this type seek to introduce integrated supply chain management techniques across the entire supply chain in a planned, staged manner. The first step is usually the introduction of the elements of the GS1 system within the initiator’s business, as the beginning of a long-term project expected to deliver significant savings and other business benefits.

Appendix B

Demographic breakdown of survey respondents

Industry sector
Manufacturing	31
Retail	2
Wholesale distribution	16
Government	1
Other	10
Total	60
Approximate gross revenue
$0–$10 m	36
$10 M–$50 M	12
$50 M–$200 M	7
>$200 M	3
Total	58
ANZSIC code or industry sub-division
Agriculture	8
Food, beverage, and tobacco	23
Textiles, clothing, and footwear	1
Wood and paper products	2
Printing, publishing, and recorded media	5
Medical and pharmaceutical products	2
Metal products	2
Machinery and equipment	1
Other manufacturing	7
Basic material wholesaling	1
Personal and household goods wholesaling	4
Personal and household goods retailing	1
Other	2
Total	59

Appendix C

Selected empirical studies on IS decision making and IS alignment implications

Author(s)	Journal and paper title	Type of data/study	Purpose	Key insight	Implications (why part of this research stream)
Research on the benefits of higher-level (deliberate) IS decision making and tightly coupled IS alignment
Reich & Benbasat (2000)	MIS Quarterly “Factors that influence the influence the social dimension of alignment between business and information technology objectives”	Case studies of ten business units within three large Canadian life insurance companies	Explore the “social dimensions” of alignment between business and IS objectives, or how managers from both areas are committed to each other’s objectives	Data show that a number of factors affect alignment in the short-term (e.g., implementation success), but only shared domain knowledge was found to affect long-term alignment	Alignment operationalization depends on mutual understanding of objectives and IS vision by all senior management. The social dimension, a constant dialogue, is crucial for IS alignment
Levy et al, (2001)	Journal of Information Technology “SMEs: aligning IS and the strategic context”	Qualitative, multiple-case research conducted at 27 SMEs	Develop a “focus-dominance” model analyzing IS investment in SMEs	SMEs align their IS with their strategic context to capture both cost advantages and value added benefits	SMEs need to deliberately make IS decisions that support their strategic positioning. Higher-level, premeditated IS decisions are crucial to successfully couple business strategy and technology. Contingencies are acknowledged, however
Cragg et al, (2002)	Journal of Strategic Information Systems “IT alignment and firm performance in small manufacturing firms”	Quantitative survey of 256 managing directors from small UK manufacturing firms	Study whether small firms that align IS strategy with business strategy are more likely to be successful	A significant number of firms had achieved high IS alignment, and in turn better organizational performance	A deliberate strategic planning approach for IS in small firms is essential to achieving successful, tightly coupled IS alignment
Kearns & Sabherwal (2007)	Journal of Management Information Systems “Strategic alignment between business and information technology: a knowledge-based view of behaviors, outcome, and consequences”	Quantitative survey of 274 information officers from medium to large US organizations	Provide insight into business/IS strategic alignment and effects on IS	Results confirm emphasis on knowledge management and centralized IS decisions impacts on top managers’ IS knowledge, which facilitates aligned planning between business and IT managers	Centralized decision making (either from business or IT managers) is greatly influenced by contextual factors such as knowledge management and project planning quality
Preston & Karahanna (2009)	Information Systems Research “Antecedents of IS strategic alignment: a nomological network”	Data drawn from 243 matched pairs of CIO and top management teams	Study the “nomological” (or natural) law of understanding that must exist between IS and other senior management	Findings show that a shared understanding of the intellectual role of IS in the organization is the proximal antecedent of IS strategic alignment	A solid understanding of IS (language, domain knowledge, “systems of knowing”) within the top management team is essential for successful IS alignment. IS alignment should be driven by senior management in a deliberate manner
Research on the benefits of functional-level (emergent) IS decision making and loosely coupled IS alignment
Chan, Huff, Barclay & Copeland (1997)	Information Systems Research “Business strategic orientation, information systems strategic orientation, and strategic alignment”	Quantitative survey of American financial services and manufacturing firms	Offer alternative interpretations and procedures for operationalizing IS strategic alignment	Alignment is best achieved using “holistic’ systems” approaches	The study highlights the importance of realized rather than planned IS strategy
Luftman & Brier (1999)	California Management Review “Achieving and sustaining business-IT alignment”	Combined use of survey with 500 firms, as well as qualitative interviews	Define the most important enablers and inhibitors to IS alignment	Results produce a six-step approach to make strategic alignment work in an organization	The study concludes that alignment is a dynamic, complex process that takes time to develop. The study also questions whether alignment can be feasibly planned and tightly controlled
Chan (2002)	MIS Quarterly “Why haven’t we mastered alignment? The importance of the informal organization structure”	Qualitative, eight case studies of firms considered to be “well aligned” in IS and overall strategy	Examine techniques used to monitor and improve alignment and performance of IS functions	Findings show that aligning IS and business strategy improves IS performance. However, this does not always apply to aligning formal organizational structure	Informal company structure may be the most enduring aspect of alignment, while formal structures are most transient. This places the research in stream 2, functional and emergent IS alignment
Grant (2003)	Journal of Information Technology “Strategic alignment and enterprise systems implementation: the case of Metalco”	Single in-depth case study on a large global organization	Explore how IS strategies are aligned with business strategy within the context of global enterprise system implementation	Alignment is acknowledged as important but difficult to maintain. Global enterprise systems do not create seamless change and require organizational change at all levels	In this case study, the company struggled with IS implementation, as it lacked a comprehensive corporate vision for the role of the technology within the company. The study details an example of emergent functional decision making around IS alignment
Peak et al, (2005)	Information & Management “Information technology alignment planning – a case study”	Case study of a Canadian corporation (58 study participants from five business units)	Explore how an IS alignment planning process uses business critical success factors to align IS with wider company objectives	Success ensued with this process-driven model, using divisional strategies to then align IS	Focuses on breaking down the process to divisional level, linked direction to success factors at strategic level. This in turn helps identify new IS requirements and resources
Tallon (2007)	Journal of Management Information Systems “A process-oriented perspective on the alignment of information technology and business strategy”	Quantitative survey of 241 public companies with sales exceeding US$100 m	Explore whether IS business value is greatest in a multi-focus versus single-focus business strategy firm	The contribution of IS to business value is found to be greatest in a multi-focused business strategy	Suggests that a strong business–IS relationship may not always be the best method of reducing operating expenses. Instead, IS should be responsive and reflect different business needs within a firm

1. IS information systems SME small and medium-sized enterprise

Appendix D

Interview instrument

Overview: The researchers provide an overview of the project [without revealing the survey results and the classification of the firm in question].

General Information: The researchers obtain background information about a company, like its history, number of employees, products, number of suppliers, role of respondent, and role of the firm in the supply chain.

Overarching Questions

• 1. Obtain a description of the technologies like barcodes, RFID tags, EDI/XML business document exchange systems, Global Data Synchronization (GDS) systems that (company name) uses to facilitate communication and transactions with:

  • (a) suppliers (i.e., for upstream activities) and/or

  • (b) customers (i.e., for downstream activities) and/or

  • (c) internally (i.e., for internal functions and business processes)

• 2. Where and how are these technologies used?

• 3. How do different technologies interact with one another?

Questions on the effect of technology:

• 1. What technologies provide which benefit(s) (if any at all)?

• 2. Obtain a description of how (company name) manages technologies to build, or maintain relationships with:

  • (a) suppliers (i.e., for upstream activities) and/or

  • (b) customers (i.e., for downstream activities) and/or

  • (c) internally (i.e., for internal functions and business processes)

Questions on changes in the technology adoption behavior of firms:

• 1. Have any of the technologies in use changed over the past five/ten years (or over the period that the respondent has been with the firm)?

• 2. Have the effects that these technologies produce changed over the past five/ten years?

• 3. Obtain a description of the role technology played in shaping interaction and integration over the past five/ten years with:

  • (a) suppliers (i.e., for upstream activities) and/or

  • (b) customers (i.e., for downstream activities) and/or

  • (c) internally (i.e., for internal functions and business processes)

• 4. Is there a story around the role these technologies play in the firm’s operations, and how this role may have developed and changed over the past five/ten years?

• 5. Identify the technologies that should be abandoned to improve the performance of the supply chain.