Skip to main content
SpringerLink
Log in
Book cover

Information Technology and Product Development pp 19–47Cite as

Deriving Business Value from IT Applications in Product Development: A Complementarities-Based Model

  • Chapter
  • First Online:

Part of the book series: Annals of Information Systems ((AOIS,volume 5))

Abstract

Many companies that have made considerable investments in IT applications to support their product development activities have realized limited value from such efforts. In this chapter, we argue that a deep understanding of the complementarities that exist in the product development context is critical to ensure that business value is derived from the IT applications. We propose a multi-level complementarities-based model of IT innovation and business value to explain the factors that shape the success of IT-enabled product development. Our model posits that firms will obtain more value from innovative IT investment initiatives when the resulting IT applications are fitted into a system of initiative or product development context-specific complementary organizational elements (strategies, structures, processes, etc.). Further, firms will get more value from IT initiatives when investment is combined with certain firm-level elements such as a business strategy that is especially amenable to IT support, strong IT capabilities, and a modern organizational architecture that incorporates a cluster of practices associated with “digital” organizations. The model can guide researchers and managers in identifying the firm-level pre-conditions for realizing value from investments in IT to support product development and specifying necessary complementary investments in organizational change associated with product development.

This is a preview of subscription content, log in via an institution.

Chapter
USD   29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD   39.99
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD   54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Learn about institutional subscriptions

Notes

  1. 1.

    Brynjolfsson’s (2003) typology identifies six factors, but for brevity we combine two closely related factors – skilled labor, and an emphasis on recruitment and training, into a single factor.

References

  • Austin, R. D., Nolan, R. L., & Cotteleer, M. J. (2002). Cisco systems, Inc.: Implementing ERP. Boston: Harvard Business School, Case #9-699-022.

    Google Scholar 

  • Barua, A., & Mukhopadhyay, T. (2000). Information technology and business performance: Past, present and future. In R. W. Zmud (Ed.), Framing the domains of IT management: Projecting the future through the past. Cincinnati, OH: Pinnaflex Educational Resources.

    Google Scholar 

  • Bharadwaj, A. S. (2000). A resource-based perspective on information technology capability and firm performance: An empirical investigation. MIS Quarterly, 24(1), 169–196.

    Article  Google Scholar 

  • Bharadwaj, A. S., Sambamurthy, V., & Zmud, R. W. (1999). IT capabilities: Theoretical perspectives and empirical operationalization. Proceedings of the Twentieth International Conference on Information Systems, Charlotte, NC.

    Google Scholar 

  • Bresnahan, T., Brynjolfsson, E., & Hitt, L. M. (2002). Information technology, workplace organization, and the demand for skilled labor: Firm-level evidence. Quarterly Journal of Economics, 117(1), 339–376.

    Article  Google Scholar 

  • Brynjolfsson, E. (2003). The IT productivity gap. Optimize, 21.

    Google Scholar 

  • Brynjolfsson, E., & Hitt, L. (1996). Paradox lost? Firm-level evidence on the returns to information systems spending. Management Science, 42(4), 541–558.

    Article  Google Scholar 

  • Brynjolfsson, E., & Hitt, L. M. (2003). Computing Productivity: Firm Level Evidence. Review of Economics & Statistics, 85(4), 793–808.

    Article  Google Scholar 

  • Brynjolfsson, E., Renshaw, A. A., & Van Alstyne, M. (1997). The Matrix of Change. Sloan Management Review, 38(2), 22–40.

    Google Scholar 

  • Bylinsky, G. (2004). Not Your Grandfather's Assembly Line. Fortune, 150(1), 136B–136H.

    Google Scholar 

  • Chan, Y. E., Huff, S. L., Barclay, D. W., & Copeland, D. G. (1997). Information Systems Research. Business Strategic Orientation, Information Systems Strategic Orientation, and Strategic Alignment, 8(2), 125–150.

    Google Scholar 

  • CIM. 2008. CIM Data Predicts Strong PLM Market Growth for 2007.http://parts.ihs.com/news/2008/cimdata-plm-market-growth-2007.htm

  • Colombo, M. G., & Mosconi, R. (1995). Complementarity and cumulative learning effects in the early diffusion of multiple technologies. Journal of Industrial Economics, 43(1), 13–48.

    Article  Google Scholar 

  • Cooper, R. G., & Kleinschmidt, E. J. (2001). Portfolio management for new product development: Results of an industry practices study. R&D Management, 31(4).

    Google Scholar 

  • Cooper, R. B., & Zmud, R. W. (1990). Information technology implementation research: A technological diffusion approach. Management Science, 36(2), 123–139.

    Article  Google Scholar 

  • Davenport, T. H., & Short, J. E. (1990). The new industrial engineering: information technology and business process redesign. Sloan Management Review, 31(4), 11–27.

    Google Scholar 

  • Dehning, B., Richardson, V. J., & Zmud, R. W. (2003). The value relevance of announcements of transformational information technology investments. MIS Quarterly, 27(4), 637–656.

    Google Scholar 

  • DeSanctis, G., & Poole, M. S. (1994). Capturing the complexity in advanced technology use: Adaptive structuration theory. Organization Science, 5(2), 121–147.

    Article  Google Scholar 

  • Devaraj, S., & Kohli, R. (2003). Performance impacts of information technology: Is actual usage the missing link? Management Science, 49(3), 273–289.

    Article  Google Scholar 

  • Dos Santos, B. L., & Peffers, K. (1995). Rewards to investors in innovative information technology applications: First movers and early followers in ATMs. Organization Science, 6(3), 241–259.

    Article  Google Scholar 

  • Fichman, R. G. (2000). The diffusion and assimilation of information technology innovations. In R. B. Zmud (Ed.), Framing the domains of IT management: Projecting the future through the past. Cincinnati, OH: Pinnaflex Educational Resources, Inc.

    Google Scholar 

  • Fichman, R. G. (2004). Real options and IT platform adoption: Implications for theory and practice. Information Systems Research, 15(2), 132–154.

    Article  Google Scholar 

  • Gawer, A., & Cusumano, M. (2002). Platform Leadership: How Intel, Microsoft, and Cisco drive industry innovation. Boston, MA: Harvard Business School Press.

    Google Scholar 

  • Grieves, M. (2006). Product lifecycle management: Driving the next generation of lean thinking. New York: McGraw-Hill.

    Google Scholar 

  • Hart, P., & Saunders, C. (1997). Power and trust: Critical factors in the adoption and use of electronic data interchange. Organization Science, 8(1), 23–42.

    Article  Google Scholar 

  • Hitt, L. M., & Brynjolfsson, E. (1997). Information technology and internal firm organization: An exploratory analysis. Journal of Management Information Systems, 14(2), 81–101.

    Google Scholar 

  • Hitt, L. M., Wu, D. J., & Zhou, X. (2001). Investment in enterprise resource planning: Business impact and productivity measures. Journal of Management Information Systems, 19(1), 71–98.

    Google Scholar 

  • Karimi, J., Somers T. M., & Bhattacherjee, A. (2007). The impact of ERP implementation on business process outcomes: A factor-based study. Journal of Management Information Systems, 24(1), 101–134.

    Article  Google Scholar 

  • Kohli, R., & Devaraj, S. (2003). Measuring information technology payoff: A meta-analysis of structural variables in firm-level empirical research. Information Systems Research, 14(2), 127–145.

    Article  Google Scholar 

  • Laursen, K., & Foss, N. J. (2003). New human resource management practices, complementarities, and the impact on innovation performance. Cambridge Journal of Economics, 27(2),243–263.

    Article  Google Scholar 

  • Lee, C.-H. S., Barua, A., & Whinston, A. B. (2000). The complementarity of mass customization and electronic commerce. Economics of Innovation & New Technology, 9(2), 81–109.

    Article  Google Scholar 

  • Leonard-Barton, D. (1988). Implementation as mutual adaptation of technology and organization. Research Policy, 17(5), 251–267.

    Article  Google Scholar 

  • Liker, J. K., Fleischer, M., & Arnsdorf, D. (1992). Fulfilling the promises of CAD. Sloan Management Review, 33(3), 74–86.

    Google Scholar 

  • Lyytinen, K., & Mathiassen, L. (1998). Attention shaping and software risk – a categorical analysis of four classical risk management approaches. Information Systems Research, 9(3), 233–255.

    Article  Google Scholar 

  • Markus, M. L. (1987). Toward a “Critical Mass” Theory of interactive media: Universal access, interdependence and diffusion. Communications Research, 14(5), 491–511.

    Article  Google Scholar 

  • Markus, M. L., & Robey, D. (1988). Information technology and organizational change: Causal structure in theory and research. Management Science, 34(5), 583–598.

    Article  Google Scholar 

  • Markus, M. L., & Soh, C. (1993) Banking on information technology: Converting IT spending into firm performance. In R. Banker, R. Kauffman, & M. A. Mahmood (Eds.), Strategic information technology management (pp. 375–403). Harrisburg, PA: Idea Group Publishing.

    Google Scholar 

  • Melville, N., Kraemer, K., & Gurbaxani, V. (2004). Review: Information technology and organizational performance: An integrative model of IT business value. MIS Quarterly, 28, 283–322.

    Google Scholar 

  • Meyer, M., & Lehnerd, A. P. (1997). The power of product platforms. New York: The Free Press.

    Google Scholar 

  • Milgrom, P., & Roberts, J. (1990). The economics of modern manufacturing: Technology, strategy and organization. American Economic Review, 80(3), 511–528.

    Google Scholar 

  • Milgrom, P., & Roberts, J. (1995). Complementarities and fit: Strategy, structure, and organizational change in manufacturing. Journal of Accounting & Economics, 19(2/3), 179–208.

    Article  Google Scholar 

  • Mishra, A. N., Konana, P., & Barua, A. (2007). Antecedents and consequences of Internet use in procurement: An empirical investigation of U.S. manufacturing firms. Information Systems Research, 18(1), 103–120.

    Article  Google Scholar 

  • Nambisan, S., & Wang, Y. (2000). Web technology adoption and knowledge barriers. Journal of Organizational Computing & Electronic Commerce, 10(2), 129–147.

    Article  Google Scholar 

  • Nerkar, A., & Roberts, P. W. (2004). Technological and product–market experience and the success of new product introductions in the pharmaceutical industry. Strategic Management Journal, 25(8/9), 779–799.

    Article  Google Scholar 

  • Nolan, R. L. (2001). Cisco systems: Web-enablement. Boston: Harvard Business School, Case #9-301-056.

    Google Scholar 

  • Orlikowski, W. J. (1992). The duality of technology: Rethinking the concept of technology in organizations. Organization Science, 3(3), 398–427.

    Article  Google Scholar 

  • Orlikowski, W. J. (1996). Improvising organizational transformation over time: A situated change perspective. Organization Science, 7(1), 63–92.

    Google Scholar 

  • Powell, T. C., & Dent-Micallef, A. (1997). Information technology as competitive advantage: The role of human, business, and technology resources. Strategic Management Journal, 18(5), 375–405.

    Article  Google Scholar 

  • Purvis, R. L., Sambamurthy, V., & Zmud, R. W. (2001). The assimilation of knowledge platforms in organizations: An empirical investigation. Organization Science, 12(2), 117–135.

    Article  Google Scholar 

  • Ramamurthy, K., Premkumar, G., & Crum, M. R. (1999). Organizational and interorganizational determinants of EDI diffusion and organizational performance: A causal model. Journal of Organizational Computing and Electronic Commerce, 9(4), 253–285.

    Article  Google Scholar 

  • Rogers, E. M. (2003). Diffusion of Innovations (5th ed.). New York: The Free Press.

    Google Scholar 

  • Ross, J. W., & Beath, C. M. (1996). Develop long-term competitiveness through IT Assets. Sloan Management Review, 38(1), 31–42.

    Google Scholar 

  • Saaksvuori, A. (2008). Product lifecycle management (3rd ed.). NewYork: Springer.

    Google Scholar 

  • Smith, M. (2004). A model of the linked adoption of complementary technologies. Economics of Innovation and New Technology, 13(1), 91–99.

    Article  Google Scholar 

  • Soh, C., & Markus, M. L. (1995). How IT creates business value: A process theory synthesis. In G. Ariav, C. Beath, J. I. DeGross, R. Hoyer, & C. F. Kemerer (Eds.), Proceedings of the sixteenth international conference on information systems (pp. 29–41). Amsterdam: ACM.

    Google Scholar 

  • Subramanian, A., & Nilakanta, S. (1996). Organizational innovativeness: Exploring the relationship between organizational determinants of innovation, types of innovations, and measures of organizational performance. Omega-International Journal of Management Science, 24(6), 631–647.

    Article  Google Scholar 

  • Swanson, E. B. (1994). Information systems innovations among organizations. Management Science, 40(9), 1069–1092.

    Article  Google Scholar 

  • Swanson, E. B., & Ramiller, N. (2004). Innovating mindfully with information technology. MIS Quarterly, 28(4), 553–583.

    Google Scholar 

  • Tanriverdi, H., & Venkatraman, N. (2005). Knowledge relatedness and the performance of multibusiness firms. Strategic Management Journal, 26(2), 97–119.

    Article  Google Scholar 

  • Teo, H. H., Wei, K. K., & Benbasat, I. (2003). Predicting intention to adopt interorganizational linkages: An institutional perspective. MIS Quarterly, 27(1), 31.

    Google Scholar 

  • Tyre, M. J., & Orlikowski, W. J. (1993). Exploiting opportunities for technological improvement. Sloan Management Review, 35(1), 13–26.

    Google Scholar 

  • Tyre, M. J., & Orlikowski, W. J. (1994). Windows of opportunity: temporal patterns of technological adaptation in organizations. Organization Science, 5(1), 98–118.

    Article  Google Scholar 

  • Venkatesh, V., Morris, M. G., Davis, G. B., & Davis, F. D. (2003). User acceptance of information technology: Toward a unified view. MIS Quarterly, 27(3), 425–478.

    Google Scholar 

  • Wade, M., & Hulland, J. (2004). Review: the resource-based view and information systems research: review, extension, and suggestions for future research. MIS Quarterly, 28(1), 107–142.

    Google Scholar 

  • Weill, P. (1992) The relationship between investment in information technology and firm performance: A study of the valve manufacturing sector. Information Systems Research, 3(4), 307–333.

    Article  Google Scholar 

  • Zahra, S. A., & George, G. (2002). Absorptive capacity: A review, reconceptualization, and extension. Academy of Management Review, 27(2), 185–203.

    Article  Google Scholar 

  • Zhu, K. (2004). The complementarity of information technology infrastructure and e-commerce capability: A resource-based assessment of their business value. Journal of Management Information Systems, 21(1), 167–202.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Carroll School of Management, Boston College, 410A Fulton Hall, 140 Commonwealth Ave, Chestnut Hill, MA, USA

    Robert G. Fichman

  2. Lally School of Management, Rensselaer Polytechnic Institute, 110 & 8th Street, 12180, Troy, NY

    Satish Nambisan

Authors
  1. Robert G. Fichman
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Satish Nambisan
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Robert G. Fichman .

Editor information

Editors and Affiliations

  1. Lally School of Management &, Rensselaer Polytechnic Inst., 8th Street 110, Troy, 12180, U.S.A.

    Satish Nambisan

Rights and permissions

Reprints and permissions

Copyright information

© 2010 Springer Science+Business Media, LLC

About this chapter

Cite this chapter

Fichman, R.G., Nambisan, S. (2010). Deriving Business Value from IT Applications in Product Development: A Complementarities-Based Model. In: Nambisan, S. (eds) Information Technology and Product Development. Annals of Information Systems, vol 5. Springer, Boston, MA. https://doi.org/10.1007/978-1-4419-1081-3_2

Download citation

Publish with us

Policies and ethics

Search

Navigation