Measurement and Enablement of Information Systems for Organizational Flexibility: An Empirical Study

Article excerpt

Organizations are required to be increasingly flexible in today's business environment to survive. Understanding the role of information systems in enabling this flexibility is helpful for practicing managers. This paper examines the ability of information systems to create flexibility in organizations, by analyzing the relationship between organizational flexibility and four IS enablers: IS flexibility, IS enabled organizational change, IS enabled organizational learning, and IS maturity. A survey of 296 users from 42 organizations across eight industrial sectors was then conducted to gather study data. Measurement development was conducted for all except IS maturity. To examine the proposed model, moderated regression analysis was used. The study results validate the relationship between organizational flexibility and four IS enablers. Nonetheless, IS maturity does not appear to moderate the relationship between organizational flexibility and IS flexibility.

INTRODUCTION

The current business environment is fast moving, turbulent, and unpredictable because of ever changing trends in technology, global competition, and electronic commerce. These changes make the long-term strategies obsolete, and to cope with these dynamically changing environments, organizations have to develop flexible strategies, resources, and business processes (Lee, 2001). Also, organizations seek flexibility so that they can quickly adapt to environmental changes and thereby gain an advantage over their competitors (Leana and Barry, 2000). The need for organizational flexibility becomes stronger, as environments keep changing in a more dynamic way. As a result, organizational change and adaptation are inevitable and vital for organizational survival (Eason, 1988). Besides, organizations, increasingly depend on information systems technology (IST) (McKeen and Smith, 1996) for their success. Information systems (IS) enable the process of organizational adaptation (Shrivastava, 1983), resulting into organizational experience and learning (Cyert & March, 1963) and thereby create, acquire, and transfer organizational knowledge and subsequently modify its behavior (Garvin, 1993). Besides, the level of enablement for organizational adaptation process depends on the maturity of IS.

Though IS plays a key role for organizational adaptability to environment, many times IS fails because of its rigidity and incapability in handling new situations. The information systems(IS) need to adapt to new changes and challenges with minimum cost. For e-business applications, flexibility and adaptability are regularly appearing on the top list of requirements (Evans, 1999). So, information systems researchers and practitioners recently started recognizing the importance of IS flexibility (Byrd and Turner, 2000; Duncan, 1995). Flexibility in IS multiplies the capability to respond to organizational changes and business conditions both within and outside the organization. Flexible flow of information engenders creativity in performance by inhaling outside changes and increases organizational effectiveness. Flexibility enables to alter the information systems strategies whenever organizational strategies are changing, reduces the built-in resistance for change and ease the organizational strategic change process. IS adaptability to organizational strategies has been emphasized as the key issue in the past (Tozer, 1986; Certo and Peter 1991; Drucker, 1994), but empirical studies are rarely available (Bahrami, 1992; Leeuw and Voberta, 1996). This research examines the ability of information systems to create flexibility in organizations, by analyzing the relationships between organizational flexibility and four IS enablers: IS flexibility, IS enablement for organizational change, IS enablement for organizational learning, and IS maturity.

Model for IS Enablement to Create Organizational Flexibility

Figure 1 shows the research model proposing organizational flexibility as the dependent variable (outcome). …