Academic journal article Journal of Business Strategies

Assessing the Performance Impacts of Information Systems from the Resource-Based Perspective: An Empirical Test of the Indirect Effect of Is

Academic journal article Journal of Business Strategies

Assessing the Performance Impacts of Information Systems from the Resource-Based Perspective: An Empirical Test of the Indirect Effect of Is

Article excerpt

Abstract

Research into the strategic impacts of information systems (IS) from the resource-based view of competitive advantage has increasingly embraced the indirect effect of IS on firm performance; that is, IS interact with other complementary organizational resources in influencing firm performance. Using both survey and archival data, this study set out to test the indirect effect of IS and determine the complementary organizational resources contributing to IS impacts on firm performance. The results provide additional evidence in support of the indirect performance effect of IS. Specifically, the study found that the performance impacts of IS arose from their interactions with firm-specific knowledge, information, vertical integration and related diversification that complemented IS.

Introduction

Over the past decade, the resource-based view of competitive advantage has emerged as a popular approach to examining the strategic roles of information systems (IS) (Mata et al., 1995; Powell & Dent-Micaleff, 1997; Lado & Zhang, 1998; Bharadwaj, 2000; Byrd, 2001; Kearns & Lederer, 2003; Wade & Hulland, 2004; Zhang, 2005). One critical issue in the resource-based inquiry of the strategic impacts of IS is whether IS alone can lead to competitive advantage or they must work in conjunction with other organizational resources in order to provide strategic benefits (Wade & Hulland, 2004). The former suggests a direct effect of IS on firm performance, whereas the latter implies an indirect effect of IS. While researchers have increasingly embraced the latter by arguing that IS complemented by certain organizational resources may lead to competitive advantage and superior performance (Feeny & Ives, 1990; Clemons & Row, 1991; Powell & Dent-Micaleff, 1997; Lado & Zhang, 1998; Bharadwaj, 2000), there has been relatively less empirical attention to testing the indirect effect of IS. Since the indirect effect of IS has become more and more influential in current thinking of how to evaluate and manage IS resources (Powell & Dent-Micaleff, 1997; Wade & Hulland, 2004), more empirical evidence is needed to ascertain this effect.

Furthermore, even though the indirect effect of IS generally exists, we still don't know enough about what specific organizational resources complement IS in influencing a firm's competitive position or performance (Wade & Hulland, 2004). While the normative literature proposes a number of potential organizational complements to IS (Feeny & Ives, 1990; Clemons & Row, 1991; Kettinger et al., 1994; Powell & Dent-Micaleff, 1997), the performance impacts of many of those complementary resources have not been assessed in prior empirical research (Kettinger et al., 1994; Powell & Dent-Micaleff, 1997). Discerning the influence of different IS complements on the IS-performance relationship would then increase our knowledge of what represents a relevant set of complementary resources that interact with IS in affecting firm performance (Wade & Hulland, 2004).

The purpose of this study was twofold. First, it provided another assessment of the indirect effect of IS on firm performance. Second, by testing the relationships between three sets of firm-specific complements to IS and firm performance, the study sought to empirically determine what organizational resources complement IS in influencing firm performance. The remainder of the paper is organized as follows. The next section reviews the indirect effect of IS within the resource-based research on IS impacts, as well as the existing empirical evidence. This is followed by an examination of the potential performance impacts of three types of organizational resources (unique organizational culture and structure, unique vertical integration and related diversification, and unique knowledge and information) that complement IS. The methodology section describes the empirical analysis, including the sample and data collection procedure, the measurement of the variables of interest, and the results. …

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