Category Archives: Research

Dissertation – Primary Conclusion

IT Investment Impact Implication Model

This graphically triangular model consists of three components. One describes the maturity of the business, the second concerns the alignment of IT systems to business strategy, the third the homogeneity of the IT systems. The impact is derived from the “pressure” inside this triangle. That is, the smaller the sides, the smaller the volume, the greater the pressure.

IT Investment Implicator Model

Fig 1. “4x I Model”
(source: author)
With reference to the first conclusion made, “that the optimal impact of IT investment occurs at the confluence of three factors. The alignment of IT systems with the business’s strategy, the homogeneity of systems across the organization, and the maturity of the business”, are the three related components. The ‘alignment of IT systems with the business’s strategy’ has to do with the degree of separation between the IT strategy and the host business’s strategy. One example of this is where the IT department is constantly second guessing the needs of the business. It is where there is no real communication between the executive and the IT department, or where there is no understanding within the executive of what benefits IT can bring to the business. Thus, the smaller this spread, the greater the positive impact upon business’s long-term expected value. The second component, ‘the homogeneity of systems across the organization’, concerns the spread of system types to achieve the same functions. For example, does one section of the business use a different brand of computer operating systems to another? Therefore, the greater the level of homogeneity, the greater the positive impact upon the business’s long-term expected value. The third component, ‘the maturity of the business’, is a reflection on both the pervasiveness, and consistency of application, of internal administrative processes. The model posits that the greater the maturity of the firm implies a reduction in organizational risk, thus a positive impact upon business’s long-term expected value.

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Dissertation – Introduction

Information technology (IT) is a crucial aspect of the modern corporation, even more so for organizations that have international operations. Whilst there is much discussion and research into the many factors of business, including the many complex aspects of international operations, there are authors who do recognise IT as one of these factors.

Academic enquiry regarding the nature and impact IT investment upon organizations has been underway since the introduction of computers into the business environment. An early example is typified by Nobel Laureate economist Robert Solow’s (Peslak, 2005, p27) work into the productivity paradox regarding computing and business productivity. Other research into the business value of IT includes Tallon et al’s (2001, p4) use of management practices and proxies for realised values, Dehning and Richardson’s (2001, p2) focus on market-based measurements to quantify returns, and the non-financial benefit realisation based model used Lin (2002, p3) and Kodthuguli (2004, p23). The shortfall, however, was that each of these studies were of a single dimension (for example, Dehning and Richardson’s study concerned accounting), none were across the many factors that influence international business IT.

From another perspective, there has been research into the complexity of business IT investment. For example: Stewart (2002, p12:4), whose diversified investment appraisal techniques included possibility theory, information economics, an organizational change model, and Kaplan’s Balanced Scorecard, and Kauffman and Weill (1989, p15), who proposed an evaluative framework comprising a synthesis of economics and behavioural science. However, none combined international factors into their study. Nonetheless, international factors were covered, albeit at a strategic level, by Keen (1992, p578), whose work led to the understanding that, from an global perspective, IT strategy is dominated by ambiguities, and Alavi and Young (1992, p495) who studied various global IT architecture dimensions against the locus of IT management and the form of international business.

This lack, from an international business perspective, of research into the many variables that give rise to the complexity of IT investment relates to the motivation for this thesis. Based on 18 years of personal experience within the domestic and international IT industry, supported by industry certifications, and having earnt a Masters of Business Administration in Technology Management together with the current  study to gain a Masters Degree in International Business, the author understands that there are several factors that comprise this IT investment complexity within an international context. These factors, whilst all related to the firm’s financial performance, are: the type of IT Investment (is it for an aspect operational efficiency [ie, an email system, an accounting package, etc] or value creation?), international operations (a joint venture or a subsidairy?), international location (is it situated in a high context culture like China, or a low context culture like the USA?), and industry sector (is it say in mining, or in pharmaceuaticals?).

The aim of this research, therefore, is to investigate whether or not there are any linkages between these factors. The approach the author has used to uncover these linkages is to gather new and prior observations and then to draw related conclusions. This is called an inductive approach (Saunders et al, 2007, p488). In the case of this research effort, this method is based on collecting primary information in the form of interviews with international businesses, and studying prior research and drawing conclusions without forming initial hypotheses. Further, the author has classified the relevant prior research into several conceptual structures: organizational impact studies, the productivity paradox, measurement models and frameworks, IT Economics, International Business and IT, Strategic Global IT , cross-culture models, worldwide organisational structures and market entry strategies. And so conclusions are based on this categorised collected primary data and the applicable theoretical models, such as “Porter’s competitive advantage” model (Porter, 1979, p6), Kaufman and Weill’s (1989, p15) “a synthesis of economics and behavioural science” and Hofstede’s (Hodgett et al, 2006, p101) “five dimensions of culture”.

This inductive approach and attendant conclusions is within a standard dissertation framework. That is, chapters devoted to the literature review, research methodology, topic discussion and appendices comprise the structure of this paper. The <em>literature review</em> sources were doctoral and masters-level theses, journals and books that were focused on a single aspect of IT investment, and published collections of articles. It is in this section that I introduce classifications of the theoretical constructs. Within the <em>gathered facts</em> chapter I discuss the inductive research methodology and the reasons I decided to gather primary data together with completed research. It is here that I present the interview data and company information. In the <em>discussion</em> chapter the author brings together the observed reality and theoretical constructs. The <em>conclusions</em> chapter gathers together the implications and inferences into three conclusions relating to the research activity itself and eight conclusions as a result of the research activity. The primary outcome of this paper is to postulate an “IT Investment Impact Implication” model (the “4x I” model) that broadly relates each of the analysed factors that influence international business. Finally, the appendices list the research questions, and detail not only the “4x I” model but also related financial measurements and aspects of cultural dimensions.

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Dissertation – Abstract

Management authors such Hodgetts, et al (2006) and Bartlett, et al (2008) describe the increasing complexity of operating a business with international activities. Of the many factors that are involved in successful operational and strategic decisions, these authors draw conclusions that understanding the bearing that information technology (IT) investments can have upon an international business is critical. Thus, the intent of this research was to understand the impact of IT investment upon the operations of international business through analysing the influence, upon the firm’s financial performance, of the type of IT Investment, the mode of international operations , the location of those international operations and the firm’s industry sector. The sources for this dissertation included interviews with senior management personnel from  Melbourne-based companies that had international operations, and prior research literature in the form of doctoral and masters-level theses, published collections of articles, as well as journals and other volumes.

Rather than posit an hypothesis regarding the impact of IT investment upon the operations of international business and subjecting that hypothesis to rigorous testing (ie, the deductive approach) I chose an inductive approach. This approach is supported by Saunders (2007) who states that “research using an inductive approach is likely to be concerned with the context in which such events were taking place”.

Therefore, in order to draw conclusions based on the interviews and the literature, I classified the relevant prior research into several conceptual structures. The categories of organizational impact studies, the productivity paradox, measurement models and frameworks, IT Economics, International Business and IT, Strategic Global IT , cross-culture models, worldwide organisational structures and market entry strategies were used. This led the author to adduce relevant conclusions based on the collected primary data and applicable theoretical models such as “Porters 5-forces model of competitive advantage” (Porter, 1979), Kaufman and Weill’s (1989) “evaluative framework: a synthesis of economics and behavioural science” and Hofstede’s (Hodgett et al, 2006) “five dimensions of culture”.

Although there are eight distinct conclusions, the major outcome of the work is the model that I postulate to describe the impact of this IT investment. This “IT Investment Impact Implication” model describes the influence that the combination of business maturity, IT alignment with business strategy and the homogeneity of IT systems has upon the firm.

For more, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, or review my IT-centric blog.