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Question 1

This paper presents a studious overview of key project success factors in the implementation of information system to business systems. Review this paper, then in your ePortfolio summarize the top two risk factors impacting the success of information systems implementation. State how you will address these potential risks in your organization. Share your workplace-based examples in Discussions.

Risk Management in Information System Projects

Question 2

This field study analyzes the challenges of managing culturally diverse and globally dispersed project teams within technology-intensive product developments. The authors discuss some significant variables managers and business leaders are faced with in establishing organizational unity. Review this paper, then in your ePortfoliosummarize the challenges in managing culturally diverse and globally dispersed project teams.

Critical Success Factors for Managing Technology Intensive Teams in the Global Enterprise

Question 3

In this paper, the authors discuss the strategic role of information technology in enhancing organizational performance with respect to both iterative adjustments and one-time overhauls. Review this paper, then in your ePortfolio summarize the factors that influence IT capabilities. Identify and describe two actions that can be taken to enhance IT capabilities in your organization. Share the two actions you identified to increase IT capabilities in Discussions.

IT Capabilities, Process-Oriented Dynamic Capabilities, and Firm Financial Performance

Question 4

In this article, Kant discusses the factors IT leaders in India should consider before transitioning their organizations from on premise data storage to cloud computing. Review this paper, then in your ePortfolio summarize the factors companies must consider before making a cloud based data resource and storage decision. Do these factors apply to your business environment? Share your workplace-based examples in Discussions.

Putting Your Enterprise Data in the Cloud? Top Considerations

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N. Denić i dr. Upravljanja rizicima projekta informacijskih sustava ISSN 1330-3651 (Print), ISSN 1848-6339 (Online) UDC/UDK 658.51.001.3:004.451 RISK MANAGEMENT IN INFORMATION SYSTEM PROJECTS Nebojša Denić, Vidoje Moračanin, Momir Milić, Zoran Nešić Original scientific paper This paper presents a studious overview of key project success factors in the implementation of information system to business systems. The paper presents the results of theoretical and practical studies, which have shown that the process of managing development of information system projects holds many problems and uncertainties in practice, which despite many improvements in the area of development methods, techniques and tools are still facing some problems and difficulties in the process of implementation of integrated information systems. Managing ERP implementation projects is associated with different specific problems, which are essentially different from the traditional information system developments, because they contain the strategic, tactical, organizational and business environment factors. Keywords: ERP, information system, project management Upravljanja rizicima projekta informacijskih sustava Izvorni znanstveni članak Ovaj članak predstavlja studiozan pregled ključnih čimbenika uspjeha projekta u provedbi informacijskog sustava u poslovnim sustavima. Članak prikazuje rezultate teorijskih i praktičnih istraživanja, koja pokazuju da proces upravljanja razvojnim projektima informacijskih sustava ima mnogo problema i neizvjesnosti u praksi, koji se unatoč brojnim poboljšanjima u području razvoja metoda, tehnika i alata još uvijek suočavaju s nekim problemima i teškoćama u procesu implementacije integriranih informacijskih sustava. Upravljanje projektima implementacije ERP (planiranja resursa poduzeća) je povezano s različitim specifičnim problemima, koji su bitno različiti od onih tradicionalnih informacijskog sustava razvoja, jer sadrže strateške, taktičke, organizacijske čimbenike te čimbenike poslovnog okruženja. Ključne riječi: ERP, informacijski sustav, upravljanje projektima 1 Introduction There are many factors and changes that occur in an increasingly competitive global business environment. The process of managing project of implementation ERP solutions to companies and business systems is a fundamental activity which in the time of global economic crisis sometimes can lead to deterioration of those systems and companies, due to the implementation failure. Some researches in the companies have shown that in the world in about 90 % of implementation projects of ERP solution the project consumes more resources than originally planned. In more than 20 % of project implementations, the same one was considered as unsuccessful. Only 30 % of companies estimated that ERP implementation was successfully completed [1]. Considering the capital investments of information system implementations to companies and the fact that many of these projects were unsuccessful, it was necessary to identify analytical tools that will determine the success of the implementation of information systems. As analytical tools critical success factors were investigated already in the seventies and eighties. At that time, the "information revolutions" were global information systems which provided the appropriate information to business managers, which were seeking appropriate solutions to easier make business decisions. Based on provided information, managers were enabled to easily perform the analysis of available information, to identify the most relevant data and based on them to make critical business decisions [2]. IT development and new software solutions are integrating information technology with a new, process-oriented business model. The technical aspects of implementation are no longer the most important elements, however, it is important to find the balance between business process design and software configuration on one hand, and corporate strategy and organizational strategy on the other hand [3]. Table 1 Critical success factors model [4] Organizational level Strategic level Support of top management Management of changes Management scope Project team Business Process Reengineering Project manager Managing projects Participation of end-users Trust between partners Appropriate strategy for implementing entire solution Tactical level Commitment to employees and consultants Good internal and external communication between project members Formalized project plan Adequate training program Elimination of systematic errors The proper function of partners Appropriate delegation of duties for project team members Proper software configuration Technological level Avoiding technically demanding adjustments Supervision and monitoring performance The choice of appropriate ERP solution and version Data transfer from old ERP solution Tehnički vjesnik 21, 6(2014), 1239-1242 1239 Risk management in information system projects N. Denić et al. In the literature there are numerous studies of eminent experts in the field of critical success factors, which play an important role in highlighting some of the most important aspects in the implementation of comprehensive integrated solutions [5÷15]. One of the studies about critical success factors is classifying them into four levels: 1) strategic, 2) tactical, 3) organization and 4) technological. Experiences show that it is very important to follow the unwritten rule that a man should learn from the mistakes of others because all experiences are important. In order to successfully complete implementation project, we need to satisfy the success of all factors within certain limits. The success, failure of some implementation project or of information system update depends on a relationship between strategic and tactical levels, how each affects the other within the area of key success factors. As proof of this theoretical study model, appropriate measurements were conducted in companies, and they show the customer satisfaction with new user interface. Feedbacks were taken from forty company users. Work mode or performance measurement mode is derived from conversations with users (approximately thirty minutes with targeted customers), filing out surveys and observation. Although the graphical user interface of the new program is quite variable, we can easily conclude that users have adapted well to its use. In fact, we can see that users were not satisfied with the use of user interface in the old ERP solution. The reason of that is that user was using the old application, only a few months before implementation of the new application. Answers and results of key users of mySAP Business Suite project are given below. Table 2 The rating of the user interface Measurement and formula X = {1, 2, 3} 1 - full knowledge, 2 - partial knowledge, 3 - user does not have knowledge Interpretation of measurement X = 1 and X = 2 Acceptable answer Type of metric scale ordinal scale Measurement type X = mark Measurement Observation of the user experience or questionnaire/survey Table 3 The significance and comparison of KFU ERP projects in the region and worldwide [4, 16] Clear objectives of strategy and of scope of introducing solution Involvement and support of top management The organization of the project team and its competences Involvement and participation of users Communication between the project team and with others in the organization Communication within the project team Training of end users Business Process Reengineering Hiring external consultants The active role of the project sponsor Transferring data from old solutions to ERP As little as possible customization of ERP to organization specifics Using the principles of project management Clear goals, strategy and scope for the implementation of solution Selection of ERP technology architecture Technical literature 2 1 3 9 7÷8 7÷8 4 5 11 13 10 15 12 6 14 Survey 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Figure 2 User interface evaluation of a new ERP solution (1 - not mastered: 6; 2 - partially mastered: 14; 3 - fully mastered: 20) Figure 1 The rating of user-interface -myNIS We can conclude that support of the management is required through all stages of project implementation. 1240 The project must be approved by the top management in the early stages of its implementation and it needs to be in accordance with the business objectives of that company. If the top management is not directly involved Technical Gazette 21, 6(2014), 1239-1242 N. Denić i dr. in implementation of ERP solution, positive effects of the project are impossible to be expected. Company management needs to formally and publicly explain that the project has the highest priority and that they are committed to put all available company resources to that project. We have an interesting research in Computerwoche magazine [17] about difficulties in area of implementing ERP systems, which was noticed by managers (Tab. 4). Upravljanja rizicima projekta informacijskih sustava methods or they will require from the implementation / maintains team to modify the system to support their methods. That is the key moment when the ERP system may fail. It is not necessary to mention why it is not recommended to create some bigger change in ERP software. Besides the risks of software bugs and inability of standard performance software upgrade, the complete functionality of the ERP system may be compromised. Studies show that if your company has a resistance to change, the more it is likely that the process of implementation of ERP systems will fail. 3 Figure 3 Key success factors considering the conducted research in practice Table 4 What would the management change for re-introduction of the ERP system? 80 % More attention to the optimization of the process Implementation which is in accordance with 65 % monitoring company goals 60 % More attention to cooperation of business segments Introduction of the project leaders from relevant 55 % factors 50 % The simultaneous implementation of MIS 45 % Intensive education 35 % Stronger involvement of the company representatives 35 % More courageous approach to changes 30 % A better proof of effectiveness 20 % Avoiding the big-bang implementation From the above mentioned survey, we can see that the most prominent problem is the lack of attention in the optimization process. The reason is very simple, and yet many times overlooked: no matter how much the technology alone is effective, it cannot help the company in achieving their business goals if business processes are not carefully defined previously. Therefore, business processes need to be improved, decisions (about which processes should be changed or thrown away) need to be made and after that implementation of modern information technology tools can start. 2 Conclusion From the above mentioned analysis we could say that the most important key factor in the successfully managing implementation project of new ERP solution or updating existing information system is active support of the company’s top management. Also, failure to comply with established methodology has a negative impact on the efficiency and effectiveness of the investment processes as well as on economy and profitability of the business system. ERP consists of a series of best practical means of performing standard business processes. To get the most out of this software, you have to convince people in the company to accept the ways of performing business processes in a manner as described in the software. If people from different sectors-departments do not agree with the described methods, and they think their current / old methods are better, they will refuse to use the new Tehnički vjesnik 21, 6(2014), 1239-1242 References [1] Ho, C. F.; Wu W. H.; Tai, Y. M. Strategies for the adaptation of ERP systems. // Industrial management & data systems. 104, 3(2004), pp. 234-251. [2] Caralli, R. A. The Critical Success Factor Method: Establishing a Foundation for Enterprise Security Management. Pittsburgh (PA): Carnegie Mellon Software Engineering Institute, 2004. [3] Gibson, N.; Holland, C. P.; Light, B. Enterprise Resource Planning: A Business Approach to Systems Development. // 32. Annual Hawaii International Conference on System Sciences. Washington (DC): IEEE Computer Society, 1999, pp. 1-9. [4] Esteves-Sousa, J.; Pastor-Collado, J. Towards unification of critical success factors for ERP implementations. UniversitatPolitecnica de Catalunya. URL: http://www.army.mil/ArmyBTKC/docs/BIT2000.pdf. [5] Nah, F. F. H.; Lau, J. L. S.; Kuang, J. Critical factors for successful implementation of enterprise system. // Business Process Management Journal. 7, 3(2001), pp. 285-290. [6] Gunson, J.; de Basis J. P. The Place and Key Success Factors of Enterprise Resource Planning (ERP) in the New Paradigms of Business Management. CRM Today. http://www.crm2day.com/library/EpFlAAAkElDCUAUBZ U.php. [7] Al-Mudimigh, A.; Zairi, M.; Al-Mashari, M. ERP software implementation: an integrative framework. // European Journal of Information Systems. 10, 4(2001), pp. 216-226. [8] Aladwani, A. M. Change management strategies for successful ERP implementation. // Business Process Management Journal. 7, 5(2001), pp. 266-278. [9] Chen, I. J. Planning for ERP systems: analysis and future trends. // Business Process Management Journal. 7, 5(2001), pp. 374-386. [10] Markus, M. L.; Axline, S.; Petrie, D.; Tanis, C. Learning from Experience with ERP: Problems Encountered and Success Achieved. Second-Wave Enterprise Resource Planning: Implementing for Effectiveness. Cambridge: Cambridge University Press, 2003, pp. 23-55. [11] Denić, N. Menadžment informacioni sistemi, Beograd, 2010. [12] Denic, N.; Dasic, B.; Maslovara, J. Profitability of the investment project of introducing modern business information systems. // TTEM - Technics Technologies Education Management. 8, 1(2013), pp. 367-372. [13] Simunovic, K.; Simunovic, G.; Havrlisan, S.; Pezer, D.; Svalina, I. The role of ERP system in business process and education. // Tehnicki Vjesnik-Technical Gazette. 20, 4(2013), pp. 711-719. [14] Rigelhof, R. ERP Implementation Best Practices, 2003. http://educase.edu/ir/library/powerpoit/EDU03146.pps. [15] Wallace, T. F.; Kremzar, M. H. ERP: Making It Happen: The Implementers' Guide to Success with Enterprise Resource Planning. New York: John Wiley & Sons, 2001. 1241 Risk management in information system projects N. Denić et al. [16] Akkermans, H.; van Helden, K. Vicious and virtuous cycles in ERP implementation: A case study of interrelations between critical success factors. // European Journal of Information Systems. 11, 1(2002), pp. 35-46. [17] http://www.computerwoche.de/software/erp/ Authors’ addresses Nebojša Denić, PhD Faculty of Information Technology, Alfa University, Palmira Toljatija 3, 11000 Belgrade, Serbia denicnebojsa@gmail.com Vidoje Moračanin, PhD Faculty of Information Technology, Alfa University, Palmira Toljatija 3, 11000 Belgrade, Serbia vidoje.moracanin@alfa.edu.rs Momir Milić, PhD Faculty of Information Technology, Alfa University, Palmira Toljatija 3, 11000 Belgrade, Serbia Zoran Nešić, PhD Faculty of Technical Sciences Čačak University of Kragujevac 65, Svetog Save St., 32000 Čačak, Serbia E-mail: zornes2002@yahoo.com 1242 Technical Gazette 21, 6(2014), 1239-1242 Engineering Management Journal ISSN: 1042-9247 (Print) 2377-0643 (Online) Journal homepage: https://www.tandfonline.com/loi/uemj20 Critical Success Factors for Managing TechnologyIntensive Teams in the Global Enterprise Hans J. Thamhain To cite this article: Hans J. Thamhain (2011) Critical Success Factors for Managing TechnologyIntensive Teams in the Global Enterprise, Engineering Management Journal, 23:3, 30-36, DOI: 10.1080/10429247.2011.11431906 To link to this article: https://doi.org/10.1080/10429247.2011.11431906 Published online: 20 Apr 2015. Submit your article to this journal Article views: 236 Citing articles: 18 View citing articles Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=uemj20 Critical Success Factors for Managing TechnologyIntensive Teams in the Global Enterprise Hans J.Thamhain, Bentley University Abstract: The challenges of managing culturally diverse and globally dispersed project teams are examined in a field study of technology-intensive product developments. The article aims to improve the understanding of team performance in multinational project environments with implications for leadership assessment and organizational development. The results suggest that multinational team performance involves a complex set of variables related to the organizational ambience, business process, managerial tools, and most importantly, to the people in the organization. Team leaders must effectively manage relations across the entire work process, including support functions, suppliers, sponsors, and partners. Emphasis on common values and goals helps in bridging cultural and organizational differences, and in unifying the multinational team. Personal interest, pride and satisfaction with the work, professional work challenge, accomplishments, recognition, and the skill sets of the team members were identified as the strongest drivers toward unifying culturally diverse project teams and their work processes, and building a true partnership among all the contributing organizations. Keywords: Global Project Management, Team Leadership, Technology, Product Development EMJ Focus Areas: Program & Project Management, Building Engineering Management Actionable Knowledge, New Product Development T he role of project teams is expanding with accelerating globalization of our enterprises, leading to increased pressures for effective management of these multi-national teams (Snow et al., 1996; Smith and Blanck, 2002). As companies leverage their operations across national borders to take advantage of the best talent, most favorable cost, timing, and marketing position, new challenges require sophisticated skill sets from project leaders. Whether or not Yahoo! creates a new search engine, Sony develops a new laptop computer, or the World Health Organization rolls out a new information system—from medical research to computer systems, companies try to leverage their budgets and accelerate their schedules by forming alliances, consortia, and partnerships with other firms, universities, and government agencies. Furthermore, multinational teamwork is being driven by business strategy. Enterprises such as IBM, Boeing, or Microsoft have many of their product developments spread across international borders in order to optimize access to talents and markets (Armstrong, 2000; Kruglianskas and Thamhain, 2000; Manning et al., 2008; Shenhar et al., 2007). While this offers great economic benefits, it also requires sophisticated managerial skills, new work processes, and business models to achieve collaboration and integration among geographically dispersed and culturally diverse work groups (Ferrante, Green, and Forster, 2006; Groysberg and Abrahams, 2006; Martinez, 1995; Mehra et al., 2006). As a result we have gained sophisticated knowledge and substantial insight into the effects and organizational dynamics of managing project teams (Anconda and Bresman, 2007; Hackman, 2006; Keller, 2001; Thamhain, 2008). Yet companies still struggle to run projects well in a global enterprise setting (Salomo et al., 2010). Why Focus on Leadership and Team Environment? Obviously, the spectrum of influences to overall team performance and project success is very broad (Barczak, 1995; Gemunden, 2011; Kleinschmidt, 2011; Salomo et al., 2010); however, many prior studies that have examined project team performance in a broad organizational context specifically identified team leadership and ambience among the critically important factors for success (Aconda, 2007; Armstrong, 2000; Asgary et al., 2007; Chia-Chen, 2004; Hackman, 2006; Kratzer et al., 2011; Salomo et al., 2010). As specifically stated by Chia-Chen, “…managerial leadership and the organizational environment must be conducive to the professional needs of the project team.” This view is also shared in business practice. Managers often lament that relatively little is known about the effectiveness of team leadership styles and the organizational conditions most conducive to team performance in project environments that are geographically dispersed across national borders, operating in technological complex, culturallydiverse, multi-national environments, which is the focus of this study. As such, the study addresses the following research questions: • What type of organizational environment and working conditions are most conducive to high project team performance in multinational settings? • What management style is most conducive to high project team performance in multinational settings? In the broader context of enterprise management, the study connects with the organizational theory via the resourcebased view of the firm. This view suggests that company resources, properly directed toward desired results such as leadership training, talent scouting, supporting tools, and techniques can create conditions favorably linked to team performance. In defining and characterizing the team environment, these conditions seem to be especially important to multinational undertakings (Snow et al., 1996; Smith and Blanck, 2004), yet difficult to investigate because of subtle influences and variations of organizational settings, policies, This article is based on “Managing Technology-Intensive Project Teams in the Global Enterprise” by Hans Thamhain which appeared in the proceedings of the 43rd Hawaii International Conference on Systems Science, Koloa, HI © 2010 IEEE. 30 Engineering Management Journal Vol. 23 No. 3 September 2011 socio-political factors, and other antecedent conditions across the multinational enterprise. These are part of the challenges and limitations associated with the current exploratory field study. Propositions While it is premature to define and test specific hypotheses at this exploratory stage of the research, I have developed 11 propositions as a guideline for this investigation, as shown in Exhibit 1. These propositions emerged from two sources: (i) discussions with project leaders and senior managers, and (ii) observations made during action research, both during Stage I of this study and earlier exploratory field studies conducted between 2004 and 2007. These propositions are consistent with the rationale and perspective of multinational project management presented in the frontend of this article, providing the focus for the exploratory field investigation, including designing questionnaires, conducting interviews, and guiding observations. Exhibit 1. Propositions Serving as Guidelines for this Field Investigation P1: Multinational team performance can be significantly influenced by (i) local leadership, (ii) headquarter leadership and (iii) team environment. P2: A professionally stimulating work environment enhances multinational collaboration and overall project performance and success. P3: Clear project objectives, directions and leadership are necessary for effective cross-functional communications, collaboration and commitment. P4: Project ownership and commitment enhance cross-functional communications, innovation and overall project performance. P5: Useful organizational processes for technology transfer and project integration are critically important for effective crossfunctional communications, collaboration, innovations and overall project performance. P6: Tangible rewards, such as recognition, bonuses and raises, are important drivers for sustaining team collaboration, commitment and innovative performance. P7: A favorable project image of value, priority and probability of success has a positive influence on team creativity and overall performance. P8: Good team spirit, mutual trust and respect enhance team collaboration, communications and performance. P9: The team leader’s competence and credibility (including trust and respect by team members) is an important influence to innovation, collaboration and team performance. P10: Increased project complexity reduces team collaboration and project performance (e.g. more failures). P11: Job security and organizational stability have a positive influence to on team collaboration and the ability to deal with risk and conflict. Objectives, Scope and Method The objective of this article is to improve the understanding of (i) the dynamics and interaction of multi-national, culturally diverse project teams, (ii) the influences of the team environment, and (iii) the influences of managerial leadership on performance. The specific focus is on technology-based, geographically dispersed project environments. The research reported here includes the Engineering Management Journal Vol. 23 No. 3 most recent phase of an ongoing exploratory field study into multinational project organizations. The article summarizes and expands on the earlier, more quantitative part of this study (Thamhain 2009, 2010). The methodology for the combined study is discussed next. Using an exploratory research format, the design of this threephase field investigation, conducted between 2004 and 2010, is summarized in Exhibit 2. The field study yielded data from 42 project teams with a total sample population of 495 project professionals such as engineers, scientists, and technicians, plus their managers, including 16 functional resource managers, 42 project team leaders, 18 product managers, eight directors of R&D, seven directors of marketing, and 11 general management executives at the vice presidential level. Together, the data covered over 112 technologybased projects in 27 large, “Fortune-500” type enterprises, spanning a total of 18 countries. The purpose of this combined three-stage data collection method is to leverage the information-gathering process for identifying the drivers and barriers to project team performance and for gaining insight into its management process. This combined method is particularly useful for new and exploratory investigations, such as the study reported here, which is considerably outside the framework of well-established theories and constructs (Glaser and Strauss, 1967; Eisenhardt, 1989). The format and process of the specific questionnaires and in-depth semi-structured interviews used in this study was developed and tested in previous field studies of project management, similar in context to the current investigation (Kruglianskas and Thamhain, 2000; Thamhain, 2004, 2009, 2010). The methodological details of the data collection and analysis are tabulated in Exhibit 2. Results The empirical results, supported by the Kendall Tau Rank-Order Correlation shown in Exhibit 3, suggest that among the four subsets of data analyzed (people, work content, work process/tools, and enterprise environment), the people side together with its culture, values, and skill sets, seem to have the strongest influence on team performance and overall project success. These influences also correlate strongly to other desired characteristics of the team environment, such as work process, communication effectiveness, and work integration. The most significant associations point at the importance of professional esteem needs and managerial leadership as particularly favorable influences on project team performance. Specifically: 1) professionally stimulating and challenging work environments [τ=.45], 2) opportunity for accomplishments and recognition [τ=.38], 3) clearly defined organizational objectives relevant to the project [τ=.36], 4) job skills and expertise of the team members appropriate for the project work [τ=.36], 5) overall directions and team leadership [τ=.35], 6) trust, respect, and credibility among team members and their leaders [τ=.30], 7) business process, as reflected by crossfunctional cooperation and support [τ=.27], 8) clear project plans [τ=.25], and 9) clearly defined authority relations, and sufficient autonomy and freedom of actions in line with the managerial expectations and accountabilities [τ=.23]. While many of these factors, such as clear objectives, skill sets, and effective business process deal with conventional project management practices, they also relate to the human side, conditioning the work environment for success. Hence, in a complex project environment that relies on commitment, buy-in, and personal drive for success, these influences appear to deal effectively with the integration of goals and needs between the team member and the organization. In this context, the more subtle factors seem to become catalysts September 2011 31 Exhibit 2. Summary of Three-Stage Research Method STAGE I STAGE II STAGE Ill Scope and Objective On-site observations and interviews to understand research environment and issues, propositions and questionnaire Data collection via questionnaire, observation and expert panel (action research) In-depth retrospective interviewing, gaining perspectives and additional information, leveraging the data collected in Stage II Time Frame 2005-2007 2007-2008 2008-2010 Unit of Analysis Project Project Project No formal data collection (exploratory only) PRIMARY: ·Overall team, performance • Project success Data Dependent Variables (Team Performance) -Judged by senior management- Independent Variables and Antecedent Conditions (Characteristics of Team Environment) SECONDARY: • Innovation and creativity • Change orientation and response rate ·Self-direction/ little supervision • Customer/client interface efficiency • Ability to resolve conflict • Dealing with risk and uncertainty • Personal effort and commitment ·Effective communications • Schedule and budget performance No formal data collection (exploratory only) -Judged by team members20 variables of the team environment listed in Exhibit 2: • Interesting Work • Recognition/Accomplishments • Clear Organizational Objectives • Job Skills and Expertise • Direction and Leadership ·Trust/Respect/Credibility ·CrossFunctional Support ·Clear Project Plan and project Support • Autonomy and Freedom ·Career Development opportunity • Job Security ·Salary/Raise/Bonuses ·Compensatory Time • Project Visibility • Team Maturity • Project Duration • Project Stability • Organizational Stability • Technological Complexity • Project Size and Complexity Data Collection Method Interviews, observations, expert panels, focus groups Questionnaires augmented by interviews Retrospective interviews, expert panels and focus groups Data Analysis Content analysis Kendall's Tau rank-order correlation' Content analysis Record analysis Kruskai-Walles analysis of variance by ranks' Critical thinking Sample Number of companies Type of companies Number of projects Project type Projects size Project duration Number of multi-national partners Number of project teams (and team members) Management personnel Record analysis Critical thinking 12 27 18 High-tech, Fortune 500 High-tech, Fortune 500 High-tech, Fortune 500 250 NDP, R&D $1.2M (average), sd +/-.5M 19 mos (average), sd +/-7mos 112 NDP, R&D $1.2M (average), sd +/-.SM 19 mas (average), sd +/-7mos 125 NDP, R&D $1 .2M (average), sd +/-.SM 19 mos (average), sd +/-7mos 18 21 (33) 18 42 (450) 42 PMs; 8 Mktg Directors; 7 R&D Directors, 11 GMJVPs 18 42 (68) 18 PMs; 5 Mktg Directors; 4 R&D Directors. 11 GMJVPs 18 PMs; 5 Mktg Directors; 4 R&D Directors, 4 GMNPs The causal relationship among the 31 variables investigated is highly intricate and complex, with cause and effect not always definable. Therefore, the traditional/conventional reflective measurement model may not be appropriate, but may need to be replaced in part by a formative model. In addition, many of the organizational and behavioral variables investigated contain ordinal measurements which do not follow normal distribution, distribution-free non-parametric methods, such as Kendall's Tau rank-order correlation and Kruskai-Waffis analysis of variance by ranks, have been chosen to evaluate the survey data of Stage-11. 32 Engineering Management Journal Vol. 23 No. 3 September 2011 for cross-functional communication, information sharing, and ultimate integration of the project team with focus on desired results. All associations are significant at p =0.10 or better, with the most significant correlations (p = .01 or stronger) shown in bold, giving support to the first nine Propositions P1—P9. It is interesting to note that many characteristics of the work environmental that were perceived by managers as important and influential to effective team performance did not correlate significantly as measured by a p-level threshold of 0.10. Others resulted even in negative correlations. As summarized in Exhibit 3, the factors of lesser influence to project team performance are: #10) career development [τ=.12], #11) job security [τ=.12], #12) salary increases and bonuses [τ=.15], #13) time-off [τ=.15], #14) project visibility and popularity [τ=.12], and #15) maturity of the project team, measured in terms of time worked together as a team [τ=.10]. In addition, several conditions of the work environment actually correlated negatively to performance although they were seen by the majority of project managers as important positive drivers. As summarized in Exhibit 3, they include: #16) project duration [τ= -.08], #17) project requirements, stability, and minimum changes [τ= -.10], #18) stable organizational structures and business processes technological complexities, such as dependencies on multiple technologies, technological disciplines, and processes, #19) technical complexity [τ= -.15], and #20) project size and project complexity, suggesting that project scope, size, and implementation challenges by themselves do not necessarily translate into lower team or project performance [τ= -.18]. Although the statistical significance of these “lesser associations (#10-#20)” is weak, it is interesting to observe that several of these influences actually seem to have opposite effects to those popularly held by managers; therefore, the statistics do not support the second part of P6 that falsely included bonuses and raises as an important driver to team performance. Nor does it support Proposition P10 which falsely argues that project size and complexity have an unfavorable influence on the desirable team characteristics and performance. For the conditions with favorable associations to team performance influences, it is not surprising but yet interesting, to note that these conditions produce desirable characteristics in all variables of the team environment such as work process, communication effectiveness, and work integration. For example, project teams that indicated a high degree of professionally Exhibit 3. Multinational Team Environment vs Performance (Kendall's τ RankOrder Correlation) Exhibit 3. Multinational Team Environment vs Performance (Kendall’s τ Rank-Order Correlation) Engineering Management Journal Vol. 23 No. 3 September 2011 33 stimulating work, work challenge, recognition, trust, and respect were also seen by their managers as being able to deal effectively with technology transfers, client interfaces, changes, risks, and cross-functional communications, all components that are part of the work process. This association was specifically tested via Kendall-Tau and Kruskal-Wallis analysis of variance by rank. These correlations show at a high level of statistical significance that project teams who see themselves working in a professionally stimulating environment also seem to be part of a more effective work process, and use work-related tools and techniques effectively across multinational borders. The field study shows that the conditions that create an interesting and stimulating work environment, also serve as bridging mechanisms between the mission goals of the enterprise and the professional needs of the project team. This is especially helpful in complex multinational and technology-based project environments where it is often difficult for team members to see the big corporate picture, but more likely for team members to see the organizational environment conducive to their professional needs if they find the work professionally interesting and stimulating. Another of these bridging mechanisms is the effective leadership and involvement of all project stakeholders throughout the organization and its external partners, lending general support to P1 and P9. Managers point out that, for today’s technology-based projects, success is no longer the result of a few geniuses, experts, and skilled leaders. Rather, project success depends on effective multidisciplinary efforts, involving teams of people and support organizations interacting in a highly complex, intricate, and sometimes even chaotic way. Especially for multi-national efforts, the process requires experiential learning, trial and error, risk taking, and cross-functional coordinating in support of technology transfer and integration, a complex process that is being seen by many managers as fuzzy, difficult to describe or predict results with certainty. Guidelines for Effective Team Management The lessons that emerged from the combined three stages of this field study have been organized into ten guidelines for leading and working effectively with culturally diverse project teams. The retrospective interviews and on-site observations from the action research of Stage-III were especially helpful in validating and clarifying the statistical results of Stage-II, and to go beyond the conclusions reached from the quantitative data, gleaning additional implications useful to the practice of project management and some future research. While these guidelines emphasize the importance of conditioning the project environment for cooperation, connectivity, and unification during the early stages of project formation and start-up, management must pay continuous attention to these conditions and critical success factors throughout the project lifecycle. The suggestions advanced below provide an overall framework for managerial actions and leadership, conditioning the multinational project environment for effective teamwork. 1. Define the Team Structure, Work Process, and Communication Channels. Management must provide an infrastructure conducive to effective cross-functional teamwork and technology transfer. This includes properly defined interfaces, task responsibilities, reporting relations, communication channels, and work transfer protocols. Most of the tools for systematically describing the work process and team structure come from the conventional project management system: project charter—defining the mission and overall 34 2. 3. 4. 5. responsibilities of the project organization, including performance measures and key interfaces; project organization chart—defining the major reporting and authority relationships; responsibility matrix or task roster; project interface chart such as the N-Squared Chart; and job descriptions and well-defined phase-gate criteria. All of these tools have been used by project managers for a long time; however, to be effective in multinational settings, they need to be fine-tuned and calibrated to the specific project situation and carefully integrated with the overall business process and its multi-cultural environment. Moreover, communication channels must be linked and effectively web accessible to all project team members. Build a High-Performance Image. Project teams which have a clear sense of purpose and confidence in their mission, perform better. A high-performance image stimulates the team’s interest, pride of participation, and sense of ownership. Common goals and shared can-do images serve as a bridging mechanism, helping to unify the team across the miles and cultures. This also builds professional confidence and encourages team members to reach “outsidethe-box” to resolve issues “locally” with a minimum of central administrative support. Project leaders and senior managers can build a favorable project image by making the project visible and stressing its importance via media exposure, management involvement, and budgetary actions as well as by emphasizing critical success factors, professional opportunities, and potential rewards. These factors promote project ownership and a sense of unity behind the project objectives. Stimulate Enthusiasm, Excitement, and Professional Interests. Factors that satisfy personal and professional needs have the strongest effect on team unification across the miles and on overall project performance. The most significant performance drivers derive from the work itself—personal interest, pride and satisfaction with the work, professional work challenge, accomplishments, and recognition. Whenever possible managers should try to accommodate the professional interests and desires of their personnel. Interesting and challenging work is a perception that can be enhanced by the visibility of the work, management attention and support, priority image, and the alignment of personnel values with organizational objectives. Adapt Project Management Tools, Techniques, and Leadership to Local Culture. With the globally dispersed project activities, success depends not only on the effective use of managerial tools and leadership style in one particular location, but equally important, on the effective use of these techniques across different geographic regions that often incorporate great differences in their organizational cultures; therefore, it is important to adopt management tools, techniques, and leadership style to local cultures and organizational values without losing consistency, purpose, and managerial integrity. Unify Management Process. Effective technology transfer and integration is crucial to the success of any project. It is particularly challenging in geographically distributed and culturally diverse project teams. “Top-down” or centralized management is often too rigid for coping with the dynamics and non-linearity. What seems to work best is a skillfully designed management process with enough flexibility and adaptability to local leadership that understands the Engineering Management Journal Vol. 23 No. 3 September 2011 established norms and cultures, and is respected by the local people. Focus groups, organizational studies and developments, internal and external consultants, process action teams, professional training and teambuilding sessions, all are powerful tools for unifying and optimizing the work flow and for managing the process. 6. Ensure Senior Management Support. Senior management support is critically important to project performance. Effective working relationships among resource managers, project leaders, and senior management across the whole project organization, all help to build a favorable image toward project visibility and priority, and help to unify the team across its cultures and geographic boundaries. 7. Promote Self-Direction and Commitment. With the shift toward more self-directed teams, more flexible and less hierarchical organizations, management control is based to a large extent on commitment, motivation, and local team leadership. Senior management needs to work with all organizations across the project to build strong linkages between the local teams, their support systems, and the sponsor organization. 8. Share Managerial Power and Influence. Given the political nature of organizations, the diversity of organizational culture, and differences in regional management style, power is often shared between managers of local organizations and the project management office (PMO) at corporate headquarters. Shifts in power and influence among regional organizations are quite common and natural; however, they can have negative effects on cooperation and commitment, and should be monitored, examined, and dealt with to avoid the risk of organizational tension, mistrust, conflict, and power struggle. 9. Recognize Differences in Management Style and Philosophy. The field observations and interviews provide us with some insight into the diverse managerial thoughts and leadership styles of culturally different regions. This explains in part the difficulties experienced by managers in multinational environments trying to establish a common project management process and a unified framework for direction and leadership. The findings suggest the critical importance of adapting headquarters leadership and methods of control to the local level, a point that had already been made earlier. Further, effective managerial role performance can be enhanced via multicultural training and organizational development at all levels of the project organization. 10. Foster a Culture of Continuous Support and Improvement. Culturally diverse teams are intrinsically complex, highly dynamic, and continuously changing. Management can establish “listening posts” such as discussion groups, action teams, and suggestion systems that capture the “voice of the project stakeholders” as well as the lessons learned from past project experiences. Tools such as the Project Maturity Model, Six Sigma, and Agile project management process can provide a useful framework and the basis for analyzing, developing, and continuously improving the management process. Clearly all of these areas represent fruitful grounds for future research toward effective use in multinational project ventures. Conclusions The empirical results presented in this article show that effective management of globally dispersed project teams involves Engineering Management Journal Vol. 23 No. 3 a complex set of variables that relate to the organizational environment, business process, managerial tools, and most importantly, to the people in the organization. In many cases, the people issues have the strongest impact on project performance. People are an intricate part of most organizational subsystems; therefore, issues affecting people eventually impact the whole project organization and the broader enterprise. Management cannot expect to create a unified project team, working seamlessly across borders and cultures, by simply issuing work orders, project summary plans, or management guidelines. Emphasis must be on common values and goals, rather than on differences, to focus and unify the team. Personal interest, pride and satisfaction with the work, professional work challenge, accomplishments, recognition, and the skill sets of the team members act most favorably toward unifying culturally diverse project teams and their work processes. These conditions serve as bridging mechanisms, helpful in enhancing project performance in multi-cultural organizations. By recognizing the greater autonomy of all international partners as well as their cultural differences, management can build a true partnership among all of the contributing organizations with strong linkages for communication, decision making, and technology transfer. Moreover, to be sustainable, these multinational alliances must not only be built at the beginning of the project life cycle, but continuously be refueled and maintained over the lifetime of the project. 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About the Author Hans Thamhain is a professor of management and director of MOT and project management programs at Bentley University, Boston/Waltham. He has held management positions with Verizon, General Electric, and ITT, and has written over 70 research papers and six professional reference books. Dr. Thamhain received the IEEE Engineering Manager Award in 2001, PMI’s Distinguished Contribution Award in 1998 and PMI’s Research Achievement Award in 2006. Contact: Hans Thamhain, Bentley University; phone: 781-891-2189; hthamhain@bentley.edu Engineering Management Journal Vol. 23 No. 3 September 2011 Journal of the Association for Information Research Article IT Capabilities, Process-Oriented Dynamic Capabilities, and Firm Financial Performance* Gimun Kim Konyang University gmkim@konyang.ac.kr Bongsik Shin San Diego State University bshin@mail.sdsu.edu Kyung Kyu Kim Yonsei University kyu.kim@yonsei.ac.kr Ho Geun Lee Yonsei University h.lee@yonsei.ac.kr Abstract More and more publications are highlighting the value of IT in affecting business processes. Recognizing firmlevel dynamic capabilities as key to improved firm performance, our work examines and empirically tests the influencing relationships among IT capabilities (IT personnel expertise, IT infrastructure flexibility, and IT management capabilities), process-oriented dynamic capabilities, and financial performance. Processoriented dynamic capabilities are defined as a firm’s ability to change (improve, adapt, or reconfigure) a business process better than the competition in terms of integrating activities, reducing cost, and capitalizing on business intelligence/learning. They encompass a broad category of changes in the firm’s processes, ranging from continual adjustments and improvements to radical one-time alterations. Although the majority of changes may be incremental, a firm’s capacity for timely changes also implies its readiness to execute radical alterations when the need arises. Grounded on the theoretical position, we propose a research model and gather a survey data set through a rigorous process that retains research validity. From the analysis of the survey data, we find an important route of causality, as follows: IT personnel expertise  IT management capabilities  IT infrastructure flexibility  process-oriented dynamic capabilities  financial performance. Based on this finding, we discuss the main contributions of our study in terms of the strategic role of IT in enhancing firm performance. Keywords: IT Capabilities, IT Resources, Process-oriented Dynamic Capabilities, Firm Performance, Resource-based View, IT Business Value * Varun Grover was the accepting senior editor. This article was submitted on 9th February 2009 and went through six revisions. Volume 12, Issue 7, pp. 487-517, July 2011 Volume 12  Issue 7 IT Capabilities, Process-oriented Dynamic Capabilities, and Firm Financial Performance 1. Introduction The relationship between IT and firm performance is a crucial research issue that symbolizes the value of information systems research (Devaraj & Kohli, 2003; Tanriverdi, 2005). Many studies have attempted to understand the role of IT in organizational performance, and more researchers are paying attention to the notion of IT capabilities, including their potential to transform IT resources into business value. Recognizing firm-level, process-oriented dynamic capabilities (PDCs) as key to improved firm performance, this study intends to enhance our knowledge about how IT is tied to business value by offering an integrated view of the relationships among IT capabilities, PDCs, and financial performance. PDCs are defined as a firm’s ability to change (e.g., improve, adapt, adjust, reconfigure, refresh, renew, etc.) a business process better than the competition. We look at firm competence in this area in terms of three key dimensions of business processes: integration/connectivity (e.g., connecting parties for communication and information sharing), cost efficiency, and capitalization of business intelligence/learning (e.g., bringing business analytics and information into the process) (Butler & Murphy, 2008; Fang & Zou, 2009). In fact, dynamic capabilities have been defined as “the ability to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments” (Teece, Pisano, & Shuen, 1997, p. 517). More recently, Helfat et al. (2007, p. 1) have defined dynamic capabilities as “the capacity of an organization to purposefully create, extend or modify its resource base.” They are demonstrated by a firm’s ability to recognize changing opportunities in internal and external environments, configuring organizational processes and deploying resources efficiently and promptly to capitalize on them (Eisenhardt & Martin, 2000). Changes in business processes, ranging from incremental adjustments and improvements to radical reconfigurations and alterations (Ambrosini, Bowman, & Collier, 2009), constitute an important indicator of dynamic capabilities. Whether the enhancement is radical or gradual, it has been recognized that even seemingly minor innovations (e.g., technological changes) can have dramatic impacts on a firm’s abilities in terms of market competition (Salvato, 2009). In addition, a firm’s ability to make changes in business processes in a dynamic fashion (though gradual) indicates its readiness to undergo other radical reconfigurations effectively when the situation demands. Our research offers two primary contributions to the IS community. The first is to compare the outcomes of two different modeling approaches (direct vs. indirect modeling). Scholars have taken different avenues to elucidate the relationship between IT and firm performance. Some studies are based on the modeling approach, in which IT capabilities and firm performance are directly tied; others treat the relationship as indirect (Pavlou & El-Sawy, 2006; Wade & Hulland, 2004). This difference in the modeling paradigm makes it difficult to compare findings of existing studies. To facilitate comparison, our study utilizes PDCs, the ability to improve business processes to respond to changing market environments, as a differentiator between the two models. Second, we examine the interrelationships among three primary IT capability constituents (i.e., IT personnel expertise, IT management capabilities, and IT infrastructure flexibility). A literature review indicates that the primary focus of existing studies has been to understand the contribution of IT capabilities toward creating business value. Consequently, the issue of the dynamics among different types of IT capabilities has been largely overlooked. With previous research contributions in mind, we propose a research model that depicts how enhanced IT capabilities ultimately result in improved financial performance (Figure 1). The research model includes the following constructs: perceived financial performance, PDCs, and IT capabilities (i.e., IT infrastructure flexibility, IT personnel expertise, and IT management capability). The operating presumption is that IT capabilities influence PDCs and, subsequently, a firm’s financial performance. As for the relationships among IT capabilities, we expect IT personnel expertise to influence IT infrastructure flexibility and IT management capability directly. It is also anticipated that IT management capability affects the level of IT infrastructure flexibility. 488 Journal of the Association for Information Systems Vol. 12 Issue 7 pp. 487-517 July 2011 Kim et al. / IT Capabilities & Firm Performance IT Capabilities IT Management Capability H4 H7 H3 IT Infrastructure Flexibility H5 H6 H1 Process-Oriented Dynamic Capabilities (PDCs) Firm Performance • perceived financial performance H2 IT Personnel Expertise Figure 1. Research Model In order to test the integrity of the research model, the study proceeds as follows. In section 2, we review existing literature and theories and characterized and propose relevant hypotheses. We describe details of the research method utilized for this study in Section 3. Section 4 summarizes the results of our data analysis based on structural equation modeling. Section 5 discusses the findings and contribution of this work from two different perspectives. Section 6 concludes by discussing the limitations of this study and possible directions for future research. 2. Literature and Hypotheses 2.1. IT and Firm Performance Early studies of IT business value examined the impact of IT investment on organizational performance, primarily at the firm level (Melville, Kraemer, & Gurbaxani, 2004). Many of them relied on the production function approach (or black box approach), in which a mathematical specification is defined based on microeconomic theory, and utilized to link production inputs (e.g., labor, IT, other capital) and outputs (e.g., quality and quantity) directly (e.g., Brynjolfsson & Hitt, 1996). However, this research paradigm was grounded on the simplistic idea that IT provides the tools necessary to transform inputs to outputs effectively (Orlikowski & Iacono, 2001). Early empirical studies that relied on the black box approach lack consistency in explaining the association between IT investment and organizational performance; they set off the controversy of the IT productivity paradox (Brynjolfsson, 1993). To tackle the productivity paradox problem, arguments have been made that research on IT business value should investigate the effects of IT on business processes (Ray, Barney, & Muhanna, 2005). Proponents point out that it is the process (e.g., a better way of doing things) rather than the product where IT makes a true impact (McAfee & Brynjolfsson, 2008). Naturally, relying on the black box approach means a loss of statistical power in determining the meaningful relationship between IT investment and organizational performance because of the large distance (i.e., temporal gap) between them (Barua Kriebel, & Mukhopadhyay, 1995). Studies grounded on the process model have shown more consistent and explanatory results (Ravichandran & Lertwongsatien, 2005). 489 Journal of the Association for Information Systems Vol. 12 Issue 7 pp. 487-517 July 2011 Kim et al. / IT Capabilities & Firm Performance Recently, researchers have depended primarily on the resource-based view (RBV) as the main theoretical framework to understand the relationship between IT and its business value. The RBV argues that competitive advantage emerges from unique combinations of resources that are economically valuable, scarce, and difficult to imitate (Barney, 1991; Grant, 1991). These resources are heterogeneously distributed across firms, and their innate traits--such as path dependency, embeddedness, and causal ambiguity--make them a springboard for competitive advantage (Barney, 1991). The IT capability literature recognizes that competence in mobilizing and deploying IT-based resources is a source of competitive advantage and differentiates firm performance (Bharadwaj, 2000; Piccoli & Ives, 2005; Ha & Jeong, 2010). As seen in Table 1, recent studies of IT capabilities performed on the basis of RBV take both direct (e.g., Bhatt & Grover, 2005; Powell & Dent-Micallef, 1997) and indirect (e.g., Pavlou & El-Sawy, 2006; Tippins & Sohi, 2003) views in understanding the linkage between IT capabilities and firm performance. Studies grounded on the two research paradigms generally report positive associations between IT capabilities and firm performance. Table 1. Summary of RBV-based Studies Study Type Linkage between IT Capabilities and Firm Performance Statistical Significance of Links Mata, Fuerst, and Barney (1995) Conceptual Direct N/A Ross Beath, and Goodhue (1996) Conceptual Direct N/A Empirical Direct IT human resources  firm performance (o) Business resources  firm performance (x) Technology resources  firm performance (x) Bharadwaj, Sambamurthy, and Zmud (1998) Conceptual Direct N/A Bharadwaj (2000) Empirical Direct IT capability  firm performance (o) Santhanam and Hartono (2003) Empirical Direct IT capability  firm performance (o) Tippins and Sohi (2003) Empirical Indirect IT competency  organizational learning (o)  firm performance (o) Sambamurthy, Bharadwaj, and Grover (2003) Conceptual Indirect N/A Melville et al. (2004) Conceptual Indirect N/A Empirical Indirect Related Studies Powell and DentMicallef (1997) Ravichandran and Lertwongsatien (2005) Bhatt and Grover (2005) Empirical Direct Pavlou and El-Sawy (2006) Empirical Indirect IT capabilities  IT support for core competencies) (o)  firm performance (o) IT infrastructure quality  competitive advantage (o) IT business expertise  competitive advantage (o) relationship infrastructure  competitive advantage (o) IT leveraging competence  process capabilities (dynamic and functional) (o)  competitive advantage (o) Note: (o) significant link, (x) insignificant link Journal of the Association for Information Systems Vol. 12 Issue 7 pp. 487-517 July 2011 490 Kim et al. / IT Capabilities & Firm Performance 2.1.1. PDCs and financial performance As stated, PDCs represent a firm’s capacity to change organizational processes to achieve better integration, cost reduction, and business intelligence. Enhanced PDCs, thus, should increase the effectiveness of a firm’s operational processes by allowing the acquisition and assimilation of internal and external knowledge, configuration/reconfiguration of the resource base, and deployment/redeployment of resources to be aligned with the firm’s corporate vision (Liao, Kickul, & Ma, 2009). Firms with excellent PDCs are expected to remedy ineffective operational processes better, faster, and cheaper than the competition, and turn them into processes responsive to changing business environments (Butler & Murphy, 2008; Eisenhardt & Martin, 2000). Such firms can outperform competitors by reacting more effectively to changing environments through enhanced communication, coordination, and information-sharing (Tippins & Sohi, 2003). Also, PDCs can result in timely and accurate decision making (Davenport & Short, 1990; Eisenhardt & Martin, 2000; Sher & Lee, 2004). Excellent PDCs, therefore, are expected to engender better firm performance and give firms a competitive advantage (Pavlou & El-Sawy, 2006; Rothaermel & Hess, 2007; Zollo & Winter, 2002). However, the presumption that stronger PDCs automatically result in better financial performance should be made with caution, because the benefits of process improvement may be diluted or neutralized before they affect a firm’s financial performance, which is the ultimate bottom line. For example, the benefits may be shared with business partners in such forms as incentives, or they may be channeled to improve customer satisfaction through lower costs and higher product/service quality (Hitt & Brynjolfsson, 1996; Ray, Barney, & Muhanna, 2004). Accordingly, our empirical efforts examine the relationship between a firm’s PDCs and its financial performance by hypothesizing that: Hypothesis 1: PDCs of a firm are positively associated with its financial performance. 2.2. IT Capabilities and PDCs The IT function is an independent organizational function, just like marketing or R&D. Most IS studies utilize a taxonomy of organizational resources, as outlined by Grant (1991) or Barney (1991), as their theoretical basis. Grant (1991) divided organizational resources into tangible, personnel-based, and intangible resources. Barney (1991) categorized organizational resources into physical capital, human capital, and organizational capital resources. These taxonomy schemes, although they differ in their terminology, are similar in that they reflect physical (e.g., equipment), human (e.g., individual skill or knowledge), and organizational (e.g., structure, rules, relationships, and culture) aspects. Table 2 summarizes typologies of IT resources or capabilities that previous studies have introduced. One notable observation is that most IS studies utilize taxonomy schemes in which physical and human resources/capabilities are consistently mapped onto IT functions (e.g., technical IT resources and human IT resources). However, efforts to translate organizational resources/capabilities into those germane to the IT function in a systematic fashion have been generally lacking (Melville et al., 2004). Table 2 demonstrates that organizational resources investigated by existing studies can be classified more divergently than simply as physical or human resources. In addition, certain variables in studies of organizational resources/capabilities (e.g., access to capital, business resources, complementary organizational resources, and culture of IT use) are not necessarily native to the IT function. The lack of such definitional convergence in organizational IT resources/capabilities research makes it difficult to track the cumulative progress of the domain research. The IT function encompasses tasks that are highly distinct from other business functions, and accordingly, IT personnel develop, retain, and reproduce their own organizational resources/capabilities. For example, the IT function has its own rules (e.g., prioritization of IT projects, performance measures of IT function and staff), structures (e.g., distribution of IT function to business units), policies (e.g., IT roadmap and vision, IT enterprise architecture, balancing strategic and tactical initiatives of IT), business relationships (e.g., appointment of IT relationship managers), and other things (e.g., IT compliance to regulation, IT sourcing, and rolling budget plans in sync with changing business strategies) necessary to design, deploy, and manage IT infrastructure and support business clients (Bharadwaj, 2000; McKeen & Smith, 2008). 491 Journal of the Association for Information Systems Vol. 12 Issue 7 pp. 487-517 July 2011 Kim et al. / IT Capabilities & Firm Performance Table 2. Typologies of IT Resources or Capabilities Typologies Related studies Physical aspect Human aspect Organizational aspect Mata et al. (1995) • Proprietary technology • Technical IT skills • Managerial IT skills • Access to capital • Customer switching costs Ross et al. (1996) • Technical assets • Human assets • Relationship assets • IT human resources • Business resources Powell and Dent-Micallef • Technology resources (1997) Bharadwaj et al. (1998) • External IT linkages • IT infrastructure • IT business process integration • Business IT strategic • IT management thinking • IT/business partnerships Bharadwaj (2000) • Tangible resource • Human IT resources • Intangible IT-enabled resources Tippins and Sohi (2003) • IT objects • IT knowledge • IT operations Melville et al. (2004) • Technical IT resources • Human IT resources • Complementary organizational resources Ravichandran and Lertwongsatien (2005) • IT infrastructure flexibility • IS human capital • IS partnership quality Bhatt and Grover (2005) • IT infrastructure quality • IT business experience • Relationship infrastructure Pavlou and El Sawy (2006) • Acquisition of IT resources • Leveraging of IT resources • Deployment of IT resources Aral and Weill (2007) • IT assets • IT skills • IT management quality (skills) • Culture of IT use • Digital transactions • Internet architecture The majority of these organizational IT resources/capabilities represents relevant issues of IT governance in terms of planning, investment decision-making, coordination, and control (Boynton & Zmud, 1987). These IT-native organizational capabilities are highly divergent among firms, and at the same time, markedly different from other traditional, more business-driven forms of organizational capabilities. In fact, one of many challenges that CIOs face is the lack of a supportive governance structure tailored to the IT function (McKeen & Smith, 2008). This leads us to believe that IT management capability--manifested by planning, investment decision, coordination, and control--is a primary indicator of a firm’s organizational capabilities. Subsequently, in parallel with the taxonomy (physical, human, organizational aspects) suggested by Barney (1991), we propose that IT infrastructure flexibility, IT personnel expertise, and IT management capability constitute the primary dimensions of IT capabilities. 2.2.1. IT personnel expertise and PDCs IT personnel expertise is defined as professional skills and knowledge of technologies, technology management, business functions, and relational (or interpersonal) areas necessary for IT staff to undertake assigned tasks effectively (Lee, Trauth, & Farwell, 1995). Technology knowledge is the understanding of an organization’s IT elements, including operating systems, programming languages, database management systems, and networking; technology management knowledge is necessary for IT resource management and includes planning, deployment, and operation; business function knowledge is the understanding of internal business units and environments; and relational (or interpersonal) knowledge is the IT staff’s ability to communicate and collaborate with people from business functions. Business operations should be able to meet emerging challenges. With IT infrastructure becoming the backbone of business operations, IT staff should be familiar with managerial, relational, and business issues to be able to formulate adequate IT solutions according to changing business requirements (Rockart, Earl, & Ross, 1996; Kim, 2010). Growing such professional knowledge in an Journal of the Association for Information Systems Vol. 12 Issue 7 pp. 487-517 July 2011 492 Kim et al. / IT Capabilities & Firm Performance IT workforce is a slow and gradual process (Mata, Fuerst, & Barney, 1995) that tends to be more localized and particular to each organization (Sambamurthy & Zmud, 1997), and therefore, is hard for competitors to imitate in a short time span (Bharadwaj, 2000; Mata et al., 1995). Firms with competent IT expertise can meet competitive demands by aligning IT strategies with business strategies, developing reliable and cost-efficient systems, and anticipating IT needs for business services better than competitors do (Bhatt & Grover, 2005; Sambamurthy & Zmud, 1997; Santhanam & Hartono, 2003). Firms lacking IT expertise are unable to redesign business processes quickly when market circumstances change (Rockart et al., 1996). We, therefore, hypothesize that IT expertise grows a firm’s capacity to reconstruct its business processes better than market competitors can. Hypothesis 2: A firm’s IT personnel expertise is positively associated with its PDCs. 2.2.2. IT infrastructure flexibility and PDCs IT infrastructure refers to the composition of all IT assets (e.g., software, hardware, and data), systems and their components, network and telecommunication facilities, and applications (Byrd & Turner, 2000; Duncan, 1995). IT infrastructure flexibility enables IT staff to develop, diffuse, and support various system components quickly, to react to changing business conditions and corporate strategies such as mergers, acquisitions, strategic alliances, global partnerships, or economic pressures (Keen, 1991; Weill, Subramani, & Broadbent, 2002). It empowers the development of a common system that links business functions and enables their synergistic engagement (Bharadwaj, 2000; Rochart et al., 1996). A firm with a flexible IT infrastructure can, therefore, take better advantage of existing IT resources to exercise business strategies and support necessary structural changes (Boar, 1996). Such IT capability becomes a valuable asset for an organization in sustaining competitive advantages in the marketplace (Rochart et al., 1996). In today’s business environment, where rapid changes and uncertainties have become normal, having a flexible IT infrastructure is crucial (Rochart et al., 1996). Studies indicate that IT infrastructure flexibility can be manifested by a firm’s (1) connectivity among intra- and interorganizational system functions; (2) compatibility, which empowers the exchange of information and data regardless of system or technology components; and (3) modularity, in which system and software components can be easily added, modified, and removed in the form of modules (Duncan, 1995; Keen, 1991; Byrd & Turner, 2001). Flexibility in IT infrastructure enables strategic innovations in business processes by allowing development of necessary applications, facilitating informationsharing across business units, and making it easy to develop common systems integrating various organizational functions (Bharadwaj, 2000; Rochart et al., 1996). Accordingly, IT infrastructure flexibility is a source of strategic ability for a firm (Weill et al., 2002), a foundation on which better business processes can be built. Therefore, we hypothesize that: Hypothesis 3: A firm’s IT infrastructure flexibility is positively associated with its PDCs. 2.2.3. IT management capability and PDCs IT management is a centrally controlled or heterogeneously distributed IT function across firms (Bhatt & Grover, 2005; Boynton, Zmud, & Jacobs, 1994) and is manifested by the collection of IT processes in the areas of planning, investment decision-making, coordination, and control. IT management capability is the IT staff’s ability to manage resources in order to transform them into business value at an organization (Peppard, 2007). It is generally reflected by the level at which such processes are structured in formal and informal practices. IT planning focuses on formal or informal procedures and protocols to attain stated goals as to how IT can support or even strengthen a firm’s strategic position. IT planning structure contributes to the formation of a shared understanding of IT values and fosters collaboration among IT people to achieve common goals. Accordingly, an organization with effective IT planning can identify innovative and useful IT applications, is competent at introducing and utilizing IT, manages IT projects according to its priorities, and makes efforts to retain formalized and long-range IT strategies (Keen, 1991; Sabherwal, 1999). 493 Journal of the Association for Information Systems Vol. 12 Issue 7 pp. 487-517 July 2011 Kim et al. / IT Capabilities & Firm Performance IT investment decision-making is grounded on the assumed value of IT in supporting or strengthening a firm’s strategic position. Firms differ in their processes of investment decision-making; these differences lead to discrepancies in terms of firm revenue, user system adoption, and subsequent organizational performance (Ryan & Harrison, 2000; Ryan & Gates, 2004; Ryan, Harrison, & Schkade, 2002). Also, having superior resource-selecting mechanisms is critical for firms to take advantage of market resources (Makadok, 2001). With the far-reaching implications of IT investmentrelated activities for productivity, decision quality, cost management, and other aspects of business operations and subsequent performance, investment decision-making needs to be structured through such mechanisms as enterprise funding models (McKeen & Smith, 2008). IT coordination represents efforts to synchronize various interactive efforts among the units of IT management via various mechanisms, including the report system, direct contact, task forces, and cross-functional teams (DeSanctis & Jackson, 1994). The cross-functional team is generally known to be the most effective structural design for IT coordination. Moreover, such distinctive characteristics as the patterns and frequency of interactions affect the ultimate effectiveness of IT coordination (Fulk & Boyd, 1991). A firm with a strong IT coordination structure better accommodates client suggestions and ideas, and encourages informal and formal gatherings of IT and business people to address pending issues (Boynton et al., 1994; Karimi, Somers, & Gupta, 2001). At organizations with a high degree of IT control, key line managers establish means to lay out IT budgets, prioritize IT functions, control IT resource-planning, and define the roles and responsibilities of IT staff (Karimi et al., 2001). Such firms can adequately assess proposals for IT projects, monitor the performance of an IT organization (or department), and handle important decision making on the development and operation of IT according to the chain of control (Boynton et al., 1994; Karimi et al., 2001). Accordingly, firms with low IT control are expected to be weak in terms of the governance structure (rules, procedures, and policies) designed to control IT-related activities. As the successful implementation of business process innovations requires deployment of the right IT to the right business process (Melville et al., 2004), firms with competent IT management are expected to have better internal processes for agile transformation than the competition, and are, thus, more likely to be prepared for change (Weill et al., 2002). Hypothesis 4: A firm’s IT management capability is positively associated with its PDCs. 2.3. Interrelationships among IT Capabilities 2.3.1. IT personnel expertise and IT management capability Organizations with competent IT staff are better at integrating IT and business planning, making investment decisions based on anticipated business needs, engaging in effective communications with business units, and executing systematic controls to achieve determined goals (Sambamurthy & Zmud, 1997). In fact, one of the main duties of IT staff is to develop and reinforce IT management capabilities by structuring various processes into adequate formal and informal practices. IT personnel play a role in cultivating such IT management capabilities (Feldman & Pentland, 2003; Feldman, 2000). The agency that participates in these processes must have the capability to recall the past, project into the future, and adapt to existing circumstances as necessary. If existing processes cannot realize intended outcomes or result in undesirable consequences, the agency will make changes to the processes, thus advancing IT management capabilities. The course of such changes will rely on whatever collective IT expertise the agency can mobilize. Accordingly, it is anticipated that IT personnel with knowledge (or expertise) of technologies, IT management, business functions, and interpersonal relationships will perform better in advancing IT management capabilities. Hypothesis 5: A firm’s IT personnel expertise is positively associated with its IT management capability. Journal of the Association for Information Systems Vol. 12 Issue 7 pp. 487-517 July 2011 494 Kim et al. / IT Capabilities & Firm Performance 2.3.2. IT personnel expertise and IT infrastructure flexibility IS researchers recognize the importance of IT professionals’ contribution to the flexibility of an organization’s IT infrastructure (Byrd & Turner, 2001). Competent IT staff are able to integrate baselevel IT resources and components into the IT infrastructure of an organization (Broadbent, Weill, & Clair, 1999; Broadbent and Weill, 1997). IT professionals can also integrate IS components to shape the capability of an IT infrastructure shared among various organizations (Byrd & Turner, 2001). Through interviews with 21 CIOs and executives from Fortune 500 firms, Duncan (1995) found that a flexible IT infrastructure is achieved by having a capable IT workforce that can balance competence in business and IT issues. Technical expertise is crucial to effectively integrate old and new systems and successfully assimilate new systems in an organization (Duncan, 1995; Ross et al., 1996). Also, IT personnel with in-depth business knowledge can better comprehend business issues, project IT implementation needs, and align IT and business strategies. Superior IT expertise is, therefore, a prerequisite to a flexible IT infrastructure. Hypothesis 6: A firm’s IT personnel expertise is positively associated with its IT infrastructure flexibility. 2.3.3. IT management capability and IT infrastructure flexibility IT management processes go hand in hand with IT personnel expertise to create a flexible IT infrastructure (Tippins & Sohi, 2003), guiding people to deploy, coordinate, and integrate IT infrastructure components quickly and adequately. As an IT infrastructure develops over time, IT management processes of distributing and managing various resources, including hardware, software, data, and networks, are formed and perfected (Ross et al., 1996), providing guidance for IT personnel and establishing the necessary conditions for flexibility (Duncan, 1995). These processes are crucial to blending various inputs (technological components, IT personnel, etc.) into an integrated IT infrastructure (McKeen & Smith, 2008). Increasing IT management capability through extended learning-by-doing experience, therefore, is important to develop a flexible IT infrastructure that enables quick adaptation to change (Bharadwaj, 2000). Hypothesis 7: A firm’s IT management capability is positively associated with its IT infrastructure flexibility. 3. Research Method 3.1. Survey Development Table 3 summarizes the operational definitions of our study constructs. All the measures, presented on a 7-point Likert scale, were drawn from previous literature and adapted to serve the purpose of this study. To develop the survey items, we initially generated a scale item pool from the existing literature comprised of more than 130 question items. In order to reduce the number of items to a manageable size, we went through several pretests. Key informants about IT capabilities, PDCs, and financial performance can differ in their responses. Therefore, IT executives and faculty colleagues participated in the pretest of the initial items in the survey of IT capabilities, while business executives and faculty colleagues pretested on PDCs and financial performance. We performed the pretest of measures for PDCs and financial performance after establishing the IT capabilities measures. In the case of IT capabilities, we first examined the survey items using the focus group interview. This group consisted of three faculty colleagues who were knowledgeable about our research subject as well as the measurement theory, and five senior IT managers with practical knowledge in IT infrastructure. This group of people met three times within a two-week period to examine the content validity of the research instrument. Each time they met, the participants gradually reduced the number of items through intensive discussion. This led to a revised 50-item questionnaire that we subsequently used for another round of pretests with 20 senior IT managers. For this round, each participant was asked to complete the questionnaire and, during the debriefing period, to offer any suggestions for improvement. Again, from this process, we dropped a few items and made several minor refinements of the remaining items. The final result was a research instrument with 46 items (refer to Appendix A). 495 Journal of the Association for Information Systems Vol. 12 Issue 7 pp. 487-517 July 2011 Kim et al. / IT Capabilities & Firm Performance We then mailed this questionnaire to another group of 20 senior IT managers for a pilot test. Followup interviews with these managers indicated no need for substantive changes to the questionnaire. For the measures of PDCs and financial performance, the process of identifying survey items was identical to that for IT capabilities, and was performed with business executives and faculty colleagues. Three colleagues and five business executives participated in the focus group interview; subsequently, 10 business executives participated in both the pretest and the pilot test. Table 3. Definitions of Study Constructs and Antecedent Variables Constructs Dimensions IT personnel expertise Definition The level of professional skills or knowledge of IT staff IT staff’s knowledge about technical elements, including Technical operational systems, programming languages, database management systems, and networking Technology management Business functional Relational (interpersonal) IT infrastructure flexibility IT staff’s knowledge of IT resource management necessary to support business goals IT staff’s understanding of various business functions and business environment IT staff’s ability to communicate and work with people from other business functions The ability of a firm’s IT infrastructure to enable quick development and support of various system components Connectivity Ability to connect internal and external IT elements Compatibility Ability to share various types of information and data regardless of technical basis Modularity Ability to add, remove, and modify system or software components IT management capabilities IT planning The ability of a firm to manage IT resources to deliver business value The level at which the planning of IT deployment and utilizations is structured according to formal and informal procedures IT investment The level at which investment decision-making about IT resources decision-making is structured according to formal and informal procedures The level at which coordination efforts between IT staff and IT coordination business clients are structured according to formal and informal procedures The level at which IT control activities (e.g., development, IT control management, and operation) are structured according to formal and informal procedures Process-oriented dynamic capabilities A firm’s competence to change existing business processes better than its competitors do in terms of coordination/integration, cost reduction, and business intelligence/learning Perceived financial performance Overall financial performance over the past three years Journal of the Association for Information Systems Vol. 12 Issue 7 pp. 487-517 July 2011 496 Kim et al. / IT Capabilities & Firm Performance 3.2. Sampling and Data Collection We collected study data through a field survey. The firms in the DART System (an electronic system for public announcement), supervised by the Financial Supervisory Service of the Korean Government, were adopted as a sampling frame. This system includes a mailing list of 1,835 firms, comprising 629 firms listed on the Korea Stock Exchange, 857 firms listed on the Korea Securities Dealers Automated Quotation (KOSDAQ), and 349 unlisted firms. From this sampling frame, we chose a random sample of 800 firms to provide potential respondents. To choose potential respondents, we utilized the key informant methodology in which respondents were chosen based on their position, experience, and professional knowledge rather than by the traditional random sampling procedure (Segars & Grover, 1999). In survey research, such key informants, with their practical experience and organizational position, provide reliable information on group-wise or firm characteristics that is less biased by personal attitudes or behaviors. The key informants included such high-level executives as CIOs, directors, and senior managers. We identified two key informants--one from an IT department (specifically, the IT strategy and IT planning departments) and the other from a business department--from each firm as a matching response set, curtailing the risk of common method bias. They confirmed that their organizations had a formal and sizable IT function and agreed to respond to the survey. Non-IT persons answered survey questions on perceived financial performance and PDS, and IT people answered those on IT capabilities. Four weeks after the initial mailing, we sent a follow-up survey to those individuals who did not return the completed questionnaire. Overall, 375 firms responded to the IT survey and 395 firms responded to the business survey. The process of matching the two data sets yielded 251 pairs of complete responses (and, therefore, a dataset of 251 firms). We dropped five IT survey responses and three business survey responses from further consideration because they were incomplete. Thus, the final sample consists of 243 response sets (103 firms listed on the Korea Stock Exchange, 85 firms listed on the KOSDAQ, and 55 unlisted firms) with a joint response rate of 37.1 percent. To check for nonresponse bias, we compared the profiles of survey respondents and those on the mailing list, and of early and late respondents, in terms of organization size and industry. The results of Chi-square tests revealed no differences, confirming the absence of non-response bias. The organizations in the sample represent diverse industry groups. Twenty-nine percent of the responding firms are in manufacturing; 23.9 percent are in the telecommunication and IT industries; 17.3 percent are in the financial services, banking, and insurance industries; 14 percent are in retail; and 15.6 percent are in transportation and utilities. Except for the unlisted firms, the average number of people employed in these firms is 4,277, and the average revenue of the firms is US$447 million. A significant number (47.7 percent) of the respondents are either CIOs or vice presidents in the IT division. The job titles of the other respondents (senior vice president, vice president of technology, assistant vice president, director of information technology) indicate that they are also senior IT executives. In addition, 50.6 percent of respondents who answered the questions on organizational performance are at the rank of senior vice president, vice president, assistant vice president, or director. All respondents indicated that they are within two levels of the highest position in their organizational hierarchy. 3.3. Construct Validity Reliability verification of the measurement models was done through confirmatory factor analysis (CFA) using LISREL. Before conducting the analysis, we checked two important assumptions underlying CFA: multivariate normality and model identification (Segars & Grover, 1999). The multivariate normality test conducted on the PRELIS function of LISREL revealed a departure of the survey data from multivariate normality. We, therefore, utilized normalized scores to fit the research model to the data set, as suggested by Jöreskog, Sörbom, Du Toit, and Du Toit (2001). After the scores had been normalized, a simple test using LISREL found no model identification problem. In the initial examination of the measurement models, we deleted only one item (MD4) of the modularity variable due to lack of reliability. Then we conducted a series of empirical tests, as recommended by Spanos and Lioukas (2001), to examine the construct validity (e.g., unidimensionality, reliability, and convergent and discriminant validity) of our first-order indicators. As 497 Journal of the Association for Information Systems Vol. 12 Issue 7 pp. 487-517 July 2011 Kim et al. / IT Capabilities & Firm Performance shown in Appendix B, the first-order indicators achieved a satisfying level of construct validity. We assessed discriminant validity among the three second-order IT capabilities with the Chi-square difference test (Venkatraman, 1989). The results demonstrated that the three second-order constructs are statistically distinct concepts at the significance level of 0.00001 (see Appendix C). 4. Analysis Results The research model was intended to examine relationships among the studied variables. Among the variables, IT capabilities (IT personnel expertise, IT management capabilities, and IT infrastructure flexibility) are manifested by lower-order conceptual dimensions and accordingly positioned as second-order constructs in our research. In addition, perceived financial performance might be affected by such business factors as industry type and firm size; therefore, they are utilized as control variables. Industries were classified into manufacturing and non-manufacturing types, and firm size was divided into five categories (100, 300, 500, 1000, and 3000) in terms of the number of employees. Figure 2 summarizes the estimation of path coefficients and subsequent results of hypothesis testing. Path coefficients indicate that IT personnel expertise strongly affects IT management capabilities (β= 0.91, t = 10.01, p < 0.01), but its influence on IT infrastructure flexibility is not substantiated. However, we observe a significant influence of IT management capabilities in enhancing IT infrastructure flexibility (β= 0.70, t = 3.41, p < 0.05). Both IT personnel expertise (β= 0.48, t = 2.24, p < 0.05) and IT infrastructure flexibility (β= 0.37, t = 2.21, p < 0.05) exhibit considerable influence on growing PDCs. We do not see a direct effect of IT management capabilities on PDCs. Finally, the level of PDCs is positively associated with perceived financial performance (β= 0.35, t = 5.25, p < 0.01). Planning Investment Coordination R2=0.83 IT Management Capabilities -0.21 (-0.82) Control 0.70* (3.41) 0.11 (1.81) Connectivity Compatibility 0.91** (10.01) IT Infrastructure Flexibility Modularity R2=0.71 0.48* (2.24) Technical Business 0.37* (2.21) 0.35** (5.25) PDCs Firm Performance R2=0.38 R2=0.21 0.27** (4.46) 0.15 (0.78) Tech. Mgt. Firm Size Industry IT Personnel Expertise significant insignificant Relational Note: *P < 0.05, **P < 0.01 Figure 2. Analysis Results Journal of the Association for Information Systems Vol. 12 Issue 7 pp. 487-517 July 2011 498 Kim et al. / IT Capabilities & Firm Performance Figure 3 shows a version of the model in which we add direct paths from the three different types of IT capabilities to firm performance to Figure 2 to test whether IT capabilities have both direct and indirect influences on firm performance. We observe no statistically significant relationship for the direct paths. This confirms the integrity of the proposed model in Figure 2, in which PDCs fully mediate the contribution of IT capabilities to firm performance. Planning Investment Coordination R2=0.83 IT Management Capabilities 0.42 (1.56) -0.23 (-0.89) Control 0.70** (3.42) Connectivity Compatibility 0.91** (9.98) 0.37* IT Infrastructure (2.20) Flexibility 0.09 (1.56) 0.31* (3.48) PDCs Financial Performance R2=0.38 R2=0.71 R2=0.23 0.27** (4.42) 0.49* (2.30) Technical Business 0.42 (0.01) Modularity 0.15 (0.80) Tech. Mgt. Firm Size -1.41 (-0.32) Industry IT Personnel Expertise Relational significant insignificant Note: *P < 0.05, **P < 0.01 Figure 3. Additional Analysis 5. Discussion We frame the discussion of data analysis in this section in terms of two main research contributions: (1) uncovering the indirect role of IT capabilities on a firm’s financial performance through the augmentation of PDCs, and (2) understanding the internal dynamics among IT capabilities. 5.1. IT Capabilities and Firm Performance We examined the process in which ...
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Running head: INFORMATION TECHNOLOGY SHORT ANSWERS

Information Technology Short Answers
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INFORMATION TECHNOLOGY SHORT ANSWERS

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Information Technology Short Answers
Introduction
To understand the role of technology in organizations today, there is a need to analyze the
risk factors impacting implementation of information systems, challenges of managing culturally
diverse project teams, actions that can be used to enhance IT capabilities, factors to consider
before implementing a cloud-based database.
Discussion
Question 1: Risk Factors Impacting Implementation of Information Systems
There are two major risk factors that affect the implementation of information systems:
(a) active support of the management; (b) and complying with the established methodology
(Denic, et al., 2014). To begin with, the management has to actively support the implementation
of the Enterprise Resource Planning project through all the steps since the management has to
ensure that it meets the business objectives and that it is explained as a high priority to the
personnel in order to ensure maximum commitment. The methodology of implementation has to
be followed as an ERP has some specific processes that have to be followed in order to ensure
maximum effic...


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