An Investigation of IT Effects on Various Aspects of

Organizational Effectiveness

Pituma Panthawipituma@nectec.or.th

Summarized from a Dissertation submitted to the Faculty of the Claremont GraduateUniversity in Partial Fulfillment of the Requirements for a Ph.D. Degree in the

Management of Information Systems

ABSTRACT -By incorporating level of infonnation technology (IT) investment, availability ofhardware and software, computer efficacy of employees, and competency of IT staff in providing servicesin the examination of organizational IT, and by assessing organizational adaptability, productivity,integration, as well as employee cohesion and development, this study found evidence which indicatespositive effects of IT on organizational perfonnance. However, the fmdings suggest that the relationbetween IT and perfonnance is by no means simple and straight-forward. That is, the study discovered thatcontextual conditions of particular organizations (e.g., working culture, competing strategy) appeared to actupon their success in gaining positive IT effects and type of effects they received.

KEY WORD S -Organizational Effects of IT, IT and Organization, IT Productivity Paradox

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1. Research Purpose andImportance

Apparently, IT has become an importantcomponent of organizations. However, researchershave not found an all-agreed conclusion of whetheror not the IT-organizational performance relationreally exists. For example, Brown et al. (1995)found that firms which were leaders in theemployment of strategic information systems

experienced greater profitability compared to theirindustrial indexes. By contrast, Kivijarvi and Saarinen(1995) did not detect significant differences inprofitability between firms with varying intensities ofinformation system investment.

This research investigates the impact ofinformation technology (IT) on organizationalperformance. However, the fundamental purpose ofthe study is not to provide a statistically derivedconclusion in regard to the relation between IT andorganizational performance. Rather, its mission is to

mayor may not be induced by the investment, arealso parts of organizational IT. Therefore, they tooare likely to have substantial effects on the IT -performance relationship. Similarly, profitabilitycannot invariably and thoroughly reflect theperformance of fIrmS. Profitability is affected bynumerous external factors (e.g., economic condition,governmental regulations), therefore it is 'possible thatan operationally effective organization may not dowell fmancially.

Due to these deficiencies, the study looks atIT investment, IT capacity, user computer efficacy, aswell as IT staff competence to measure organizationalIT. Similarly, for performance measurement, insteadof using profitability indicators, this study employsfour sets of criteria which reflect organizationaleffectiveness. These sets of criteria are adaptability,productivity, integration, and employee cohesion anddevelopment. Adaptability refers to the ability oforganizations to adapt to changes. Productivity refersto organizational efficiency in work output planingand producing. Integration refers to the ability tointegrate and stabilize various internal componentsinto a collective whole. Lastly, employee cohesionand development refers to the ability of organizationsto maintain morale and cohesion among theemployees and to help them develop knowledge andskills.

gain further understanding to explain theinconsistency of the previous fmdings.

For this study, IT refers to the availabilityof IT resources within organizations. Theseresources are comprised of not only the IT tangibles(e.g., hardware, software, and telecommunicationdevices) but also the knowledge to effectivelyutilize these tangibles. In addition, unlike manyprevious studies within the IT-ftrm performanceresearch domain, the tenn organizationalperformance will not restrictively refer to fmancialaccomplishment of organizations. Instead, the studyutilizes several effectiveness criteria to assessperformance.

Previous studies defmed and measured ITand ftrm performance constructs, and determinedwhether the relation was positive, negative, or non-existent based on the observed variation (or lack ofvariation) in the value of the perfonnance variabledue to the change in the value of the IT variable.These studies typically involved a large number oforganizations since the principal focus was on thestatistical validity of the relation. As a result, thesestudies generally sacrificed the 'depth' (i.e., in-depth investigations within each organization) forthe 'width' (i.e., number of organizations included)of their investigations.

These previous studies employed variousmeasures and/or surrogates for IT andorganizational perfonnance constructs. However,the one most commonly used surrogate for IT wasIT investment; whereas measures of perfonnanceincluded, almost solely, those reflecting profitabilityof organizations for example, return on investment(ROI) and return on asset (ROA). Collectively,previous empirical fmdings indicated inconsistentresults. Restrictive IT and organizationalperforn1ance measures may indeed contribute to theobserved contradiction in the findings. That is, ITinvestment does not represent the completeconstruct of IT within organizations. For example,user IT competency and IT staff competency, which

Furthermore, the impact of IT onperfonnance of organizations should not be studiedout-of-context as many of the previous studiestypically did. IT effects may vary from oneorganization to another since any particularorganization operates within its own environmentalcontext which differs from that of any otherorganization's. Hence, this research does not restrictits investigation solely to IT and performance. Thestudy examines the environments of the organizationsas well. Environmental differences may also explainthe discrepancy in the previous fmdings.

I~~~~~~~] r~~~~~Out-Or-ContextPrevious Studv

Organizational ContextThis Study

Fi~re I. Research Model

The study possesses both qualitative andquantitative characteristics. As a whole, theresearch is qualitative in the sense that itinvolves in-depth examinations of only a smallnumber of units of analysis (i.e., organizations)and it is not aimed at statistical hypothesistesting. However, the quantitative characteristicsof the study are shown in its operationalizationof the IT and performance variables. That is, thestudy employs concrete instruments to measurethese variables. Furthermore, the study utilizessome statistical analyses on the collected data.Nevertheless, as mentioned earlier, the mainpurpose of the study is not to draw a statisticalconclusion for any particular relation. Theresults obtained from these statistical analyseswill be coupled with the insights obtained fromthe in-depth exploration of the organizationalconditions to produce further understandingregarding the impact of IT on organizationalperformance.

In a nutshell, the propositions of this research arethe following:Proposition I The restrictive defmitions of IT andorganizational performance adopted in theprevious studies contributed to the inconsistencyof their fmdings.Proposition 2 The previous studies' omission oforganizational context examination contributed tothe inconsistency of their fmdings.

2. The Eight Case Studies

2.1 Research Approach

This research encompasses in-depth casestudies of IT effects within eight organizations.These organizations are located in Bangkok,Thailand. The organizations being investigatedare in the consumer products. and advertisingindustries. All of these companies are well-knownand large in size. Among these companies, theuse of computers is primarily for informationprocessing and administration. Furthermore, ITpresent in these companies is typically mainstreamrather than high-tech. Table I summarizes thecharacteristics of the eight companies. Due to theconfidentiality agreement between the companiesand the researcher, the companies' names aredisguised.

2.2 Research Instruments

The instruments used in this study arepresented in Table 2. These instruments arepackaged in two questionnaires: IT questionnaireand employee questionnaire. The ITquestionnaire encompasses questions concerningIT investment and IT capacity. For eachparticipating company, the chief informationofficer (CIa) was typically the respondent of theIT questionnaire. The employee questionnaireincorporates the questions regarding usercomputer ability, IT staff competency inproviding services, and organizationaleffectiveness in terms of adaptability,productivity, integration, and employee cohesionand development. Within each firm,approximately 30-50 copies of this questionnairewere randomly distributed among officeemployees. In this study, office employees camefrom various hierarchical levels. However, thegroup did not include manufacturing labor.

Table J Participating Companies

soap, detergent, shampoo, toothpaste, etc.

Table 2 Research Instruments culture, domain of business, and so on. Thoughthese conditions are seemingly non-IT, they tooare parts of the collective organizationalenvironment, and are likely to have influences oneverything that happens within that environment.

This qualitative exploration is alsointended to capture additional insights regardingIT conditions of organizations. As mentionedearlier, this additional qualitative informationwill be used to augment the quantitative dataobtained from the questionnaires. Moreover, thisqualitative exploration also enables theresearcher to extend the study investigation toinclude other IT elements which may not be aseasily quantifiable as those identified in theresearch model. (shown in Figure 1) Examplesof these elements are tension (if any) between ITstaff and users, characteristics of IT use,organization of IT department, overallconfiguration of IT systems, and recognizedsignificance of IT within organizations. Serni-structured, in-depth interviews with IT and userstaff, examination of documents (e.g.,newsclippings, corporate documents), and directobservations are data collection techniques usedin obtaining this qualitative information.

variable I Instrument

[1] IT Investment per

Employee[2] IT Expense per Employee[3] Total IT Budget perEmployee (Invest.+Exp.)[1] Computer per EmployeeRatio[2] Variety and Novelty ofApplication SoftwareMeasured by Computer SelfEfficacy Instrument(Compeau and Higgins, 1995)Measured by the Performance

Compartment ofSERVQUALIrlstrument (Pitt et al., 1995)Measured by ModifiedOrganizational Effectiveness

I Instrument (Rohrbaugh, 1981)

Note: The instrument includesadaptability, productivity,integration, and employeecohesion and developmentcompartments.

2.4 Brief Guidelines for Data AnalysesNevertheless, it is not the intention of thestudy to only rely on the quantitative datacollected via the questionnaires to determine ITand organizational performance. The studyattempts to accommodate these data with moreprofound qualitative exploration as appropriate.Please note that the data collection period of thisstudy began in September 1997 and ended in June1998. During the course of the data collection,Thailand as well as many other countries in theregion were facing a serious economic crisis.

Within each company, linearregressions are conducted between the multi-valued IT variables (i.e., user competence andIT staff competence) and each of the four aspectsof organizational effectiveness (i.e., adaptability,productivity, integration, and employee cohesionand development). A simple rule of thumb isthat if the regression significance is less than0.05, the regression is statistically significant.Therefore, one can conclude that the independentvariables have statistical significance to predictthe dependent variable. Simply put, theregression significance of less that 0.05 suggeststhat the independent variables (i.e., the twomulti-valued IT variables) have an effect on thedependent variables (i.e., one of the four aspectsof organizational performance). The observedeffects (or lack of effects) of IT on particulartypes of performance within each company, arethen explained by level of IT investment, ITcapacity (i.e., availability of hardware andsoftware), and all other IT and organizationalconditions present in that company.

2.3 Examination of OrganizationalContext

As mentioned earlier, this research doesnot snldy the IT-performance relation out-of-context. That is, the investigation of the relationalso involves an exploration of the organizationalenvironn1ent in which the relation takes place.The primary purpose of the exploration is for theresearcher to be aware of organizationalconditions which may affect the relation. Theseconditions include stage of the life-cycle2, currentcompetitiveness, managerial emphases, working

2 Based on the life-cycle model of Quinn and

Cameron. 1983

9: T.echnflfal..-journal.Vol I. No.3. September 1999

3.

Results

As mentioned earlier, for eachorganization, the study performs linear regressionsbetween the two multi-valued IT variables andeach of the four performance aspects. Theregression results are summarized in a graphicalfonn in Figure 2.

Each quadrant represents a particularaspect of organizational performance included inthe research model. That is, the top-rightquadrant represents adaptability performance, thebottom-right quadrant represents productivityperformance, the bottom-left quadrant representsintegration performance, and lastly the top-leftquadrant represents employee cohesion anddevelopment performance. The existence of abox indicates that the two IT variables, together,have statistical significance (i.e., the regressionsignificance is less that 0.05) to predict theparticular performance. In other words, the ITvariables have a statistically significant effect onsuch performance. For example, at company H,the user competence and IT staff competencevariables, together, have a statistical significanceto predict only the productivity effectiveness ofthe company. In other words, the fmdingsindicate an effect of IT on only the effectivenessof the company in its productivity performance.The box in the bottom-left quadrant of firm C isdrawn using a dotted-line because thesignificance of the IT-integration performanceregression of firm C is equal to 0.057.Obviously, this significance value is not lessthan, yet very close to, the 0.05 cut-off point.

As discussed earlier, the observed ITeffects or lack of effects will be explained by ITand organizational conditions of particularcompanies. To make the rationalization easy tocomprehend the regression results, values of ITvariables, and other observed conditions aresummarized and reported in Table 3. The tablelooks rather simple, however its content isactually a result of long and demanding researchinvestigations.

Figure 2 Regression Results

Table 3 Summary of Results

investment

software

ITstaff

user stage outstandingcharacteristics

..i..; perfonnance ettects

A Excellent due toaggressivemarketing strategyenabled by strongfinancial Dower

100(60+40)

0.8 A 3.17 B 3 ~Aggressivecompetitor,Yersatile andInitiative focusedCompany

~

Persistent andConservativeCompetitor,Stable rather thanVersatile companyHave a highlycompetitiveworkingatmosphere

Starting to take alead in certainsegments

103

(6+97)

0.63 A 2.89 A 3

:;to

c114

(51+63)

1 A 3.72 B 3

~-0-- 100

(40+60)

Have a noticeabletension betweenIT and user staff

0.8 A 3.72 c 4

Facing stagnationin sales growthbut having manymoreopportunities inthe horizonNotablydissatisfactory dueto the difficulty inchanging theirtrade practice of--

27I

(7+ i

20) !

E lias expanded intomany differentbusiness domains

Hindered by thecurrent economicmeltdown but stillsurviving

0.21 A 3.38 B

~

4

m

108

(29+79) ~0.56 B+ 3.49 B 4

Had a recentmarketrepositioning of amajor product

Somewnathindered by theeconomic drop butcontinues tomaintain a strong

competitiveposition due tomarketrepositioning of a

~aj~r p~o.d~ct IHaving high II growth in recent iI years but facing

substantial dropthis year due to

governmentalregulations

--a-

49

(20+29)

Have significantdifferences inbusiness practiceacross divisions

0.58 A 3.39 B 3 ~~oTO

H Nodata

Have a highconcern for dataconfidentiality

Somewhathindered by theeconomy butcontinues tomaintain a strongcompetitiveposition

0.73 A 3.46 A 4

-to

4. Discussion

4.1 Pattern of IT effects

Referring to Table 3, one can see thatall of the companies succeed in gaining ITeffects on at least one of the aspects ofperfonnance effectiveness. Evidently, thepattern of IT effects of a particular organizationis generally different from that of anotherorganization. That is, of all the eightparticipating companies, only two of them (i.e.,A and E) obtain the same pattern of IT effects.

Most interestingly, the study fmdsevidence which indicates that there areassociations between organizational practices,resulting effects of IT, and business performanceof organizations. For example, within fInD A,there appears to be an alignment between theobtained IT effects and the business emphases ofthe company. That is, as mentioned in the table,A is an aggressive market competitor.Furthermore, within the company, initiatives areencouraged and valued. Therefore, it is notsurprising to fmd that within this company, IT isnot used in a way that results in integrationenhancement. Reasonably, integrationeffectiveness, which has its focus on stabilizationand control, should not be of substantial interestto the company that largely values inventivenessand readiness to compete aggressively in itsmarket.

The 'investment' column reports IT budgetper employee of each fInD. The two figures in theparenthesis refer to IT capital investment peremployee and IT expense per employeeconsecutively. Please note that the investmentfigures are reported in thousand baht. The 'PC'column reports end-using computer per employeeratios of particular fInDS. In the 'software' column,letter grades are used to illustrate software varietyand novelty of the fInDS. Apparently, the eightcompanies being studied do not have muchdifference in terms of its software advancement.AIIof these fInDS have all the common officeapplications such as word processor, spreadsheet,presentation software, e-mail, etc. available. Someof these companies have video conferencingtechnology in place. Also, customized data queriesare available to the employee users in many of thesefmns.1n comparison to other business companies inThailand, these eight companies are quite advancedin regard to their IT technology. However, amongthese eight, fInD F is slightly less advanced in itssoftware variety and novelty.

The figures shown in the 'user' column arethe mean scores of user computer efficacy measuredby the computer self-efficacy scale. The possiblescore range is from 0 to 5.Zero represents inability;whereas 5 represents excellence. The 'ITstaff'column displays, in letter grades, the user-perceivedcompetencies of the IT staff in providing ITservices. Apparently, firm D is considerablyinferior in this respect. Within fInD D, datacollected via the employee questionnaires indicatesubstantial dissatisfactions of the users towards theircompany's IT staff. Additional insights collectedthrough the interviews are consistent with thequestionnaires' results. The 'stage' column describesthe stage of the life-cycle of each organization. Thenumber '3' refers to the stage of formalization andcontrol (growth); whereas the number '4' refers tothe stage of elaboration of structure (maturity). The'outstanding characteristics' column summarizesobserved characteristics of individual organizations.The 'performance' column describes currentbusiness performance of the eight firms. Finally,the last 'effects' column displays, in a graphicalforms, the IT effects appeared in particularorganizations.

Besides fInn A, finn B is the othercompany that still is doing exceptionally welldespite the cunent national economic slump. Asone may see, the pattern of IT effects of fInn Bdiffers from that of fInn A. For fIrm B, theeffects are on productivity, integration, andemployee cohesion and development but notadaptability effectiveness. Though bothcompanies are doing well, they are distinctivelydifferent with regards to their competingschemes. That is, finn A is a speedy attacker;whereas firm B is a persistent player.Furthennore, these two opponent companies arealso substantially different in their internalworking tradition. That is, for A, cross-functional job rotation is more or less a companynonn; whereas for firm B, it is rare. Forexample, the current HR director of finn Aactually had his education in mechanicalengineering and initially began his career withthe company in the manufacturing function.Conversely, in firm B, it is unusual to find an

Confidentiality is a central concern of[mn H. As an advertising agency, it has to do allit can to protect its clients' infonnation. Afundamental strategy of [mn H is to limit accessof any confidential infonnation only to thosewho really need them. Therefore, there is notmuch infonnation sharing across the companynetwork. As a result, computers are generallyused for producing individual work outputs suchas artwork, client reports, and presentationmaterials. Correspondingly, the researchfindings indicate effects of IT only onproductivity (i.e., output planning andproducing) effectiveness of the company.

Referring to Table 3, one can see that[mn G is the only company that succeeds ingaining positive IT effects on all of the fouraspects of perfonnance. Nonetheless, of all theeight companies included in the study, it is notthe company with the best business performance.There are two main reasons for their under-expected performance. First, many of themedicine products of [mn G are imported,therefore the company sales are hindered by thenew governmental restriction against importedmedicines. Second, one of its very successfulproduct, baby formula, is also imported. Due tothe recent devaluation of Thai baht, its costs havedramatically increased. Unfortunately, babyformula pricing is under governmentalregulation. As a result, [mn G cannot instantlyand freely adjust the price according to the newcosts. With an attempt to maintain the productpresence in the rnarke~ the company decides tosell this product even at less than costs. Thefindings of [mn G suggest that the success of anorganization in gaining substantial IT effects onits performance effectiveness is definitely not anadequate determinant of its success in thebusiness competition. Obviously, there are manymore factors that can affect the business successof a firm.

By and large, the research fmds thatorganizational characteristics, to an extent, helpexplain the pattern of IT effects of organizations.The phrase "to an extent" is emphasized becausewithin this study, the researcher is able toexplain patterns of IT effects of some, but not all,of the organizations. In the case of flnn F, forinstance, it is not obvious to the researcher why,within this company, there are no effects of ITon productivity performance of the firm.Similarly, in the case of company E where thepattern of the effects is identical to that of A, theresearcher found no profound evidence toexplain why the pattern is as it is. The only clue

employee with an educational background that isinconsistent with herlhis job position. The HRdirector of flnn B stated that the company believesin fmding the right person with the right educationalqualification for the job and once a person isappointed to a certain position within a certainfunction. shelhe will normally be staying within thatfunction. The difference in job rotation practicesfurther indicates the difference in organizationalcharacteristics between these two f1flnS. By andlarge, flnn A is a versatile organization; whereas Bis a more stable business entity. Due to thecompany's marketing practice (i.e., persistent playeras opposed to speedy attacker), and internalorganizational characteristics (i.e, stability asopposed to versatility focus), it is not surprising thatwithin flnn B, IT is not used in a way that wouldresult in an enhancement of the adaptabilityeffectiveness of the flnn. Again, the findings offirm B indicate an alignment between organizationalpractices and the resulting IT effects.

An opposite case is firm D. It is acompany with an unfavorable businessperformance. Apparently, the present unsatisfactoryperformance is a result of the company's inability toeffectively respond to a major change in the marketenvironment (i.e., from traditional-trade market tomodern-trade market). Evidently, the regressionresults of flnn D indicate that there are IT effects ononly integration and not any of the other threeaspects of effectiveness. In other words, thedetected IT effects imply that, within firm D, IT isused to enhance organizational stability and control.However, to get through this displeasing businesssituation, stability and control are the leastimportant values onto which the company shouldhold. To survive, flnn D would need to redefineits business practices and make changes instead ofstabilizing and controlling existing business routine.This misalignment between the appropriate practicethe company should adopt and the actual IT effectsthe research found may help to explain the poorbusiness performance of the company.

The IT-performance regression findings offim1 C and firm H also give additional evidencewhich indicates that organizational practicesinfluence how IT is used, which in turn, determinestypes of IT effects organizations receive. Asmentioned in the table, competition amongemployees within C is very intense. Therefore, it isnot surprising to find no IT effect on the employeecohesion and development effectiveness of the firm.Since the employees of firm C perceive one anothermore or less as competitors, it is therefore unlikelyfor them to use IT to promote employee adherence.

4.2 Ingredients of IT Successthe researcher has is that this company has beenexpanding into many new business domains sinceits establishment a century ago. This history ofmany domain expansions might have madeintegration an unimportant value to the company.

The study cannot use organizationalpractices to explain all of the patterns of IT effects.Yet, by and large, the evidence which indicates theassociation between organizational practices and ITeffects is too substantial to ignore. In certainorganizations where the researcher cannot relate thepattern of the effects to certain organizationalfactors there is perhaps no dominatingcharacteristic. Instead, many factors might havebeen simultaneously and equally playing a role inshaping the company's use of IT. In such cases, itwould be difficult to associate the resulting ITeffects to any particular factors.

To summarize this discussion, thefollowing suggestions are drawn:

The study found no evidence to suggestthat either IT investment, availability of usercomputers, or efficacy of employees in usingcomputers alone can predict the success oforganizations in gaining IT effects (see'investment', 'PC', 'user', and 'effects' columnsof Table 3). In other words, there appears to beno association between any of these variables oringredients and the success of organizations ingaining IT effects. For example, flnn A and flnnD are the two flnnS with exactly the same levelof IT investment, however they are very differentin their IT success. That is, flnn A receives ITeffects on three of th~ four performance aspects;whereas D receives the effects on only one of theeffects. Nonetheless, one limitation of this studyis that it considers only the present yearinvestments of the companies; whereasaccumulative investments are not included in theinvestigation.

Likewise, neither computers peremployee ratio nor employee computer efficacyis a determinant of IT success. With regard tosoftware advancement, due to the lacksubstantial differences among the firms, thestudy cannot draw any specific conclusion.

Interesting fmdings lie in the influenceof quality of IT services on the effects of IT onorganizational performance. The study resultssuggest that the quality of IT services is oneingredient that has a substantial consequence onIT effects. By comparing the seven marketing-manufacturing flrmS (firm A to G) with a similarnature of IT use, one can clearly see thatcompany D has the least success in achieving ITeffects. The user-perceived quality of ITservices of firm D is distinctly lower than thoseof the other firms. It is reasonable to suggestthat this deficiency of IT service qualitycontributes to the downfall because firm D is not

1. Organizational practices( e.g.,competingstrategy, working tradition, employee disposition)influence how IT is used, which consequentlydetennines the type of effects an organizationobtains. This statement is graphically presented inFigure 3. As mention earlier, during the course ofthe data collection (from September 1997 to June.1998), Thailand was facing a critical economicsetback. It is possible that this economic crisisincreased the chance of this cross-sectional study todetect the organizational practices-IT use/effectsassociation. The organizational practices-ITuse/effects turnaround time might have beenshortened by the urgent need to survive.

2. Misalignment between the type ofperformance effectiveness that IT enhances and thedesired type of effectiveness the organization seeks(i.e., as found in [Inn D), contributes to poorbusiness performance.

3. The success of an organization ingaining positive IT effects on its performanceeffectiveness is not an adequate determinant of itssuccess in business competition. There are manymore factors besides IT (e.g., product cost structure,govermental regulation, economic condition) thataffect business outcomes of organizations.

Organizational Practices Characteristics of IT Use Type of IT Effects

Figure 3 The Influence of Organizational Practices

have influences on the organizations' success ingaining IT effects and type of effects theyreceived. The evidence found implies that ITseems to have become an integral and indivisibleelement of a compound organizational entity.Therefore, it is noticeable that the use of ITwithin any particular organizations is shaped bytheir overall practices and behaviors.

These research fmdings stimulate theneed to include more composite IT andperformance measures and examination ofcontextual conditions to study the IT -organizational performance relation. Theevidence found suggests that restrictive measuresof IT and organizational performance, as well asomission of contextual exploration may havecontributed to the discrepancy in the previousresearch fmdings.

References

inferior to other fInDS with respect to theavailability of any other ingredients such asinvestment, hardware, software, and computerefficacy of employees.

Besides IT service quality, the studydetects that organizational characteristics are alsokey to IT effects. As discussed earlier in thepattern of IT effects sub-section, organizationalpractices influence characteristics of IT use,which in turn, influence type of IT effects. In thecase of flfnl H, there are IT effects on only theproductivity aspect of performance. Howeverthis observed scarcity of IT effects is not causedby a deficiency in any of the direct ITingredients. Rather, it is a result of therestriction on the use of IT due to theinformation confidentiality concern of thecompany.

Evidently, the research fmdings do notsuggest that an organization's stage of the life-cycle can predict the pattern of IT effects. Thatis, there is no similarity in the pattern of effectsamong the flfnlS at the same stage. Moreover,some fInDS at a different stage (i.e., A versus E),indeed, have an identical IT effect pattern.

Same-staged organizations may bedifferent in their characteristics. For instance, Aand B, which are both in a formalization andcontrol (growth) stage, are substantially differentin their business practices. Therefore, it is notnecessary that same-staged organizations woulduse IT in the same manner and consequentlyreceive similar patterns of IT effects. Likewise,different-staged companies may share somecharacteristics in common. Therefore, it ispossible for different-staged organizations to useIT in a similar manner and receive similarpatterns of IT effects.

Brown, R.M., Gatian, A.W., and Hicks, Jr., J.O.,"Strategic Infonnation Systems and FinancialPerformance," Journal of ManagementInfonnation Systems, 11(4), 1995, pp. 215-248.Compeau, D.R. and Higgins, C.A., "ComputerSelf-Efficacy: Development of a Measure andInitial Test," MIS Quarterly, 19(2), 1995, pp.189-211.Kivijarvi, H. and Saarinen, T., "Investment inInformation Systems and the FinancialPerfonnance of the Finn, " Infonnation &

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5. Concluding Remarks

By not restricting the definitions of ITand performance to IT investment and profitattainment, the study found positive IT effects.More interestingly, the study detected that thecontextual conditions of particular organizations