Key Organizational Theories in IS: Direction of Research
Information systems (IS) research is among the most incorporative branches of science (Wade & Hulland, 2004). In other words, it tends to absorb the theoretical foundations and implications of other disciplines, including management. Various organizational theories can be applied to IS as well. The direction of this level of IS research can be described as the development of new IS perspectives and principles that incorporate various aspects of organizational life (Ravichandran, & Rai, 2004).
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Given the dependence of modern organizations on IS, this direction of research is of vast importance as it ensures more effective IS integration. Several examples of organizational theories in IS will be discussed in this paper, including the resource-based view, institutional theory, organizational changes theory, and some other relevant approaches.
Key Theories for Organizational-Level Phenomena in IS Research
One of the major organizational theories that received prominence nowadays is the resource-based view (RBV) or theory (Cragg, Caldeira & Ward, 2011). It was first proposed for usage in the field of strategic management in 1992, and it has been applied in the context of IS occasionally (Wade & Hulland, 2004). RBV defines a number of resources, the right set and allocation of which can ensure the firm’s competitiveness. The competitive set depends on the industry as well as other specific features (to the point of the possibility of individual customization for a single organization).
The terminology of RBV has been somewhat vague, especially in relation to the major term “resource”. Wade and Hulland (2004) define resources as tangible and intangible assets and primarily intangible capabilities. For IS research, RBV offers the possibility of relating various types of IS to management strategy by determining their value for it. By providing this information, RBV also offers the ground for comparison of IS with each other and different strategic elements. The major disadvantage of such integration consists in the fact that IS are relatively unlikely to contribute to the competitive advantage directly. The indirect impact on competitive advantage is relatively underdeveloped within the theory.
Liang, Saraf, Hu, and Xue (2007) describe another approach, the institutional theory. It emphasizes the strife for legitimacy in an organizational environment which makes the organization vulnerable to external influences (political and economical as well as that of other companies, and so on). The theory is perfectly applicable to IS: for example, the development of information security policies is most often caused by governmental policies, and in the terms of the adoption of various IT, the mimetic actions of organizations have been noted. The special feature of this theory consists in the fact that it explains the organization-level phenomena from the point of view of external forces, unlike most other approaches that focus on internal ones.
Pavlou, Liang, and Xue (2007) dwell on the principal-agent perspective they derive from the agency theory. The agency approach presupposes regarding the relationship between buyers and sellers from a specific angle: buyers are considered to be principals as they “delegate the delivery responsibility” to sellers who function as agents (Pavlou et al., 2007, p. 106). The theory was applied to B2C e-commerce with particular emphasis on the information asymmetry (and its reduction strategies).
The authors pointed out that in the terms of IS and organizational theory approach to trust, principal-agent perspective demonstrated the correlation between information issues and uncertainty perception. It was concluded that for the sake of e-commerce, attempts at uncertainty mitigation must be made. The mitigation suggestions of the authors belong to various disciplines including organization theory (trust issues solution), sociology (social presence), marketing (diagnosticity), and IS (information privacy/security).
There is a number of other examples of IS-relevant or IS-applied theories and ideas. The “socio-technical systems approach” literally presupposes ensuring both the “technical validity and organizational validity” of an organization as they are considered to be the key aspects of the development process (Ravichandran, & Rai, 2004, p. 384). It is probably one of the most general organization-level approaches in IS.
The collective resource perspective incorporates the trendy emancipatory ideals from management theory into IS study. This approach suggests a more active involvement of workers in the design and use of computer systems (to avoid deskilling the employees) through negotiations with managers. Subramani (2004) discusses the theory of exploitation and exploration and demonstrates how both of these approaches can be used for IS practice. Also, a significant IS-relevant approach is organizational change (transformation, development) theories. IS “has always been a transformational object from its beginning” (Suter et al., 2013, p. 117). As a result, the challenge of applying transformational theories is always reasonable.
Key Antecedents and Outcomes of Organizational-Level Phenomena in IS Research
The beginnings of organizational-level phenomena trace back to 1938 when Barnard presented “the notion of organizations as purposeful systems of coordinated action” (Ravichandran & Rai, 2004, p. 386). Since then, organizations and their units became the subject of theoretical analysis. The concept of organization as a system has been developing, and the understanding of its structure was leaving behind the limitations “tangible” elements as it started to include leadership, processes, policies as the “bricks, materials,” the right combination of which could improve the company’s performance (Ravichandran & Rai, 2004, p. 386).
Nowadays, as the integration of the organizational theory in IS progresses, the practical implications of such a symbiosis are being studied. Liang et al. (2007), for example, propose a line of action for managers that can be boiled down to a more active mediation of IT adoption. An example of an RBV-based framework was presented by Cragg, Caldeira, and Ward (2011). It involves the development of six major and 22 minor competencies that would allow better IS adoption for small and medium-sized enterprises, thus providing them with a strategy and a guide for areas that require specific attention (for example, benefits management or supplier relationship management). The authors also believe that that framework can be used for defining the least developed areas within an organization and targeting them.
The Importance of Organizational-Level Phenomena in IS Research
The primary aim of the integration of organizational level phenomena in IS research consists in the achievement of effective process management and (eventually) performance improvement. Indeed, by understanding the relationships between various organizational elements that include IS, researchers discover ways of more effective management of these elements. As the organizational dependence on IS grows, the effective integration of them becomes more important. Liang et al. (2007) demonstrate that the adoption, implementation, assimilation (wide adoption), and usage of IT components is largely facilitated by the top management involvement and proper institutional infrastructure.
In turn, IT have been “providing management support, reducing operational costs, improving customer service, and gaining competitive advantages” (Subramani, 2004, p. 47). In other words, it is a fact that the integration of organizational theories in IS means finding the ways of organizational performance improvement, which justifies this kind of research.
Cragg, P., Caldeira, M., & Ward, J. (2011). Organizational information systems competences in small and medium-sized enterprises. Information & Management, 48(8), 353-363. Web.
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Liang, H., Saraf, N., Hu, Q., & Xue, Y. (2007). Assimilation of Enterprise Systems: The Effect of Institutional Pressures and the Mediating Role of Top Management. Management Information Systems Quarterly, 31(1), 59-87. Web.
Pavlou, P., Liang, H., & Xue, Y. (2007). Understanding and Mitigating Uncertainty in Online Exchange Relationships: A Principal-Agent Perspective. Management Information Systems Quarterly, 31(1), 105-136. Web.
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Wade, M., & Hulland, J. (2004). Review: The Resource-Based View and Information Systems Research: Review, Extension, and Suggestions for Future Research. Management Information Systems Quarterly, 28(1), 107-142. Web.