OMEGA Int. J. of Mgmt Sci., Vol. 18, No. I, pp. 103-107. 1990 0305-0483/89 53.90 + 0.00 Printed in Great Britain. All rights reserved Copyright ~ 1990 Pergamon Press plc

Distinguishing Computer Users From Non-Users

INTRODUCTION

INFORMATION TECHNOLOGY (IT) provides an opportunity for organizations to improve their efficiency and effectiveness. Several factors, such as technological availability, competitive impera- tive, and the need to improve the productivity of clerical and managerial workers, have been sug- gested in the literature as the motivation for organizations to invest in IT [1-3]. But there has been little reported research which attempts to identify the distinguishing characteristics of orga- nizations using computers. Based on data col- lected from a mail survey carried out in the UK service sector, this paper identifies organizational characteristics which distinguish organizations us- ing computers from those not using them. For convenience, organizations using computers will be referred to as computer users, and those not using computers as non-users.

METHODOLOGY

A study was carried out to examine the relation- ships between a selected number of organizational characteristics and the use of computers. Ten organizational characteristics were identified and included as the research variables: annual turnover, industrial sector, average return on cap- ital employed over the last three years, growth of business over the last three years, routineness of work activities, percentage of information workers (defined as the percentage of workers engaged in secretarial and clerical activities), degree of for- malization of communications, degree of central- ization of decision-making, competitiveness of the organization's market, and predictability of cus- tomer's requirements. A dichotomous measure was adopted for the dependent variable, use of computer: an organization is either a computer user or a non-user. Further details of the study are given in Yap [5].

A commercial agency was engaged to randomly select 3000 organizations in the UK service sector from its databases based on a prespecified sample design. The service sector was chosen because it is basically an information-based sector, handling and processing a vast amount of information in its operation. The service sector is also a sector which

has been undergoing rapid changes as a direct result of the information revolution. Five subsec- tors were identified: transport and communica- tion, wholesale distribution, retail distribution, business and financial services, and miscellaneous services, including hotels and catering, repairs, and recreational services. The survey resulted in a final sample size of 638 organizations.

103

DISTINGUISHING CHARACTERISTICS

Contingency table analysis of the data showed that the use of computers is highly correlated with annual turnover and sector. There was a wide variation in the percentage of organizations using computers across turnover ranges; large organiza- tions were more likely to use computers than small and medium organizations. Also, there Was a significant difference between the financial subsec- tor and the other four subseetors. More than 90% of the sample in the financial subsector were using computers, compared with between 54 and 72% for the other subsectors. Moreover, the financial subsector was the most highly computerized sector in all turnover ranges.

Discriminant analysis was used to identify char- acteristics which distinguish organizations using computers from those not using them. Because earlier analyses showed that the use of computers was highly correlated with annual turnover and sector, we would expect these two variables to be good discriminants between computer users and non-users. The aim of the discriminant analysis was to identify organizational characteristics other than annual turnover and sector which distinguish computer users from non-users, so annual turnover and sector were excluded from the study. The other eight research variables were used as candidates for the discriminants.

The discriminant function was estimated using the Statistical Packages for the Social Sciences (SPSS--X). A stepwise procedure was used because the aim was to select variables which contribute most significantly to the discrimination ability of the linear discriminant function. It was found that the same discriminant function was obtained by using either the Mahalanobis D-squared distance criterion or the WillCs lambda criterion.

104 Memoranda

The derived discriminant function includes three explanatory variables: degree of formaliza- tion, growth of business, and the percentage of information workers. The result implies that com- puter users are organizations that tend to have more formalization in communications and proce- dures, a higher growth rate, and a higher propor- tion of information workers (Table 1).

DISCUSSION

Perhaps the most interesting finding of the study concerns the percentage of information workers. The survey data showed that organizations with a high proportion of information workers were more likely to use computers. Although several authors have suggested that organizations with high proportions of information workers tend to use IT heavily [3, 4], there is no published empir- ical data to support this view. Thus, the present study has contributed empirical evidence to sup- port the suggestion that the use of computers is related to the percentage of information workers.

One possible interpretation of the result is that organizations whose main activities are informa- tion-based are more likely to use computers than organizations involved in handling physical goods and materials. Computer users tend to be organi- zations which are more information intensive, that is, those that handle and process more informa- tion in their operations and hence employ more information workers than other organizations.

Another possible interpretation is that organi- zations increase their number of information workers as a result of computerization. When computers are used, more information workers are required not only to process existing paper- based information into suitable formats for trans- fer into computerized files, but also to handle more information arising from technology in- duced demand. For example, when computers are available, more calculations and analyses are per- formed to answer all sorts of 'what if' questions. The result indicates that computer users tend to have more, rather than fewer, information workers than non-users of a similar size. This is contrary to a commonly held belief that with the use of computers, fewer secretarial and clerical workers are required, since managers can by-pass these

workers and gain direct access to information [6]. Although the survey data did not prove or dis- prove such assertions, they provided no evidence to support the view that computerization leads to a reduction in the information workforce within an organization. Indeed, the evidence seems to suggest the opposite.

The growth rate of business was also found to be a good predictor for the use of computers. One interpretation of the result is that fast growing organizations are more likely to use computers. As the organization grows and the volume of business transaction increases, there is a need to expand its capacity to cope with the accompanying increase in complexity and information processing require- ments. Investing in advanced IT is one way of dealing with increased complexity and informa- tion processing requirements resulting from in- creasing size. This option is particularly attractive in the case of computers because labour costs are rising while equipment costs are declining. An- other interpretation is that the use of computers tends to improve an organization's prospect for growth. By improving the efficiency and effective- ness of business operations, computers tend to improve the competitiveness of an organization, putting it in a better position to exploit opportu- nities for expansion.

The survey data showed that computer users tend to be more formalized in communications than non-users. One explanation is that computer- ization tends to lead organizations towards a higher degree of formalization in communica- tions. This trend is not surprising because for efficient use of computers, data must be highly structured and standardized. Another possible explanation is that organizations which are more formalized, i.e. those which are more mature or have been rationally structured and organized, are more likely to use computers.

P O T E N T I A L F O R A P P L I C A T I O N O F C O M P U T E R S

These findings can be used to form a simple classification scheme to indicate the likelihood of an organization using computers (see Fig. I). Given an organization of a particular size and sector, the potential for application of computers

Table I. Results of the two-group discrirninant analysis

Variable F to Wilks' Min. Std Step entered enter lambda D 2 coeff)

I Degree of formalization 36.0 0.931" 0.35* 0.591 2 Growth of business 24.9 0.886* 0.61 * 0.579 3 Percentage of information

workers 19.1 0.852* 0.82* 0.513

~Standardized discriminant function coefficients. • P < 0.0001.

Omega, Vol. 18, No. 1 105

Low Growth High Growth

High Percentage of Information Wod(ers

Low Percentage of Information Workers

More Formalized

HIGH POTENTIAL

Less Forrnallzed

MEDIUM POTENTIAL

More Formalized

MEDIUM POTENTIAL

Less Formalized

LOW POTENTIAL

More Formalized

VERY HIGH POTENTIAL

Less Formalized

HIGH POTENTIAL

More Formalized

HIGH POTENTIAL

Less Formalized

MEDIUM POTENTIAL

Fig. 1. The potential for application of computers.

is associated with the degree of formalization, its growth rate, and the proportion of its workforce engaged in information processing activities. The potential is very high for organizations with a high degree of formalization, a high growth rate, and a high percentage of information workers. At the other extreme, organizations which have a low degree of formalization, a low growth rate, and a low percentage of information workers, are least likely to use computers. Thus, by knowing only three organizational characteristics, one could as-

'sign an organization into the appropriate group and predict its potential for using computers. The classification scheme can be used to identify seg- ments of a market for promoting advanced IT.

SUMMARY

In addition to organizational size and sector, the study has identified three other organizational characteristics which distinguished computer users from non-users in the UK service sector. These characteristics are: the degree of formalization, the growth rate, and the percentage of information workers. These characteristics may be used as

predictors of the potential for application of ad- vanced IT.

REFERENCES

1. McCosh A (1985) The organization, its aims, and using information technology to achieve them. In- formation Technol. Public Policy 4(1), 23-35.

2. Olson MH and Lucas HC Jr (1982) The impact of office automation on the organization: Some impli- cations for research and practice. Commun. ACM 25(11), 838-847.

3. Panko RR (1984) Office work. Office: Technol. People 2, 205-238.

4. Teger SL (1983) Factors impacting the evolution of office automation. Proceedings of the 1EEE 71(4), 503-51 I.

5. Yap CS (1986) Information technology in organiza- tions in the service sector. Ph.D. Dissertation, De- partment of Engineering, University of Cambridge, UK.

6. Zuboff S (1982) New worlds of computer-mediated work. Harv. Bus. Rev. 60(5), 142-152.

Department of Information Systems and Computer Science National University of Singapore Lower Kent Ridge Road Singapore 0511 Republic of Singapore

CS Yap (August 1989)