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AMCIS 2005 Proceedings Americas Conference on Information Systems(AMCIS)

2005

The Impact of Organizational Culture onInformation Technology Practices andPerformanceLi XiaoThe George Washington University, [email protected]

Subhasish DasguptaGeorge Washington University, [email protected]

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Recommended CitationXiao, Li and Dasgupta, Subhasish, "The Impact of Organizational Culture on Information Technology Practices and Performance"(2005). AMCIS 2005 Proceedings. 466.http://aisel.aisnet.org/amcis2005/466

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Xiao and Dasgupta Organizational Culture, IT Practices and Performance

Proceedings of the Eleventh Americas Conference on Information Systems, Omaha, NE, USA August 11th-14th 2005

The Impact of Organizational Culture on InformationTechnology Practices and Performance

Li XiaoThe George Washington University

[email protected]

Subhasish DasguptaThe George Washington University

[email protected]

ABSTRACT

Researchers and practitioners acknowledge that organizational culture plays a vital role in information technology (IT)implementation and influences organizational performance. However, there has been little research in this area. We aim toaddress this gap in the information systems (IS) literature. Using Scheins conceptualization of organizational culture, weanalyze culture on three levels: underlying assumptions, espoused beliefs and values, and artifacts. Underlying assumptionsrefer to the unconscious and taken-for-granted beliefs, perceptions, thoughts and feelings that members of the organizationshare. Espoused beliefs and values are the espoused justifications including strategies, goals, and philosophies. Artifacts arethe visible organizational structures and processes. We propose a research model that relates the culture of innovation andespoused values to IT practices and performance. Using a survey method, we plan to test the relationships among theseconstructs. We believe this study presents a significant step toward a better understanding of embedded values andassumptions that influence IT practices and performance.

Keywords

Information technology practices, organizational culture, corporate culture, performance.

INTRODUCTION

With rapid development of new information technologies (IT), organizations are eager to adopt emerging IT in their quest forsurvival and success. IT projects, however, often fall below expectations of managers in terms of their usefulness inimproving organizational performance. A recent Standish Group survey (2001) found that 23% of IT projects completely failand another 49% run over time and/or over budget. One of the reasons attributed to the high failure rate of IT projects is poorunderstanding and management of organizational culture (Kendra and Taplin, 2004; Lin, Tan, and Chang, 2002).Organizational culture is defined as a pattern of shared basic assumptions that was learned by a group as it solved itsproblems of external adaptation and internal integration, that has worked well enough to be considered valid and, therefore, tobe taught to new members as the correct way to perceive, think, and feel in relation to those problems (Schein, 2004).However, there has been a dearth of research investigating how organizational culture impacts IT management practices andfirm performance. In this study, we address this gap in academic research by examining the impact of organizational cultureon management of IT and organizational performance. Our research questions are:

1. What is the relationship between organizational culture and IT management practices?

2. What is the relationship between IT management practices and organizational performance?

Rich and complex as organizational culture is, it is impossible to capture all aspects of the cultural phenomena inorganizations. Therefore, this study focuses on a specific type of organizational culture that is especially associated with ITmanagement culture of innovation. Based on literature, we propose a model of culture of innovation and its relationship toIT management and organizational performance.

We believe the contributions of this study are two fold. Theoretically, this study will contribute to knowledge in thefollowing aspects. Firstly, this study will address a gap in Information Systems (IS) literature by examining the relationshipbetween organizational culture and IT. Secondly, this study will identify values and assumptions shared amongorganizational members that are more conducive than others to IT success and organizational performance improvement.Practically, the results of this study will help leaders create constructive organizational culture to improve IT success rate andorganizational performance.

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Organization of this paper is as follows. In the next section, we review relevant literature on organizational culture, ITpractices and performance. Then, we introduce our theoretical framework and research model. After that, we discuss ourresearch methodology and our plan for data collection and analysis. Finally, we report on the present status of this projectand our conclusions.

LITERATURE REVIEW

In this section we examine literature from three different areas: organizational culture, organizational culture and IT, andorganizational culture and performance. We look at each of these areas separately.

Organizational Culture

Organizational culture is among the major issues in both academic research and management practice, because the culturaldimension is central to all aspects of organizational behavior (Alvesson, 2002). Due to complexity and richness of culture,different researchers try to use various typologies to categorize organizational culture. Table 1 lists a few typologies that areinfluential in the organizational behavior field.

Author (Date) Dimensions Organizational Culture TypesEtzioni (1975) -Participation

-Involvement-Coercive organizations-Utilitarian organizations-Normative organizations

Goffee and Jones (1996) -Solidarity-Sociability

-Fragmented-Mercenary-Communal-Networked

Cameron and Quinn(1999)

-Stability/flexibility-Internal/external focus

-Clan-Hierarchy-Adhocracy-Market

Table 1. Typologies on Organizational Culture

The theories mentioned above help us understand organizational culture, but when organizational culture interacts with otherfactors such as the IT management, we need to look at literature on the relationship between organizational culture and ITwhich is the next sub-section.

Culture and IT

Scholars agree that culture and IT practices are closely related (Doherty and Doig, 2003; Huang, Newell, Galliers, and Pan,2003). Researchers examine culture and IT at different levels of analysis (Erez and Gati, 2004; Karahanna, Evaristo, andSrite, 2005). Some studies analyze the influence of national cultural backgrounds on IT practices such as (Bagchi, Hart, andPeterson, 2004; Walsham, 2002). Several studies attribute IT success to organizational culture (Schein, 2003). In recentyears, IS field has witnessed a growth of interest in culture and organizational culture. In a special issue of IEEETransactions on Engineering Management journal devoted to cultural issues and IT, editors Davison and Martinsons (2003)evaluate this trend and call for more studies on the topic. Specifically, they emphasize the importance of understanding thehow and why of cultural differences. Our study aims to answer those questions by trying to identify the deeplyembedded assumptions and values of organizational members that support IT practices and performance. In addition toresearch on organizational culture and IT, researchers have also examined the relationship between culture and performance.

Organizational Culture and Performance

Scholars have been trying to associate organizational culture with financial performance for years (Denison, 1990; Kotter andHeskett, 1992; Nahm, Vonderembse, and Koufteros, 2004). Denison (1990) constructs a model of four cultural factorsincluding mission, consistency, adaptability, and involvement as influencing organizational effectiveness. Kotter and Heskett(1992) argue for adaptive culture to improve performance. Studies in this area show mixed results primarily due to a numberof issues such as measurement, level of analysis, and ambiguity of cultural analysis (Alvesson, 2002).

Based on our review of literature on organizational culture we decide to use Scheins culture theory, a dominant theory in thisarea. We review this model next.

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Organizational Culture Model

Schein (2004) proposes a three-level organizational culture model, which reflects the visibility of cultural phenomena toobservers. When one approaches an organization, all the phenomena that s/he sees, hears and feels are the most visible levelof culture artifacts, which are extremely rich but difficult to decipher. In trying to understand the meanings of artifacts, onemust analyze the principles that guide those artifacts, which are the middle level in the model espoused beliefs and values.At the deepest level of organizational culture, underlying assumptions refer to the taken-for-granted beliefs, perceptions andthoughts that members of the organization share.

Scheins model is well received by scholars and many studies draw on his theory. For example, Nahm et al (2004) apply hismodel in manufacturing industry; Haugh and McKee (2004) use it to examine the cultural values of small firms. In addition,different studies focus on the various levels of organizational culture specified by his model (Erez and Gati, 2004).

We adopt Scheins model in our research because of its theoretical rigor and practical relevance to organizations. In the nextsection we present our research model based on Scheins theory of culture.

THEORETICAL FRAMEWORK

Research Model

Our research model is illustrated in figure 1. We explain details of this model next.

Figure 1. Research Model

Underlying Assumptions

In trying to identify the underlying cultural assumptions that are conducive to IT success, many scholars argue for a cultureof innovation. Culture of innovation is defined as a set of underlying assumptions that center on innovation. Here innovationis the ability to craft often radically new solutions or products, which is often viewed as one of the sole sustainingcompetitive advantages of the modern firm1. Researchers agree that innovation is the basis of all competitive advantage,which enables organizations to fill customer needs and utilize technology (Brown and Ulijn, 2004; Schumann, Prestwood,Tong, and Vanston, 1994). Based on Scheins theory, we propose that in an organization where innovation is the center oforganizational culture, leaders and managers will espouse a number of values that support this assumption, which areelaborated next.

1 http://www.sims.berkeley.edu/courses/is213/s99/Projects/P9/web_site/glossary.htm, retrieved on 2/26/05.

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Espoused Beliefs and Values

Espoused beliefs and values provide members of an organization with day-to-day operating principles, norms and rules(Schein, 2004). In this study, we propose that following values reflect the underlying culture of innovation. Teamwork isoften emphasized in successful innovation and IT projects (Kendra and Taplin, 2004; Nahm et al., 2004; Sheng, Pearson, andCrosby, 2003). Leadership is regarded as crucial in implementing innovative IT projects and organizational performance(Nahm et al., 2004). Continuous learning of members of an organization is generally accepted as important in achievingsuccess of IT projects (El_Sawy, 1985; Kendra and Taplin, 2004). Customer orientation is frequently mentioned as a criticalvalue in innovation projects and improvement of organizational performance (Kendra and Taplin, 2004; Nahm et al., 2004).

Artifacts/Practices

Artifacts include all organizational structures and processes. IT is regarded as a part of cultural artifacts in organizations(Schein, 1984). IT management practices practically cover all aspects that one encounters when entering an organization.The types of computers used, the physical environment of IT department, IT expenditure, IT training practices, and technicalsupport procedures are just a few examples of IT management practices. Faced with the rich phenomena of IT artifacts, thechallenge for researchers is to correctly decipher them (Schein, 2004). Hofstede et al (1990) develop a measurementinstrument that helps us to decipher and understand practices of organizational culture. They measure cultural phenomena onseveral dimensions, including process/results-orientation, employee/job-orientation, parochialism/professionalism,open/closed system, loose/tight control, and normative/pragmatic-orientation. In our study, we adopt this instrument andmodify it to appropriately measure IT practices in organizations. In the section that follows we will discuss the researchmethodology that we use and report on the current status of our project.

RESEARCH METHODOLOGY AND CURRENT STATUS

Based on our research design, we plan to use questionnaire survey to collect data. Measurement instruments will bedeveloped when necessary (Nahm et al., 2004). Instruments developed by Hofstede et al (1990) will be adopted andappropriately modified to assess IT practices, and financial indicators including sales growth and return on investment will beused to measure performance (Nahm et al., 2004). Currently we are identifying potential constructs and developing ourquestionnaire. We are also identifying organizations for data collection. We plan to collect data in the next few months.After the data are collected, hypotheses testing will be carried out through structural equations modeling.

CONCLUSION

There is increasing interest in examining the role of organizational culture on IT management practices and the subsequentimpact on the organization. Organizational culture is highly relevant for understanding practices that characterizeorganizations and for predicting their success. In a complex and competitive business environment, it is crucial that leaderscreate a culture that facilitates innovation and IT management practices in order to improve organizational performance. Thisstudy will be a positive step in the conceptualization and empirical support of culture of innovation that promotes IT andperformance.

REFERENCES

1. Alvesson, M. (2002) Understanding organizational culture., Sage publications.2. Bagchi, K., Hart, P. and Peterson, M. F. (2004) National Culture and Information Technology Product Adoption, Journal

of Global Information Technology Management, 7, 4, 29.3. Brown, T. E. and Ulijn, J. (Eds.). (2004) Innovation, entrepreneurship and culture : the interaction between technology,

progress and economic growth., Cheltenham, UK ; Northampton, MA : E. Elgar Pub.4. Cameron, K. S. and Quinn, R. E. (1999) Diagnosing and changing organizational culture. Reading, MS: Addison-

Wesley.5. Davison, R. and Martinsons, M. G. (2003) Guest editorial cultural issues and it management: past and present, IEEE

Transactions on Engineering Management, 50, 1, 3-7.6. Denison, D. R. (1990) Corporate culture and organizational effectiveness., New York: Wiley.7. Doherty, N. F. and Doig, G. (2003) An analysis of the anticipated cultural impacts of the implementation of data

warehouses, IEEE Transactions on Engineering Management, 50, 1, 78.

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8. El_Sawy, O. A. (1985) Implementation by Cultural Infusion: An Approach for Managing the Introduction ofInformation Technologies, MIS Quarterly, 9, 2, 131, 110 pgs.

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Perspective, Journal of Global Information Management, 13, 2.16. Kendra, K. and Taplin, L. J. (2004) Project success: a cultural framework, Project Management Journal, 35, 1, 30, 16p.17. Kotter, J. P. and Heskett, J. L. (1992) Corporate culture and performance., New York : Free Press.18. Lin, C., Tan, B. and Chang, S. (2002) The critical factors for technology absorptive capacity, Industrial manage + Data

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manufacturing and performance, Decision Sciences, 35, 4, 579-607.20. Schein, E. H. (1984) Coming to a new awareness of organizational culture, Sloan Management Review, 25, 2, 3-16.21. Schein, E. H. (2003) DEC is dead, long live DEC., San Francisco: Berrett-Koehler Publishers Inc.22. Schein, E. H. (2004) Organizational culture and leadership, ( 3rd ed.), San Francisco: Jossey-Bass.23. Schumann, P., Prestwood, D., Tong, A. and Vanston, J. (1994) Innovate., New York: McGraw-Hill, Inc.24. Sheng, Y. P., Pearson, J. M. and Crosby, L. (2003) Organizational culture and employees' computer self-efficacy: an

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The Impact of Organizational Culture on Information Technology Practices and PerformanceLi XiaoSubhasish DasguptaRecommended Citation

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