oi&m^
HD28
.M414
ALFRED
P.
WORKING PAPER
SLOAN SCHOOL OF MANAGEMENT
INVESTING IN NEW INEORMATION TECHNOLOGY; THE
ROLE OF COMPETITIVE POSTURE AND ISSLT DIAGNOSIS
Ari Ginsberg
and
N. Venkatraman
Working Paper No. 3384-92BPS
February 1992
MASSACHUSETTS
INSTITUTE OF TECHNOLOGY
50 MEMORIAL DRIVE
CAMBRIDGE, MASSACHUSETTS 02139
IWTSTING IN NEW INFORMATION TECHNOLOGY: THE
ROLE OF COMPETITIVE POSTURE AND ISSL^ DIAGNOSIS
Ari Ginsberg
and
N. Venkatraman
Working Paper No. 3384-92BPS
February 1992
M.I.T.
UBRAh
FEB 2
1
1992
RECEIVtEJ
J
New
Information Technology:
The Role of Competitive Posture and Issue Diagnosis
Investing in
ARI GINSBERG
Stern School of Business
New York
University
90 Trinity Place
(212) 285-6045
N.
VENKATRAMAN
Massachusetts Institute of Technology
E52-537 Sloan School of Management
Cambridge, MA 02139
(617) 253-5044
December 1991
Paper presented
at the
Minnesota Strategy Process Conference, October 20-22, 1991.
Strategic Management Journal
Special issue on Strategy Process Research
(1992 forthcoming!
Acknowledgements: We gratefully acknowledge support from the Center for Entrepreneurial
Studies, New York University and the Management in the 1990s Research Program at MIT. We
thank the Internal Revenue for making this study possible, especially John Wedick, Judy
Tomaso, and Bemie Radack and the professionals in the industry who gave valuable time for
interviews and other data collection efforts.
Starbuck, and the
anonymous reviewers
We
also thank Jane Dutton, Frances Milliken, Bill
for their helpful
comments on an
earlier draft.
New
Infonuatioii Tecluiology
PaEC 2
New
Information Technology:
The Role of Competitive Posture and Issue Diagnosis
Investing in
Summary
This paper investigates the influence of competitive posture and strategic issue diagnosis
on firms' investment
in
new
information technology.
We
analyze responses to technological
innovation of close to three hundred tax-return preparation businesses confronted with the
introduction of electronic filing in the market for tax-related services. Results of path analysis
show
that issue diagnosis indirectly
of commitment
to
technological
provokes adoption of new technology by increasing the level
capabilities.
etTiciency and quality orientations,
directly
Competitive posture,
as
reflected
in
firms'
influenced adoption of newly available technology both
and indirectly through issue interpretation. These findings suggest
postures influence investment
in
new technology
that competitive
primarily by establishing institutional rules for
innovation rather than by conditioning the process of strategic issue diagnosis.
Key words: competitive posture;
innovation; path analysis.
issue interpretation;
information technology; technological
New
Iiifoniiatioii
liiliiiolog^
Pace
^
INTRODUCTION
Strategy
has only
research
begun
recently
surrounding the commercialization of
to
from a focus on
shift
new technology
to 'strategic'
'tactical'
problems of how technology
can shape and support corporate strategy (Pappas, 1984; Pavitt, 1986). Within
an important question
way
in the
The few
is:
they seize or
Why
do firms facing similar
fail to
seize
upon the
this
situations respond differently
-
movement,
particularly
strategic implications of technology innovations?
changes have not led
theoretical attempts to link strategic responses to technological
any integrated, generalizable answers
difficulties
to this question.
However, they have pointed
to the
to
value
of a decision making perspective that directs our attention to managerial interpretations (Morone,
1989).
In
advancing an information processing model of investment
paper maintains
that
its
new
managers view technological innovation as a strategic
emerging development
organization or
in
that has the potential to affect significantly the total
technology,
issue, that
is,
this
as an
performance of the
position in the environment (Ansoff, 1980). Accordingly, our theory building
begins with two key premises:
first, that
investment
in
new technology
is
largely the
outcome
of the interpretations produced by strategic issue diagnosis; and second, that a firm's competitive
posture plays an important role in shaping managers' interpretations of technological innovation
as
a
strategic
issue.
Independent of their effects on strategic issue interpretation,
may
competitive postures also
influence investment in
institutional pressures for stability
new technology by
and conformity. Therefore,
of whether competitive postures influence investment
indirectly through their effects
in
this
firms'
creating and sustaining
study addresses the question
new technology both
directly
and
on managers' interpretations of strategic issues.
ELECTRONIC FILING OF TAX RETURNS AS A STRATEGIC ISSUE
The new technology we
filing).
This innovation
investigate
is
is
the electronic filing of tax returns (hereafter, electronic
a fundamental technological departure
from the
traditional paper-based
process to a system founded on computer-to-computer exchange of data between the taxpaying
community and
the
IRS (Wedick, 1986). Until the mid 1980s, the return preparation market had
experienced limited applications of computer and communication technology. Although larger
businesses had adopted computerized operations, computerized tax-return preparation was not
commonplace. Typically, returns were prepared manually and mailed
Service (IRS) through
the
U.S. Postal Service.
In
1985,
the
to the Internal
Revenue
IRS spent over $1
billion
New
lufunnatiua Tecliuulugy
PSSC 4
(approximately one third of
its
budget) on handling paper returns and transcribing data
machine readable form. Data transcription procedures were prone
to errors leading to costly
delays in the processing of returns and refund checks (Venkatraman
In
to
&
Kambil, 1991).
1986, the IRS responded to the increasing costs of tax collection by offering the
capability for professional retum-preparers to file returns electronically. This system
would
of costs of paper handling as well as the need for data transcription
(at the
reduce the entire
set
IRS end) by capturing the relevant taxpayer information
technical feasibility of electronic filing
expanded
was demonstrated
over a third of the country, and by 1990
to
it
at the
time of return-preparation. The
1986.
in
By 1988,
electronic filing had
was available nationwide.
Electronic filing offers firms a chance to redefine the characteristics of products and
services and to create
It
does
new
sources of competitive advantage (Venkatraman
by creating the potential
this
to offer
&
new technology-based products
the
in
market
(e.g.,
retail
banks and credit card issuing
availability of electronic filing has confronted
entrants to
institutions).
Thus, the
managers of tax-preparation businesses with an
important question: Should their firm aggressively invest
thereby seizing the opportunity to redefine
its
(e.g., refund-
new
anticipation loans, tax planning, investment services) and the opportunity for
compete
Kambil, 1991).
in this
new information technology,
product/ market domain or to differentiate
from other competitors? Or should the firm respond slowly and conservatively
risks
we develop
a theoretical
model
that considers the
reduce the
to
and costs of radical change? To explain why firms will respond differently
itself
to this issue,
impact of issue interpretations and competitive
postures.
INTERPRETING AND RESPONDING TO
Investing in
new technology
is
NEW TECHNOLOGIES
an important component of organizational innovation.
New
technologies, such as electronic filing, have potential impact on market characteristics, as well
as
on performance of individual firms (Porter, 1983). However, studies of innovation generally
ignore the strategic issues that top managers face
de Ven,
1986).
when confronted by
As an environmental development
that
has
organization's performance, the introduction of electronic filing
the
is
a
new technology (Van
potential
to
affect
a strategic issue that top
managers must contemplate. Examining the interpretation step may be particularly
understanding differences
in organizational
their
responses (Milliken, 1990).
critical to
Not
Techuology
Iiil'oniiatioii
Evidence from
Page
5
field interviews
Field interviews with managers provided support for our interpretive approach. At the end of
detailed interviews with professional return-preparers,
the marketplace
that the
were interpreting the electronic
impact of electronic
filing
it
became
clear to us that participants in
filing initiative in different
Some
ways.
believed
on the marketplace would be profound. One tax preparer with
a significant presence in the southeastern region predicted:
"This initiative by the IRS will change the
The companies have been
marketplace.
the
way
business
sitting
is
conducted
pretty
in
not taking
advantage of new technologies. Sure tax-laws have been changing, and
we keep up
is
expected that
to
our business processes
men from
the
in
with
it
but nothing significant has happened
it,
a long time. Electronic filing will differentiate
you can't make a buck with old
the boys because
skills
alone."
An owner
of a regional retum-preparer chain saw things differently:
"My
customers would rather
that
spend time going over their returns
I
carefully to identify additional possible deductions rather than
seduced by
this
.Moreover,
.
.
I
think that
we
technology, which
we
I
me
being
do not understand well anyway.
are quite efficient without using these computers, and
will spend
more time and incur more
costs with this
new
technology."
During these interviews,
it
became
also
clear that
some executives saw
the electronic
a major source of business opportunity to differentiate their services and
filing initiative as
provide value-added services to their clients. In the words of one young tax preparer:
".
.
the
.Electronic filing allows
state-of-the-art in
me
the opportunity to advertise that
using computers;
chances of error are minimal and
who have always
we
as
Others
professional
to attract
the
new customers
filing
as
a potential threat.
For example,
the
owner of a
practice said:
far,
us to
be able
that
at
thought that they could do the forms themselves as well
saw electronic
Now,
will
know
am
guys."
CPA
"So
I
taxpayers will
I
if
we
did not have as
we do
not do
it,
we
much
pressure to computerize our operations.
are in big trouble: customers will not pay for
do the tax-returns manually what with
all
these
new ^tware
available in the market for the personal computers; they also will want to
New
lufonuatiuu TvcUuolug>'
file
electronically so that they can get their refund sooner. So, if
have
this capability,
According
as either
PSSC 6
to
might as well say goodbye
Tushman and Anderson
my
to
business."
(1986), technological innovations
(here, electronic filing) could
competence-enhancing (new ways of differentiating
may be
classified
be perceived by senior managers as either
service offering), or competence-
their
destroying (destroying traditional skills of manual return preparation).
that a
do not
competence-enhancing or competence-destroying. However, our interviews suggested
same innovation
that the
I
I
We
therefore concluded
managerial interpretation view was an appropriate theoretical lens through which to
examine organizational responses
strategic issue diagnosis to direct
to
We
technological innovation.
turn to the literature on
our conceptualization of managerial interpretations.
Strategic issue diagnosis
As described by Dutton, Fahey, and Narayanan (1983: 307),
strategic issue diagnosis refers to
"those activities and processes by which data and stimuli are translated into focused issues
(i.e.,
attention organizing acts) and the issues explored (i.e., acts of interpretation)." Dutton and
Duncan (1987) propose
and judgements
that the interpretations
that are the outputs
of strategic
issue diagnosis play an important role in shaping organizational responses to environmental
change.
In
this
study
we examine how
diagnosis influence subsequent
the interpretations that
commitment
interviews suggested the importance of
to,
and investment
commitment
capability in terms of hardware, software,
emerge from
in,
to obtaining
and communication
electronic filing.
as 'the extent to
which there
is
a
(1)
commitment
firms need to adopt electronic filing'; and (2)
to
which the firm uses electronic
filing.'
new technology
Our
skills as part
field
of organizations'
we
analyze two
capability commitment, defined
to strengthening or acquiring the capabilities that
new technology
adoption, defined as 'the extent
Phrased as a theoretical proposition, our expectations
are as follows:
Proposition 1: Managers' assessments of the impact of a technological innovation
will influence their firms'
issue
and enhancing new technology
responses to the introduction of electronic filing by the IRS. Therefore,
components of new technology investment:
strategic
commitment
to invest in
new technology
which, in turn, will influence actual adoption of the
new
capabilities,
technology.
New
lurormatiuu Techuology
Srrarei^ic issue
Pase 7
dimensions
Strategic issue diagnosis influences response
feasibility of taking action (Dutton
&
momentum by
clarifying the perceived urgency and
Duncan, 1987). Response momentum
refers to the level
of effort and commitment that top-level decision makers are willing to devote to action designed
to resolve an issue
To examine
&
(Dutton
Duncan, 1987).
the impact of perceived urgency of investing in
ejfect significance, defined as 'the extent to
filing to
new technology, we examine
which managers expect implementation of electronic
have a significant impact on the marketplace'. Effect significance directly influences
issue urgency:
Assessments of issue urgency depend on the issue's
importance (Dutton
Duncan, 1987; Milliken, Dutton,
cS:
&
visibility
Beyer, 1990).
We
and perceived
would therefore
expect effect significance to influence positively the level of commitment that top managers are
willing to devote toward the adoption of a
new
technology.
Hypothesis lA: The more significance top managers attach to the impact
on the marketplace of a technological innovation, the greater
new technology
firms' level of commitment to invest in
increase adoption of the
in turn, will
new
Issue feasibility reflects the interaction of
issue understanding, that
is,
the issue are available
'
technology.
some
effort, the
and accessible. To examine the impact of the
new technology, we examine
&
means
the perception that the
is,
be their
capability, which,
two judgements (Dutton
the perception that with
issue can be identified; and issue capability, that
will
Duncan, 1987):
for resolving the
means
feasibility
ejfect valence, defined as 'the extent to
for resolving
of investing in
which managers frame
electronic filing as an opportunity for the firm to gain competitive advantage.
Effect valence
is
a salient dimension that directly influences issue feasibility. In our
context, issue feasibility reflects the perception that managers can capitalize
changes by investing
in the
new technology
to bring
on
the
coming
about competitive advantages for the firm.
This perception closely associates with the perception of opportunity versus threat. Empirical
evidence suggests that framing events or issues as opportunities associates with a strong sense
of positive and gain possibility and of competence or control concerning issue resolution; and,
threats associate with a strong sense of negative
disablement concerning issue resolution (Jackson
Therefore,
we
&
and loss possibility and of inadequacy and
Dutton, 1988;
Thomas
&
McDaniel, 1990).
expect effect valence to influence positively the level of commitment that top
managers are willing
to
devote to the adoption of a new technology.
New
lafonnatioa Technology
Pa26
8
Hypothesis IB: Vie more top managers frame the impact of a new
technology as an opportunity to achieve competitive advantage, the greater
will
be their firms
level
'
of commitment
to invest in
capabiliry, which, in turn, will increase adoption
new technology
of the new technology.
ORGANIZATIONAL STRATEGY AND ISSUE DIAGNOSIS
Organizations' strategies intluence the outcomes of issue interpretation processes by encoding
theories of action that influence
&
how managers
Weick, 1984). Competitive posture
is
a
select
and interpret environmental stimuli (Daft
component of organizational
theories of action regarding the competitive advantages that
which they allocate
By encoding
its
its
strategy that encodes
managers value, and toward
resources (Mintzberg, 1988).
theories of action, competitive postures influence three different aspects of
issue diagnosis: First, they affect the breadth of information surveillance.
For example, Meyer
(1982) found that hospitals pursuing conservative strategies typically enacted narrow domains
and tended
to disregard the
tremors that preceded the occurrence of a strike,
Thomas and McDaniel (1990) found
hospitals pursuing entrepreneurial strategies. Similarly,
CEOs
in organizations
domain defense
makers
strategies
in
in
terms of the number of variables considered.
organizations pursuing
efficiency
internally and to clues for increasing efficiency, as
differentiation strategies,
who
are
more
likely to
strategies
opposed
in contrast hospitals
will
(1990) propose that
direct
their
attention
companies pursuing product
that hospitals with a set of values that
emphasized efficiency, predictability, and self-reliance tended
revenue;
to
et al.
Second, they
be focused externally. Third, they shape the
meaning of examined information. Meyer (1982) found
in
that
with domain offense strategies differed from their counterparts pursuing
determine the target of information gathering. For example, Milliken
decision
in contrast to
to perceive a strike as a decline
with a set of values that emphasized innovation, pluralism, and
professional autonomy, tended to perceive the strike as an opportunity for testing members'
adaptive dexterity.
In our study, during our field interviews,
we observed
that firms
competed primarily
in
terms of their emphasis on efficiency and quality of service. By emphasizing efficiency through
high volume and speediness of return preparation and through policies that keep costs down, a
firm can charge a lower price for
its
services and attract those taxpayers
bypass these services because of high costs. Indeed, managers
aggressive pricing reflecting an efficiency orientation
is
in
who might
many
otherwise
firms believe that
essential for survival in this highly
New
Iufonna(ii>ii
Tnhiiulogy
P^P6 9
competitive and turbulent marketplace (Venkatraman
features of tax-return preparation that reflect a
who
more
are willing to pay
&
Kambil, 1991).
more personal touch,
In contrast,
by stressing
a firm captures customers
for the quality of the service they receive.
Efficiency and service quality orientations shape the outcomes of issue diagnosis in terms
of the three aspects discussed above. Organizations that emphasize efficiency tend to have a
narrower range of information surveillance, pay attention
to events that
hold clues to increasing
efficiency, and interpret events that have the potential to increase efficiency as opportunities for
competitive advantage. In contrast, organizations that emphasize service quality tend to have a
broader range of information surveillance, ignore events that hold clues to increasing efficiency,
and are not likely
to interpret events that
for competitive advantage.
managers
will notice the
The
first
have the potential
to increase efficiency as opportunities
two aspects of issue diagnosis influence the extent
to
which
widespread impact of technological innovation. The third aspect of issue
diagnosis influences the extent to which managers will interpret a technological innovation as
an opportunity. Phrased as theoretical propositions, our expectations are as follows:
Proposition 2: Firms
'
competitive postures will influence managers
'
attention to
the significance of a technological innovation, which, in turn, will influence their
commitment
to invest in
adoption of the
new
new technology
capabilities
and
their firms' subsequent
technology.
Proposition 3: Firms competitive postures will influence managers
'
of the valence of a technological innovation, which,
commitment
to invest in
adoption of the
new
new technology
capabilities
'
assessments
in turn, will influence their
and
their flrms' subsequent
technology.
Competitive posture and effect significance
Breadth of information surveillance.
To understand
the nature of competitive posture in our study,
we
use Mills and Margulies'
(1980) classification of service organizations in terms of the features that characterize interaction
between employee and customer/client:
(1) maintenance-interactive,
cosmetic and continuous with the objective of building long-term
where
the employee-client interaction
where
the interaction focuses on the
is
narrow range of
improvement of
activities,
interaction
is
reliability; (2) task-interactive,
concentrated and focused; and (3) person-interactive,
the client's direct intrinsic and intimate
well-being. Maintenance-interactive firms emphasize high
relatively
where the
volume and speed and deal with a
while personal-interactive firms emphasize a highly
New
Informatioa Technology
personal touch that
and broad
may
needed, but
is
how
are
more complex and tend
the
more
&
Kambil, 1991). Here the client
accomplish
to
to require
Therefore, the decisions
it.
novel solutions (Mills
decision-making processes, and the greater, therefore,
Thomas and McDaniel
complexity tend
more complex
&
Henderson,
to
rules
technology
is
we
follows that
It
creative are
its
information processing capacity.
characterized
by high levels of
ability
and procedures for gathering information (Ginsberg,
More complex
reflect greater information variety
more aware of
Margulies, 1980).
employee
the
handle
to
greater latitude in reading and defining the environment and to use
Deighton, 1988).
(Dutton, 1990). Thus,
made by
positively to the quantity of information gathered and used for
related
show
is its
less precise not
(1990) found that the information processing capacity of top
Top management teams
interpretation.
&
is
more complex, judgmental, and
a firm emphasizes service quality, the
management teams
1
include personal financial planning and deal with a relatively complex
of activities (Venkatraman
set
about what
Pst^C
1990;
Walsh,
or differentiated organizational paradigms also
and a broader stock of interpretations from which
to
draw
expect top managers of firms emphasizing service orientation to be
the significance and diversity of the impact of a
new technology
(even
if
the
not directly relevant to the competitive advantage their firms are pursuing at
present).
Hypothesis 2A: The stronger
more
significance top
is
their firms service quality orientation, the
'
managers
will attach
to
the
impact of a new
technology on the marketplace.
Target of information gathering
The more
managers
a firm emphasizes efficiency as a source of competitive advantage, the
will
pay attention
efficiency (Milliken et
of electronic
in
al.,
developments
to technological
1990).
Our
field research
filing as increasing the efficiency
terms of the extent to which they viewed
marketplace for tax services. Accordingly,
emphasis on efficiency
to
that
may
this potential as
we
one
that
would transform
the
expect managers of firms placing a stronger
weak emphasis on
filing
on the marketplace
efficiency.
is
more
to perceive the
managers
hold clues to increasing
of tax-return preparation. However, they differed
Hypothesis 2B: Vie stronger
likely are top
its
confirmed that managers view the benefits
be more aware of the impact of electronic
than managers of firms placing a
more
their firms' efficiency orientation, the
innovation on the marketplace as significant.
impact of a technological
"
New
lufurmatiuii Techuulogy
PaSC
1 1
Competitive posture and effect valence
Meaning of Infornmtion Examined
By
volume and speed, firms emphasizing efficiency
exploiting the benefits of
competitive advantage are
as a source of
a better position to capitalize on the potential gains of electronic
in
firms emphasizing service orientation. In the words of one regional franchisee:
filing than
"Tax-filing
we
is
a taxing time for everyone including us
how many
can't predict
and communication links
customers than
I
Electronic
filing
in a
have been able
to
given day.
my work
up
will help speed
important as the price for
type of business)
show up
will
do before. This
this service (I
--
mean
.
especially since
.
and service more
is
becoming more
the standard
getting very competitive with lots of
is
is
a
me
must for
if
I
So, computers
have
stay
to
Form- 1040
CPAs
around.
and
efficient
competitive in this market.
A
manager of a firm with a strong emphasis on personal service made
the following
comment:
"Tax-filing service
down
is
a people business.
to sit
much
they earned and what they
different and
Somehow,
is
we
owe
IRS.
last
More
when
the customers
year in terms of
how
important, each customer
attempt to service each as a distinct individual.
the use of computers takes
We have done
a time
with us and talk about the
want
is
It is
away from
the personalized service.
market surveys, which have shown us
considered very important. Although
backroom, we do not believe
we might
that they should
that personal service
use computers in the
be used to interact with
clients."
Generally, firms emphasizing efficiency as a competitive advantage
to
view environmental
jolts as opportunities
attuned to the benefits of
electronic filing.
We
may be
less likely
(Meyer, 1982). However, they should be more
volume and experience offered by
would therefore expect managers of firms
a specific technology such as
that place a strong
emphasis on
efficiency to view electronic filing as an opportunity to gain competitive advantage. Similarly,
we would
expect top managers of firms that emphasize service to be less likely to frame
electronic filing as an opportunity to gain competitive advantage. Thus,
Hypothesis 3A: The stronger
more
likely
is
hypothesized:
their firms' efficiency orientation,
are top managers to frame the impact of a
an opportunity
we
to gain competitive advantage.
the
new technology
as
New lafixvaliM
TechBOioi;)
Page 12
H\poth€^s 3B: The stronger is
likely
less
they are to
rheir firms ' service quality orientation, the
frame
the impact
of a new technology as an
opportunity to gain competitive advamage.
ENSTITL TIONAL EFFECTS
OF ORGA.MZATIONAL STRATEGY
Organizational strategies also reflect institutional properties that shape strategic actions
more
automatically, or directly. Application oi the rules and routines expressed by organizational
strategies
promotes fusion among
decisions
strategic
o\er time, realization of distinctive
competencies, and maintenance of the organization's character (Burgelman. 1991: Nelson
Winter, 1982). Organizational strategies also pro\ide a
&
of orienting metaphors that enable
set
stakeholders to understand the organization (Chaffee. 1985), .As a set of routines that describe
what an organization's members believe
as a se: oi attributes that describe
use to distinguish
it
to
be
its
character, a firm's strategy defines
its
identity;
what an organization's members believe external stakeholders
from other organizations, a firm's strategy detlnes
its
Dukerich, 1991). Thus, an organization's strategy acts to engender strategic
image (Dutton
&,
momentum and
to
sustain institutional reliabilir\- and accountability.
Competitive postures retlect the development of institutionalized routines regarding
a firm will compete within the boundaries of
for consistency
and
others (Hannan
Sc
reliability
among
Freeman. 1984).
its
business domain. Internal and external
how
demands
these routines endorse cenain organizational actions o\er
.As a
form of normative control, organizational reputations
confer relative competitive advantage and disadvantage upon conforming organizations (Fombrun
& Shanley,
1990). \Mien organizations engage in changes that violate institutional reliability and
accountability,
they face increased risks of failure (Hannan
organizations engage in activities that stakeholders
important competitive advantages
(Fombrun
&
&
Freeman.
deem unacceptable, they
Shanley.
1990).
Phrased
1984);
when an
risk the loss of
as
a
theoretical
proposition, our expectations are as follows:
Proposition 4: Firms' competitive postures \ull influence their commitment to
invest in ne^v technology capabilities
new
that
emphasize efficiency are more likely
volume and speed -oriented
expectations.
deliberation
their firms' subsequent adoption
of the
technology.
Firms
the
and
Here,
top
to invest in electronic filing
rules and procedures set up,
because of
and which have shaped stakeholders
managers may notice a technological innovation and with
or interpretation,
emit a programmed
response
to
little
develop new capabilities.
3
New
InformatiuD Technology
Pa (^6
1
Similarly, firms that emphasize service quality are less likely to adopt electronic filing since
managers believe
that
it
symbolizes a reduction
send a negative message
Hypothesis 4A:
and
The stronger
its
new
Hypothesis 4B: The stronger
will be: (a) its
commitment
new
adoption of the
the firm's efficiency
is
commitment
adoption of the
(b) its
personal service to
its
customers, which
may
customers. Thus:
to its
extensive will be: (a)
in
to investing in
orientation,
new technology
the
more
capabilities
technology.
is
the firm's service orientation, the less extensive
to investing in
new technology
capabilities
and
(b) its
technology.
Direct versus Indirect Effects of Competitive Posture
the previous
Implicit in
investment
its
in
discussion
new technology
is
the expectation
competitive posture influences
that
both directly and indirectly through managerial interpretations of
mechanism
strategic impact. In specifying the role of managerial interpretation as a
we have drawn upon
mediates competitive posture,
Here we have argued
strategic
cognitive theories of organizational action.
that strategies reflect ideologies that affect
which,
issues,
subsequent organizational responses. However,
in specifying the role
a set of variables that directly constrain organizational action,
institutional theories
managers' interpretations of
influence commitments to resolving these issues and to
turn,
in
of organizational action. Here,
routines, and metaphors that satisfy stakeholders'
we have
demands
of competitive posture as
we have
little
is
legitimate for an organization,
reflection
institutional
on the strategic issue
resistance
may
prevent
its
it
its
also
drawn upon
argued that strategies reflect rules,
for consistency
and
which, thereby, determine the legitimacy of different organizational actions.
innovation
that
If
reliability,
and
a technological
managers may adopt the new technology with
presents;
if
adoption even
it
if
is
abnormal for an organization,
managers recognize
its
potential
importance to the marketplace.
A
question
we now
raise is
whether one or the other of these theories provides a stronger
explanation for organizational responses to technological innovation. Behavioral
a dominant role in
Fombrun
&
all
types of organizational actions
Ginsberg,
1990; Ginsberg
&
(Amburgey
Buchholtz,
1990).
implementation of a radical change or innovation even when a
need to change has emerged
Schendel,
1976; Ginsberg
in the
&
&
momentum plays
Miner, 1990; Boeker, 1989;
Inertial
new
forces can block the
perspective calling for the
information domain of strategic decision makers (Cooper
Abrahamson, 1991).
Institutional
momentum
is
&
not merely a
New
lufunuatiuu
Tecliiiolog}'
feature, but a
Page 14
dominant force
response to an event with
Thus,
we
tendency to emit a programmed organizational
that leads to the
little
reflection or interpretation
by decision makers (Starbuck, 1983).
expect the following:
Proposition 5: The direct effects of a firm
investing in
to
new technology
's
competitive posture on
capabilities
and on
its
its
commitment
adoption of the
new
technology will be stronger than the indirect effects of competitive posture through
managerial interpretations.
METHOD
Phase One: Detailed Field Interviews
In the first phase of the study,
participants:
(a)
senior
we
carried out detailed field interviews with three sets of
management of
the IRS, to understand the steps taken
by them
to
encourage and accelerate the conversion from paper-based returns towards electronic returns;
retum-preparers, to understand the nature of the expected effects of the electronic filing
(b)
initiative
to
on the marketplace; and
(c)
key providers of the software and communication services,
understand the nature of emerging
new products and
services.
Interviews with senior IRS personnel were critical in ascertaining the level of regulation
involved
in
the electronic filing initiative:
If electronic
filing
were compulsory
some
for
segments but not for others, then an interpretive perspective would be inappropriate for
explaining differences across these segments.
The second
set
retum-preparers helped us understand the importance of
businesses and recognize that this
is
of interviews with professional
this
a major technological change.
technological shift for their
A
third set of interviews with
key providers of software and communication services enabled us to appreciate the
capabilities required to adapt to the challenges
posed by
this
skills
and
new information technology.
Phase Two: Structured Data Collection Using Questionnaires
In
phase two,
we developed
underlie our hypotheses.
an instrument that captures the measures of the key constructs that
We
pre-tested the instrument with eight professionals in the market
and within the IRS for understandability, wording, and fatigue.
necessary to develop and
that
could serve as the
Appendix
1
test
important,
a one-page scenario describing the electronic filing
common
shows a copy of
More
stimulus for
all
the one-page scenario.
it
was
phenomenon
participants in answering the questions.
New
lufonualiuii Tecluiology
PaSC
1
5
Data
Using structured questionnaires, we obtained data on indicators of the following constructs:
service
efficiency-orienrarion,
capability
qiialiry-orientation,
commitment Appendix
.
effect
valence,
2 provides a detailed description of the measures. In 1987,
mailed questionnaires to 1000 businesses, stratified according to the population
in the
to
and
significance,
effect
in
we
each zipcode
country. Each questionnaire was accompanied by a letter explaining that the study seeks
understand the perceptions of the market to the specific initiative of electronic
tiling,
and we
had one round of follow-up with an additional copy of the questionnaire. The effective response
rate
was 43
percent. Approximately 66 percent of the sample consisted of primary tax-return
preparers, nearly
20%
of the sample consisted of individual accountants, and the remainder
represented regional and national accounting firms.
sample along three
was used
We compared
criteria: (a) the fifty states; (b) the size
initially to
this distribution to the original
category maintained by the IRS that
derive the sample; and (c) the category of the
number of
The
returns filed.
sample of completed questionnaires did not differ from the original sample along these three
criteria.
A
the
year later (in 1988), following the next return filing season,
IRS regarding adoption of electronic
extent to which firms invested in this
filing
by each firm
in
we
collected data from
our sample.
To examine
the
new technology, we measured adoption of new technology
(our final dependent variable) as the percentage of returns filed electronically during the tax
filing
season that followed a year later after the IRS had introduced electronic
filing.
We
used
the subset of the sample that had the opportunity to file electronically during the next season
(29 1 out of 430) since the dependent variable
choice to
file
Table
is
electronically.
1
variables in the
provides means, standard deviations, and intercorrelation coefficients for the
model we examined
in
our study.
Insert Table
We
all
irrelevant for those firms that did not have the
1
about here.
on a single senior informant since we observed during our interviews
that nearly
businesses are owner-managed, assisted by one or two tax professionals (average
number of
rely
tax-professionals in our final sample: between two and three); and even in larger organizations
New
lufurmatiua TM:tuiulog>'
PSSC 16
was headed by a senior executive
the tax services area
business.
This approach
consistent
is
directly responsible for
with the general
recommendation
&
Power, 1985; Venkatraman
test
our hypotheses because of
knowledgeable informant (Huber
&.
to
managing
use
the
the
most
Grant, 1986).
Analysis
We
used path analysis to
and indirect components (Alwin
into their direct
we
Specifically,
the relative
identify
&
its
ability to
decompose
effects
Hauser, 1975; Duncan, 1971; Kenny, 1979).
magnitude of the direct and indirect effects through
managerial interpretations and behavioral intentions of competitive posture on adoption of
technology. (See Figure
1.)
Insert Figure
We
new
1
about here.
carried out the required analyses in three steps: First,
we
estimated a set of four
ordinary least squares (OLS) regressions:
Adoption
=
Commitment =
Significance
Valence
=
+
Pq +/'j5Commitment
=
Po
P^
Pq
+
+
+
P,, Valence
/'j^Service
Pi^Service
In the second step,
we
+
+
+
P^, Valence
+
/'^jSignificance
PssSignificance
+
fj^Service
+
+
Pj^Service
+
/'j, Efficiency
P,, Efficiency
(1)
(2)
F,, Efficiency
(3)
P,, Efficiency
(4)
calculated the indirect effects as a simple multiplicative measure
of the magnitude of the relevant path coefficients (standardized beta coefficients) by using the
Simon-Blalock technique (Duncan, 1971). For example, we obtained the indirect effect of
efficiency
on commitment through valence by multiplying the path coefficients between efficiency
and valence (P21) and valence and commitment (P53).
In the third step,
orientation on
we
calculated the ratio of the indirect effect of efficiency and service
new technology adoption (through
to their direct effect; the ratio
capability
commitment and
issue interpretation)
of the indirect effect of issue interpretations on
new technology
adoption (through capability commitment) to their direct effect; and the ratio of the indirect
effect
of efficiency
commitment
effects
and service orientation (through issue interpretations)
to their direct effect.
on capability
This analysis provides the basis for examining the indirect
of competitive posture and issue diagnosis on new technology adoption (through
capability
commitment).
It
also allowed us to investigate Proposition 5,
which posits
that the
New
Iiifonuatidii I'txlinology
direct effects of competitive posture
indirect
effects
PaPC 17
on investment
through issue diagnosis.
We
in
new technology
will
be stronger than their
calculated pseudo f-tests for indirect effects
involving one mediating variable (Venkatraman, 1989). However, the use of ratios to examine
the strength of direct versus indirect effects
is
unavoidable since
statistical tests
of indirect effects
involving multiple mediating variables are not available.
RESULTS
Table 2 summarizes the path coefficients. The results of path analysis completely supported our
first
two hypotheses regarding the
effects
of issue
interpretation
on investment
technology: Specifically, the more significance managers attached to the
impact on the marketplace, and the more they framed
it
in
new
new technology's
as an opportunity to gain competitive
advantage, the stronger were behavioral intentions to acquire relevant technological capabilities.
Table 2 shows that both of these effects {P53 and P54)and the effect of capability commitment
on new technology adoption iP65) were highly significant. Yet, the effects of issue interpretation
on new technology adoption {P63 and P64) are
statistically insignificant.
new technology
proposition that issue interpretations influence adoption of
their effects
Our
This supports our
first
indirectly through
on capability commitment.
analysis provided partial support for the second set of hypotheses
2A
-
and 2B
-
regarding the influence of efficiency and service orientation on effect significance. Specifically,
the influence of efficiency orientation
on effect significance {P31)
influence of service orientation on effect significance {P32)
is
significant
is statistically
and positive; the
insignificant. Thus,
our analysis only supported proposition 2 (which posited that firms' competitive postures will
influence managers attention to the significance of a technological innovation) with respect to
efficiency orientation.
Our
analysis also provided partial support for the third set of hypotheses
-
3A and 3B
-
regarding the influence of efficiency and service orientation on effect valence. Specifically, the
influence of efficiency orientation on effect valence {P4])
influence of service orientation on effect valence {P42)
analysis only supported proposition 3
is
is
significant
and positive; the
statistically insignificant.
Thus, our
(which posited that firms' competitive postures will
influence managers attention to the significance of a technological innovation) with respect to
efficiency orientation.
New
lufurmatiuu Techuologj
Our
P&OQ
analysis completely supported the fourth set of hypotheses
more firms emphasized
the
commitments and
the
more extensive were
emphasized service, the weaker were
were
the stronger
efficiency,
their
their adoptions of electronic filing.
orientation
were
-
4A
their adoptions of electronic filing; the
new technology commitments and
Table 2 shows
8
and 4B. Specifically,
new technology
their
[
capability
more firms
the less extensive
that the positive effects of efficiency
on capability commitment (PSl) and adoption of new technology (P61) are
statistically significant;
iP52) and adoption of
and the negative effects of service orientation on capability commitment
new technology {P62)
are statistically significant. This supports our fourth
proposition that firms' competitive postures will influence their
commitment
test statistically
new
new technology.
technology capabilities and their firms' subsequent adoptions of the
Although we could not
to invest in
proposition 5 in the
same way
as
we
did the
previously posited hypotheses, the results of path analysis supported our expectation that the
direct influence of efficiency
will
and service quality orientation on investment
be stronger than their indirect effects through issue interpretation. Table 3 shows that the
direct effects of both efficiency
their indirect effects
and service quality orientation on adoption (B) are stronger than
through issue interpretation (D and E). Only when
effects through issue interpretation
commitment (C and F)
is
direct effect
on adoption (B)
its
direct
effect
commitment
the ratio of direct to indirect effects smaller than
on capability commitment (.256)
is
even stronger than
on adoption (-.098)
(-.091).
For
all
generation
is
1
.
This
much
is
because
stronger than
its
is
combined
slightly
indirect effects
larger
than
(C
+ D + E +
direct
its
effect
F) because
on capability
the competitive posture and issue interpretation variables influencing
the proportion of unanalyzed effects
may
the indirect
on adoption (.083). In contrast, the direct effect of service quality orientation
responses, the proportion of analyzed effects to total association
postures
we combine
on adoption with the indirect effects through capability
the direct effect of efficiency orientation
its
new technology
in
is
is
quite low; in other words,
very good. These findings suggest that competitive
influence organizational responses to strategic issues
more
intensely through their
of institutional support or resistance than through their conditioning of issue
interpretation processes.
Insert Table 3 about here.
New
lufonuuliuu Technology
Pa.2e 19
DISCUSSION AND CONCLUSIONS
We
began
differently
this
-
paper with an important question:
particularly in the
way
Why
they seize or
do firms facing similar
fail to
seize
upon the
strategic implications of
technology innovations? Researchers have examined the adoption of
function of organizational
properties
that
situations respond
new
technologies as a
enhance or hinder organizational innovativeness
(Kimberly. 1986). This approach emphasizes the importance of variables that shape institutional
support or resistance to innovativeness, which
more accurately represented when researchers
is
consider multiple rather than single innovations (Damanpour, 1991).
In
attempting
perspective,
we saw
to
explain
investment
the potential value of
in
new technology from
two different
a
Evidence
theories.
making
decision
that technological
innovations afford early adopters a rare opportunity to secure competitive advantage pointed to
the value of a cognitive approach to address this question.
According
to this
approach,
how
managers assess environmental events through processes of information acquisition and sense-
&
Weick, 1984).
positive valence managers attach to the
meaning of an
making explain why they may respond
more importance and
Specifically, the
differently to similar events (Daft
environmental development, or strategic issue, the more effort will be devoted
issue,
and the more
1987). Therefore,
likely the organization is to
we expected
managers' interpretations of
its
engage
in a radical
to resolve the
response (Dutton
& Duncan,
the decision to invest in electronic filing to be influenced
significance to the marketplace and the extent to which
by
it
presents an opportunity to gain competitive advantage.
Evidence
that
some organizations
are less likely to adopt radical innovations than others,
despite the possibilities of competitive advantage (Zucker, 1987), also points to the value of an
institutional perspective
to this
approach
of organizationalional responses
to organizational action, the rules
to technological innovation.
and routines
time determine the legitimacy of different actions and explain
differently to similar events
(Hannan
&
According
that organizations build
why
organizations
up over
may respond
Freeman, 1984; Zucker, 1987). Specifically, the more
firms emphasize rules that legitimize the regularity of an organizational response to an external
event, the
more
likely they are to
embrace
that
response and vice versa. Therefore,
the decision to invest in electronic filing to be influenced
by the extent
to
we
expected
which such behavior
might be considered routine for firms emphasizing competitive norms of efficiency and
extraordinary for firms emphasizing competitive norms of service quality.
New
Infonnatiou Techiiologj-
The
results of
PasC 20
our study suggest that both of these approaches are useful
addressing
in
our original question: both managerial interpretations and competitive postures influenced
investment
in
new technology. This
suggests that research on investment in
new technology
warrants an integrative approach that includes the effects of managerial interpretations and
The former may play a more important
institutional contexts in shaping organizational responses.
role in initiating
change and innovation, while the
implementing change and innovation. This
is
latter
abilities
interpret
to
pressures
&
accumulate over time (Ginsberg
It is
role in
also congruent with research
toward containment appear
change than
for
more important
play a
consistent with two-stage "ambidextrous" models
of the process of innovation adoption (Damanpour, 1991).
strategic change: Organizational tendencies
may
Buchholtz,
the
to
managers'
less related to
institutional
baggage
managers
that
Thus, even after consultants have
1990).
introduced frame-breaking ideas into strategic decision making processes, radical changes
be
impeded
unless
organizations
resort
to
institutionalized forces of resistance (Ginsberg
Table 2
interpretations
their
combined
shows
on the
that
the
combined
on the extent
&
and
symbolic
overcome
to
of competitive posture and
effects
who
supports the arguments of organizational theorists
is
managerial
=
are considerably stronger (R^
which the new technology
to
actions
may
Abrahamson, 1991).
commitment
level of capability
effects
political
on
=
adopted (R^
.26) than
.11).
This
maintain that inertia! forces inhibit
responsiveness to environmental change despite managers' awareness and behavioral intentions
(Hannan
&
Freeman, 1984). The predominance of
inertial tendencies also
might explain
why
analysts have characterized the return preparation industry as having limited applications of
information technology even though
&Kambil,
it
is
a highly information intensive business (Venkatraman
1991).
Like previous research, our study supports the importance of strategy
managers'
information
gathering
and
sense-making
McDaniel, 1990) and the importance of such
(Button
&
Duncan,
1987).
activities
activities in
(Meyer,
provoking
in
to
& De
Meyer, 1991).
In a recent study of
for
&
change
show whether
institutional contexts directly influence strategic responses or indirectly influence
interpretation (see Schneider
Thomas
1982;
momentum
However, previous research has neglected
influencing
them through
one organization's
response to a nontraditional and emotional strategic issue, Dutton and Dukerich (1991) found
that organizational identity influenced action both indirectly
through issue interpretation and
New
liiformaliou Technology
directly
PaPfi 2
by providing guidelines
for evaluating success, recipes for solutions,
acceptable ways of resolving the issue.
However,
importance of direct versus indirect effects
in
and parameters for
examine the
relative
influencing action. In contrast, this study found
the direct influence of firms' competitive postures
to
their study did not
1
on
their responses to technological innovation
be more powerful than their indirect influence through managerial interpretations. These
support
results
arguments of organizational theorists regarding the predominance of
the
and the tendency
institutionalized responses
to use issue interpretations to justify, rather than to
inform, organizational action (Starbuck, 1983).
Our
findings also
organizational
responses
may be more
orientation
suggest
in
intrinsic,
ways
may depend on what
in
which competitive postures influence
we
aspect
sensitive to pressures of reliability
such as efficiency orientation. This
involved
the
that
is
examining.
Service quality
and accountability than a dimension
because the employee/customer interactions and repertoires
developing an emphasis on, and reputation
intimate,
are
and complex than those involved
for,
in
high quality service are more
developing an emphasis on, and
reputation for a simple and narrow range of activities, such as providing low prices and quick
service (Mills
&
Margulies, 1980). Our interview data also supports
this
conclusion: Managers
of firms with a strong efficiency orientation tended to talk about electronic filing as an
opportunity for attracting
as a
as
more
new customers who would now
see professional tax form preparation
error-free process than before; or they tended to see the availability of electronic filing
a threat unless their firm
offered
it
because they feared customers would go to those
competitors that can get them their refunds sooner. In contrast, managers of firms with a strong
service quality orientation tended to talk about their customers' preferences for
more
careful
analysis to identify additional possible deductions and their employees lack of comfort in using
the
new
technology.
To
these managers, electronic tiling represented an intrusion to their firms'
modus operandi.
Limitations and Future Directions
Future research could improve the generalizability of the results in several ways. First, studies
should
broaden the examination of organizational responses by including other types of
responses, such as strategic alliances. Although
we
implicitly
assumed
that adoption of the
new
technology reflects a strategic response given the strategic nature of the challenges posed by
electronic
filing,
we
did not examine
how
firms actually leveraged adoption of the
new
New
lofomiatiou Tecluiology
Pa2£ 22
technology to gain competitive advantage.
new technology adoption
of
The
we
we examined
it
studied allowed us to
level of analysis. Equivalent to those of the
perceptions
leave
to future studies to
examine
this aspect
greater detail.
in
nature of the firms
We
constitute
examine interpretations
dominant coalition
at the individual
in larger firms, the
managers'
an important link between environmental events and
organizational actions (Carter, 1990). However, researchers have also studied interpretation at
the
&
group and organization levels
Deighton,
1988).
(see, e.g., Isabella,
1990; Meyer, 1982; Walsh, Henderson.
Investigating the impact of collective interpretations on organizational
responses to technological innovation should provide an important challenge for the future.
Finally, future research should use research methodologies that better account for the
&
Dukerich,
in the
process of
processes of interpretation involved in strategic issue diagnosis (see, e.g., Dutton
1991). This
is
particularly important for
examining the extent
issue diagnosis follow a logical sequence
from scanning
to
which stages
to action (Milliken,
1990). Studies
should also broaden their examination of issue dimensions. For example, work by
Dutton, Kahn,
&
Hart (1991) suggests that threat and opportunity
dimensions of issue assessment. Future research examining issue
may
represent two distinct
feasibility or issue valence
be enhanced by using more robust measures, such as those suggested by Denison
By employing
Denison,
et al.
respond
to greater
(1991).
a design that examines responses over multiple time periods, future research also
can examine the influence of strategic posture and managerial interpretations on the time
to
can
(see, e.g.,
Ginsberg
&
it
takes
Buchholtz, 1990). Directions such as the above should lead
understanding of the forces that influence organizational responses to technological
innovation.
New
Inforuiutiiiii TM:luiulog;y
Pa 26
''3
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Page 27
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2
>
^
CO
C:
>
New
Infonnatiou Technology
Page
TABLE
1
Descriptive Statistics of Variables in the
ModeP
Correlations'"
Variables
1.
Efficiency
Orientation
2.
Quality
Orientation
3. Effect
Significance
4. Effect
Valence
5.
Capability
Commitment
6.
Mean
Adoption of
New Technology
5.12
s.d.
1.
4.
5.
2^
New
Information Technology
TABLE
2
Path Coefficients for the Model
Path
in
Figure
1
New
lufonuutiuu Tectiuulugy
Page 30
TABLE
3
Analysis of Direct versus Indirect Relationships
Antecedent Factor
New
Inroniialiuii Tecliiiologj'
APPENDIX
Pa2S
1
Description of the One-Page Scenario Used in the Study
You may be aware that the
1987.
A
IRS has introduced Electronic Filing in selected areas in 1986 and
brief description of the system is provided below. (Please read before continuing)
The IRS has completed
pilot tests of electronic filing of individual tax returns. Initially, it was limited
to returns prepared in a few metropolitan areas. Next year the project will be substantially expanded
to cover entire states or major potions thereof. Soon, it will be nation wide. The IRS will only accept
returns from approved electronic filers.
return preparer.
An electronic
filer
is
usually (but need not necessarily be) a
Each year, the IRS will publish specifications which prescribe the format of computer-prepared
returns and the communications requirements for transmitting these returns to the IRS. A firm
desiring to file returns electronically must arrange for the computer software and facilities to
computer-generate and electronically transmit returns in accordance with the specifications. It must
then successfully complete an acceptance test to demonstrate its ability to comply with the IRS
specifications.
Prior to transmitting live returns, an electronic filer must secure the signatures of the taxpayers on
Taxpayer Declaration Forms, which are batched and mailed to the Service weekly, in addition, the
preparers must provide clients with printout of their electronic return. IRS will transmit
acknowledgements to electronic filers within 24 hours of receipt of electronic return, indicating
whether returns have been accepted or rejected. The reasons for rejection will be provided so that
they can be retransmitted after correction.
Electronic filing enables the Service to generally issue 95% of the refunds within three weeks of
receipt. The remaining returns have problems that would have resulted in a delay irrespective of the
method of filing. The Service will guarantee that electronic returns are not treated any differently
from those filed on paper from the standpoint of audit selection or other compliance action.
considering the possibility of accepting electronic payments with electronic returns. The
in the form of authorizations by the taxpayers contained on the electronic returns
for the IRS to either (a) debit checking accounts, or (b) draw on established lines of credit, such as
credit card accounts.
IRS
is
payments would be
^
1
New
lufumiation TecUuology
Page
APPENDIX
2
Measures
Details of Questionnaire
Questionnaire measures were worded as follows:
Efnciency Orientation
Different organizations emphasize different factors in their business strategies. Please indicate the degree
of importance that you generally place on the following factors in your business strategy
important, 7
=
(1
=
not
at all
extremely important).
1.
Low
2.
Large volume of business.
3.
Speed of return preparation
4.
Competitive pricing.
cost of operations.
Measure: The aggregate of these four indicators was used
reliability is given by Cronbach's a, estimated at 0.782.
to
measure
this construct.
The measure of
Service Quality Orientation
Different organizations emphasize different factors in their business strategies. Please indicate the degree
of importance that you generally place on the following factors in your business strategy
important, 7
=
(1
=
not
at all
extremely important).
1.
Personalized service.
2.
Accuracy and completeness of return.
3.
Service quality.
Measure: The aggregate of these three indicators was used
reliability is given by Cronbach's a, estimated at 0.741.
to
measure
this construct.
The measure of
Effect SigniHcance
When
electronic filing
is
fully
market for tax-related services for individuals
1.
(1
rate
its
impact competition
in the
high impact)?
Financial service firms (retail banks)
2.
Software firms
3.
Telecommunication providers
4. Service
5.
how would you
= low impact, 7 =
implemented,
bureaus
Tax-return preparer firms
Measure: The aggregate of these five indicators was used
reliability is given by Cronbach's a, estimated at 0.762.
to
measure
this
construct.
The measure
3^
New
lafonuatiou Tecluiulogy
Pa26 33
Effect Valence
Please indicate the degree of opportunity or threat posed by the following factor for your business
An
operations.
competitors.
threat,
4
=
A
opportunity implies that your business can exploit
threat implies that your business
neutral, 7
=
is
likely to be
it
to gain relative
more negatively
as a
measure of
this construct since
we
perceived attractiveness of a specific technological innovation on a specific tlrm.
more
advantage over
by
it
(1
=
great
great opportunity).
Measure: Only one indicator was used
a
affected
sought to measure the
A
higher score indicates
positive effect valence.
Capability
Commitment
Please indicate the likelihood that your organization will adopt each of the following responses
(1
=
not
at all likely,
7
=
extremely
likely).
1.
Strengthening, or acquiring computer processing
2.
Strengthening, or acquiring software capabilities.
3.
Strengthening, or acquiring communication capabilities.
facilities.
Measure: The aggregate of these three indicators was used
reliability is given by Cronbach's a, estimated at 0.933.
to
measure
this construct.
The measure
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