Justifying business intelligence systems adoption in SMEs. Impact of systems use on firm performance
| Pages | 210-228 |
| Date | 04 February 2019 |
| DOI | https://doi.org/10.1108/IMDS-02-2018-0085 |
| Published date | 04 February 2019 |
| Author | Aleš Popovič,Borut Puklavec,Tiago Oliveira |
| Subject Matter | Information & knowledge management,Information systems,Data management systems,Knowledge management,Knowledge sharing,Management science & operations,Supply chain management,Supply chain information systems,Logistics,Quality management/systems |
Justifying business intelligence
systems adoption in SMEs
Impact of systems use on firm performance
AlešPopovič
Department of Business informatics and logistics,
Faculty of Economics, University of Ljubljana, Ljubljana, Slovenia and
NOVA Information Management School (NOVA IMS),
Universidade Nova de Lisboa, Campus de Campolide, Lisboa, Portugal
Borut Puklavec
Department of Information Management,
Faculty of Economics, University of Ljubljana, Ljubljana, Slovenia, and
Tiago Oliveira
Department of Information Management,
NOVA Information Management School (NOVA IMS),
Universidade Nova de Lisboa, Campus de Campolide, Lisboa, Portugal
Abstract
Purpose –The purpose of this paper is to provide a better understanding of how post-adoption use of
business intelligence system (BIS) affects firm performance. It develops and empirically tests a conceptual
model for assessing the impact of BIS routine and innovative usage on firm performance the context of small
and medium enterprises (SMEs).
Design/methodology/approach –Drawing on the data collected from 181 SMEs we analyzed how BIS
usage influences firm performance using the PLS-SEM method.
Findings –The paper provides empirical insights about how BIS routine and innovative usage affect firm
performance.
Practical implications –The results provide instrumental insights for managers and solution providers to
help them understand the influence of various determinants to more effectively conclude the post-adoption
process in SMEs.
Originality/value –This studyrepresents important progressin the authors’theoreticalunderstanding of the
role of BIS routineand innovative usage across differentBIS partial impacts on firm performancedimensions.
Keywords Business intelligence, Firm performance, Systems use
Paper type Research paper
1. Introduction
In the literatureon the business value of informationtechnology (IT), the relationshipbetween
IT investments and their effects on firm performance continues to interest academics and
practitioners (Devaraj and Kohli, 2003; Hsieh et al., 2011; Liu et al., 2013; Melville et al., 2004;
Schryen, 2013). Empirical evidence to unequivocally support the view that IT investments
enhance firm performance has been elusive (Bharadwaj, 2000; Kohli and Grover, 2008; Nevo
and Wade, 2010; Santhanam and Hartono, 2003). In enterprise-wideinformation systems (IS)
research, the adoption, use and value of business intelligence systems (BIS) and the link to
firm performance has emerged as an active research area within the discipline (Audzeyeva
and Hudson, 2015 ; Işıketal., 2013; Popovičet al., 2012). We defineBIS as “quality information
in well-designed data stores, coupled with software tools that provide users timely access,
effectiveanalysis and intuitive presentationof the right information,enabling them to take the
right actions or make the right decision”(Popovičet al., 2012).
Today, IS researchersstill face strong pressureto answer the question of whether and how
IT investments add to firm performance (Hsieh et al., 2011; Liu et al., 2013; Sabherwal and
Industrial Management & Data
Systems
Vol. 119 No. 1, 2019
pp. 210-228
© Emerald PublishingLimited
0263-5577
DOI 10.1108/IMDS-02-2018-0085
Received 24 February 2018
Revised 28 June 2018
Accepted 17 July 2018
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0263-5577.htm
210
IMDS
119,1
Jeyaraj, 2015). Answers to this persistent challenge have important implications for the way
firms approach IT investment and management(Zhu and Kraemer, 2005). To respond to this
challenge, some efforts have been devoted to studying BIS adoption and firm performance
(e.g. Côrte-Real et al., 2017; Gupta and George, 2016; Wamba et al., 2017). While thesestudies
contributed to our understanding of BIS innovation, several gaps can be identified in the
literature.To begin with, althoughinnovation diffusion representsa complex process, muchof
the existingresearch has focused on the adoption decision(e.g. Puklavec et al., 2014;Yeoh and
Popovič, 2016) and less on the post-adoption environment (e.g. Popovičet al.,2014).Infact,
prior researchhas shown that actual usage may be an importantlink to IT value, but this link
seems to be missing in the literature (Devaraj and Kohli, 2003).
Next, there is a lack of empirical evidence to gauge BIS use and its impact on firm
performance (Elbashir et al., 2008). Extant studies have addressed this issues from various
(partial) perspectives (e.g. Wamba et al., 2017), yet there is a need for a theoretically thorough
and empirically relevant framework to examine the use and value of BIS in organizations.
Third, earlier research explored the BIS adoption stage and use stage in the context of
large firms and called for future research to re-examine the mechanisms linking adoption
and use to performance outcomes in other contexts (Li et al., 2013; Popovičet al., 2014). We
believe it is important to investigate whether prior assumptions can be generalized and
empirical findings are applicable in different firm-size contexts. To achieve this, we study
BIS in small and medium enterprise (SME) setting to encompass the experience of smaller
firms that might represent different aspects of BIS use in transforming firm performance.
In summary, these gaps in the literature limit our understanding of the process of BIS use
for attaining higher levels of firm performance. Our study seeks to narrow these gaps. The
following research questions motivating our work are:
RQ1. What framework can be used as a theoretical basis for studying BIS use and firm
performance?
RQ2. Within this theoretical framework, how can different usage behaviors affect value
in the context of SMEs?
RQ3. How would various BIS-enabled partial impacts on firm performance then affect
the overall firm performance?
To better understand these issues, from a resource-based perspective, we analyzed the BIS
impact on firm performance that stems from the unique characteristics of the BIS (Popovič
et al., 2012). Then, an integrative model for BIS use and its impact on firm performance is
developed. We tested this model using survey data from 181 SMEs. Data analysis was
performed by partial least squares (PLS). The results demonstrate varied impacts of distinct
usage behaviors on firm performance. These results contribute to the continued debate on
IT payoffs (Davern and Kauffman, 2000; Melville et al., 2004) and their state in BIS context
(Elbashir et al., 2008; Popovičet al., 2010).
2. Theoretical framework
Firm performance denotes collective IT-enabled performance across all firm activities, with metrics
capturing bottom-line firm impacts such as cost reduction, revenue enhancement and competitive
advantage (Melville et al., 2004). Prior research on the business value of enterprise-wide IT
adoption has investigated the direct effect of IT implementation and use on firm performance, but
rarely how this effect is realized through the partial impacts of IT use on firm performance.
2.1 Linking IS use to firm performance
The importance of the link between IS use and firm performance has long been conversed in
the literature (Aral and Weill, 2007; Devaraj and Kohli, 2003; Mithas et al., 2011). IS use has
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