Measurement of the intensity of global information technology usage: quantitizing the value of a firm’s information technology
| Pages | 380-394 |
| DOI | https://doi.org/10.1108/02635579810246499 |
| Date | 01 December 1998 |
| Published date | 01 December 1998 |
| Author | Toru Sakaguchi,C. Clay Dibrell |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
[ 380 ]
Industrial Management &
Data Systems
98/8 [1998] 380–394
© MCB University Press
[ISSN 0263-5577]
Measurement of the intensity of global information
technology usage: quantitizing the value of a firm’s
information technology
Toru Sakaguchi
The University of Memphis, Memphis, Tennessee
C. Clay Dibrell
The University of Memphis, Memphis, Tennessee
With the increasing conver-
gence of international mar-
kets, a greater number of
firms are entering the global
arena. As these firms com-
pete in the global market-
place, they utilize information
technology to formulate and
implement strategies and to
control and coordinate their
resources. This increased
dependence on information
technology by the firm leads
to the following question: how
do firms measure the value of
a global information system
to the performance of the
firm? Ideally, information
technology would be evalu-
ated based on its degree of
strategic use through a firm’s
performance. However, the
resulting benefits of IT as a
utility in performance are
generally difficult to identify.
First, this paper attempts to
conceptualize the intensity of
global information technology
usage by constructing a new
instrument measuring IT
investment, strategic impor-
tance of the IT and degree of
IT training. Second, the paper
formulates and submits a
pilot test of a holistic model
of the relationship between
the intensity of global infor-
mation technology usage and
a firm’s global strategy and
performance.
Both authors have contrib-
uted equally to this article
Introduction
With the increasing convergence of interna-
tional markets, a greater number of firms are
entering the global arena. As firms progress
toward an international presence, they are
forced to make decisions on various aspects of
global information systems that will accommo-
date their needs. There are many pitfalls and
hazards in planning, designing, implementing
and maintaining these global information
systems. For instance, many managers do not
understand which information systems are
available for their foreign subsidiaries. Roche
(1992) confirms widely held concerns about
very unequal distribution of computer equip-
ment and control over information resources
among subsidiaries in different countries.
These added problems and difficulties lead
to higher expenses and longer payback peri-
ods. Hence, the following questions should be
considered. Is the value of the information
technology (IT) to a firm worth the invest-
ment? Will a global information system help
increase our firm's ability to plan and imple-
ment global strategies? How do we measure
the value of a global information system to the
performance of the firm? These questions
present major problems to both managers and
researchers. Unfortunately, there is a paucity
of research in a global context of the strategy-
information technology-performance (GSIP)
relationship but not from a domestic context.
From a domestic perspective, strategic
information systems have been studied as
competitive tools. These information systems
(IS) influence a firm’s ability to gain a com-
petitive advantage (e.g., Ives and Learmonth,
1984; Lederer and Sethi, 1988; Mahmood and
Soon, 1991; McFarlan et al., 1983; Parsons,
1983; Porter, 1980; Porter and Miller, 1985;
Rackoff et al., 1985) and to reengineer busi-
ness processes (e.g., Davenport and Short,
1990; Hammer, 1990; Keen, 1991). These stud-
ies focus on the use of IS to enhance domestic
competitiveness implicitly or explicitly
(Palvia, 1996). Few researchers have
attempted to move this research to a global
context (e.g., Palvia, 1996; ComputerWorld,
1995). However, there does not seem to be an
agreement on which measurement instru-
ment captures the intensity of global IT usage
most effectively.
Thus, this paper will attempt to conceptual-
ize what factors are involved in the intensity
of a global information technology usage by
constructing a new instrument of IT invest-
ment. The paper's structure will include a
brief literature review of the domestic strat-
egy-IT-performance relationship. The second
part formulates a model of the intensity of
global information technology usage, and the
third part will include the process of generat-
ing measures of the intensity of global IT
usage. Lastly, the paper will close with a
future directions and conclusion section.
Strategy-IT-performance
relationship
Although there has been little research con-
ducted on the strategy-IT-performance rela-
tionship, there are two narrow streams of liter-
ature which have bearing on the development
of the measurement model of intensity of
global IT usage. The research streams of strate-
gic information systems and the strategic
impacts of IT investments upon a firm’s perfor-
mance provide a basis for the proposed model.
Both of these two streams are interrelated, as
they attempt to provide a better understanding
of how a firm’s strategy influences IT and how
IT influences a firm's performance.
Strategic information systems
The first is the general literature on strategic
information systems (SISs). SISs, or the use of
information systems as a competitive weapon,
have been developed and studied largely from
a domestic perspective (e.g., Rackoff et al.,
1985; Lederer and Sethi, 1988). Porter (e.g.,
1980, 1985) develops a framework of application
of SISs, which consists of several dimensions
of strategic applications of IS: five competitive
forces (bargaining power of customers, bar-
gaining power of suppliers, new entrants,
substitute products/services and competitive
rivalry); and, strategic thrust (low cost leader,
differentiation and innovation).
Parsons (1983) expands the Porter (1980)
framework and argues that firms must ana-
lyze the impact of IT at the industry and firm
levels of analyses. At the industry level, IT
will significantly affect markets, products
and services and production economies. At
the firm level, IT will alter the manner in
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