The Role of Information Technology Organizational Design in Firms' Ability to Innovate

251 Pages·2017·1.71 MB·English

Walden University
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Walden Dissertations and Doctoral Studies
Walden Dissertations and Doctoral Studies
Collection
2015
The Role of Information Technology
Organizational Design in Firms' Ability to Innovate
Hassan S. Halimi
Walden University
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Walden University

College of Management and Technology

This is to certify that the doctoral dissertation by

Hassan S. Halimi

has been found to be complete and satisfactory in all respects,
and that any and all revisions required by
the review committee have been made.

Review Committee
Dr. David Gould, Committee Chairperson, Management Faculty
Dr. Anthony Lolas, Committee Member, Management Faculty
Dr. Bharat Thakkar, University Reviewer, Management Faculty

Chief Academic Officer
Eric Riedel, Ph.D.

Walden University
2015
Abstract

The Role of Information Technology Organizational Design in Firms’ Ability to Innovate
by
Hassan S. Halimi

MS, Texas A&M University, 1990
BS, Texas A&M University, 1989

Dissertation Submitted in Partial Fulfillment
of the Requirements for the Degree of
Doctor of Philosophy
Management

Walden University
August 2015
Abstract
Information technology (IT) organizations have become an integral part of many firms,
with increasing strategic significance. Consequently, investments in IT represent a
significant percentage of a firm’s expenditure. Despite the investment, the business value
of IT has been difficult to quantify, creating uncertainty about a firm’s investments in IT
innovation. The purpose of this nonexperimental study was to examine relationships
between a firm’s innovativeness and 3 IT organizational design factors: knowledge
creation, dynamic capabilities, and communication structures. The research questions
addressed the relationships between a firm’s ability to innovate and specific design
elements of the IT organization. The study was based on Nonaka’s dynamic theory of
organizational knowledge creation, Schumpeter’s industrial market structure, and
Wernerfelt’s resource-based view of the firm. Data were collected from an online survey
with 115 employees of firms that depend on IT to deliver their products or services.
Pearson product-moment correlational analysis revealed statistically significant
relationships between the IT organizational design factors and a firm’s ability to
innovate. The implications for positive social change stemming from this study affect
managers of firms that rely on IT to deliver products or services. The findings suggest
that the design of the IT organization influences the performance of the firm through cost
reduction and its sustainability through innovation, both of which lead to community
economic empowerment thus benefiting the general public.
The Role of Information Technology Organizational Design in Firms’ Ability to Innovate
by
Hassan S. Halimi

MS, Texas A&M University, 1990
BS, Texas A&M University, 1989

Dissertation Submitted in Partial Fulfillment
of the Requirements for the Degree of
Doctor of Philosophy
Management

Walden University
August 2015
Dedication
To my wife, Marcia; my daughter, Sarah; and my son, Adam. Without their
patience and support, this would not have been possible.
Acknowledgments
Success of a dissertation is unlikely without the help of many people who provide
encouragement and guidance throughout the process. My sincere gratitude goes to my
committee chair Dr. Gould, who guided the dissertation research study; thank you for you
guidance. My thanks to Dr. Lolas; your insightful feedback guided and identified
opportunities for improvements. My thanks also go to Dr. Thakkar for his support
throughout the program. My sincere appreciation goes to Walden University for enabling
working adults to achieve their dreams. Many thanks to the doctoral advisors and several
of Walden University’s support members and the management program; I am grateful for
all your help. Lastly, I am blessed to have my wife, Marcia, throughout this journey; your
sacrifices are appreciated. Thanks to Sarah and Adam, who never complained when I
missed an event that I should have attended. Thank you all.
Table of Contents
List of Tables .................................................................................................................... vii
List of Figures ......................................................................................................................x
Chapter 1: Introduction to the Study ....................................................................................1
Background of the Study ...............................................................................................2
Strategy Formulation .............................................................................................. 5
Strategic Alignment ................................................................................................ 6
Business Agility ...................................................................................................... 7
Modularity and Communication Structure ............................................................. 8
Enterprise Knowledge Creation .............................................................................. 8
Dynamic Capabilities .............................................................................................. 9
Problem Statement .........................................................................................................9
Purpose of the Study ....................................................................................................10
Research Questions and Hypotheses ...........................................................................11
Hypothesis 1: IT Knowledge Creation ................................................................. 12
Hypothesis 2: IT Dynamic Capabilities ................................................................ 14
Hypothesis 3: Communication Structures ............................................................ 15
Hypothesis 4: Communication Structures and Knowledge Creation ................... 16
Hypothesis 5: Knowledge Creation and Dynamic Capabilities ............................ 16
Nature of the Study ......................................................................................................17
Theoretical Base...........................................................................................................17
Definition of Terms......................................................................................................18
i
Assumptions .................................................................................................................21
Scope and Delimitations ..............................................................................................22
Limitations ...................................................................................................................22
Significance of the Study .............................................................................................23
Theoretical Contributions of the Study ................................................................. 24
Practical Contributions of the Study ..................................................................... 24
Contributions of the Study to Positive Social Change .......................................... 25
Summary and Transition ..............................................................................................25
Chapter 2: Literature Review .............................................................................................27
Literature Search Strategy............................................................................................29
Theoretical Foundation ................................................................................................31
Schumpeter’s Creative Destruction ...................................................................... 32
Dynamic Theory of Organizational Knowledge Creation .................................... 32
Wernerfelt’s Resource-Based View of the Firm ................................................... 33
Conway’s Law ...................................................................................................... 34
Literature Review.........................................................................................................35
The Contemporary Firm ....................................................................................... 35
The Different Views on Innovation ...................................................................... 37
The Nature of Sociotechnical Innovation ............................................................. 39
Organizational Innovation .................................................................................... 43
Measuring Innovation ........................................................................................... 44
The Role of the IT Organization in Firms ............................................................ 48
ii
The IT Organizational Design .............................................................................. 54
Summary and Transition ..............................................................................................67
Chapter 3: Research Method ..............................................................................................69
Research Design and Rationale ...................................................................................69
Methodology ................................................................................................................72
Population ............................................................................................................. 73
Sampling and Sampling Procedures ..................................................................... 73
Procedures for Recruitment, Participation, and Data Collection .......................... 76
Pilot Study ............................................................................................................. 79
Instrumentation and Operation of Constructs ....................................................... 80
Data Analysis Plan .......................................................................................................87
Hypothesis 1: IT Knowledge Creation ................................................................. 88
Hypothesis 2: IT Dynamic Capabilities ................................................................ 89
Hypothesis 3: Communication Structures ............................................................ 90
Hypothesis 4: Communication Structures and Knowledge Creation ................... 92
Hypothesis 5: Knowledge Creation and Dynamic Capabilities ............................ 92
Analysis Strategy .................................................................................................. 92
Threats to Validity .......................................................................................................94
External Validity ................................................................................................... 95
Internal Validity .................................................................................................... 95
Construct Validity ................................................................................................. 96
Ethical Procedures ................................................................................................ 96
iii