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Factors affecting the implementation of e-business strategies

An empirical study in Taiwan
Jung-Chi Pai
Department of Business Administration, Takming University of Science and Technology, Taipei, Taiwan, and

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Received February 2008 Accepted February 2008

Chi-Hung Yeh
Department of Information Management, National Taiwan University of Science and Technology, Taipei, Taiwan
Abstract
Purpose This study aims to examine the relationships between contingency factors and the effectiveness of the implementation of core e-business strategies and to explore the inuences on the implementation process quality for e-business strategy. Design/methodology/approach To examine the relationships between the constructs in the research model, data were gathered via a questionnaire survey sent to 650 manufacturing enterprises in Taiwan. Findings The survey results indicate that some factors inuence the effectiveness of the implementation of core e-business strategies. The implications of the ndings for practice and future research are also examined. Practical implications Business managers or IS executives of enterprises should consider these environmental, organizational and technological contingency factors while implementing e-business strategies. Originality/value Numerous researchers have proposed various studies relating to e-business strategies. However, these studies focused on developing e-business planning frameworks and conducting case studies, and little attention has been paid to empirical studies examining the inuences of contingency factors on the implementation of e-business strategies. The results of this study will be of interest to business managers or strategic planners who are initiating or conducting e-business strategic planning exercises, as well as to researchers in the eld of information systems strategic planning and management. Keywords Electronic commerce, Contingency planning, Taiwan Paper type Research paper

Introduction The emergence of e-business strategies has consistently been identied as a critical issue facing IS executives and academic researchers (Pant and Ravichandran, 2001; Cagliano et al., 2003; Johnson and Whang, 2002; Plant et al., 2003; Li and Chang, 2004;
The authors would like to thank the National Science Council of the Republic of China (Taiwan) for nancially supporting this research under Contract No. NSC94-2416-H-147-002.

Management Decision Vol. 46 No. 5, 2008 pp. 681-690 q Emerald Group Publishing Limited 0025-1747 DOI 10.1108/00251740810873446

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Burn and Ash, 2005; Cagliano et al., 2003; Daghfous and AI-Nahas, 2006; Coltman et al., 2007). Numerous researchers have adopted various perspectives to examine issues related to e-business strategies. However, most studies have focused on the development of the conceptual framework and case study (Pant and Ravichandran, 2001; Rodgers et al., 2002; Johnson and Whang, 2002; Li and Chang, 2004), survey research based on contingency theory has received little attention. Recently, growing numbers of enterprises have implemented innovative e-business applications to boost their competitive advantage. However, the effectiveness in implementing e-business applications has fallen below expectations for most businesses. An exhaustive literature review demonstrates that many organizational and environmental factors inuence the implementation of e-business strategies. Numerous researchers have proposed various studies dealing with e-business strategies. However, these studies focused on developing e-business planning frameworks and conducting case studies, and few empirical studies have examined the effects of contingency factors on e-business strategy implementation. The main purpose of this study is to examine how contingency factors and the effectiveness of the implementation of core e-business strategies are related. Moreover, this study also examines the factors inuencing the quality of e-business strategy implementation. The hypothesized relationships were empirically tested using a eld survey of manufacturing enterprises in Taiwan. The empirical results of this study are interesting to business managers or strategic planners involved in initiating or conducting e-business strategic planning exercises, and to researchers interested in information systems strategic planning and management. Literature review According to Weill and Olson (1989), contingency theory is considered an important basis for technology-organization related research. According to contingency theory, functional-dependent relationships can be established for environmental and managerial variables, with the environmental variables being independent variables and the management variables being dependent variables. Begeron et al. (1991) proposed that A contingency approach in which a methodology would be selected based on its congruence with factors such as level of certainty in the organizations environment, overall strategy, and management of information resources. Recently, some researchers have studied the inuences of contingency factors on information systems management. For example, McKeen et al. (1994) investigated the effects of four contingency factors (task complexity, system complexity, user inuence, and user-developer communication) on the relationship between user participation and user satisfaction. Additionally, Lin and Shao (2000) examined the relationship between user participation and system success using a simultaneous contingency approach, and identied three contingency variables, including system impact, system complexity and development methodology. Furthermore, Finlay and Wilson (2000) conducted a survey investigating the contingency factors affecting the validation of end-user spreadsheet-based decision support systems (DSS). Moreover, Premkumar and King (1994) validated the relationship between organizational characteristics and information systems planning via a eld survey based on contingency theory, and demonstrated that numerous contingency variables inuenced ISSP effectiveness, including resource input, the role of IS, quality of implementation and facilitation

mechanisms. Additionally, Teo and King (1997) indicated that both categories of contingency variables (including organizational characteristics and environmental characteristics) inuence ISSP and the strategic use of information technology. Numerous internal and external factors inuence the implementation of e-business strategies; organizations thus should consider contingency factors that may inuence the quality of the implementation process for e-business strategy. Research model and hypotheses The research model was constructed based on a literature review, (Figure 1), utilizing contingency, organizational and information systems management theory as reference disciplines. Tait and Vessey (1988) indicated that Contingency theory acknowledges that certain variables may affect the outcome of certain processes. Contingency theory itself has no content; it is merely a framework for organizing knowledge in a given area. Consequently, this study draws on the IS implementation models of Ives et al. (1980) and those of King and Sabherwal (1992) to provide a basis for developing a research model regarding the inuence of contingency factors on the quality of the implementation process for e-business applications. After collecting and gathering relevant literature, Larsen (2003) proposed that parameters inuencing the effect of information system can be distinguished into four structures including IS expertise related, Organization related, IT related, as well as Individual and job related. Furthermore, this study also uses Larsens (2003) model as a basis for developing the research model. Enterprises come to strategic opportunities and relevant action plans of organizations to ensure competitiveness through IT (Massetti and Zmud, 1996). But

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Figure 1. Research model

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in the era of e-business, enterprises need to consider application of IT as well as the external environment and organization factors when establishing strategy. Tosi (1992) proposed that the dynamic environment enterprises face will inuence their strategic operation directly. According to the literatures, we hypothesized that organizational readiness and IS core competence are positively related to the quality of the implementation process for e-business applications, as well as environmental dynamism is negatively related to the quality of the implementation process for e-business applications. Furthermore, we hypothesized that task uncertainty affect the relationship between organizational readiness and the quality of the e-business implementation process, as well as the relationship between IS core competence and the quality of the e-business implementation process. Finally, we hypothesized the quality of the implementation process for e-business strategies is positively related to e-business performance. Based on above, the six hypotheses are proposed as follows: H1. Organizational readiness is positively related to the quality of the implementation process for e-business applications. H2. IS core competence is positively related to the quality of the implementation process for e-business applications. H3. Environmental dynamism is negatively related to the quality of the implementation process for e-business applications. H4. In high task uncertainty, greater organizational readiness leads to better quality of the e-business implementation process. H5. In high task uncertainty, greater IS core competence leads to better quality of the e-business implementation process. H6. The quality of the implementation process for e-business strategies is positively related to e-business performance. Research methodology Sample and data collection With the rapid progress of information technology and information systems, more and more enterprises have implemented innovative e-business applications to enhance their competitive advantage. Samples have been obtained from a business directory published by the China Credit Information Service, Ltd. in Taiwan. As Stephens et al. (1992) thought information systems executives are in charge of organizing information technology and systems, playing roles in combing organization strategy and information technology application to support goals of companies. Therefore, the questionnaires were mailed to information systems executives. Questionnaires were mailed to the information systems executives of 650 manufacturing rms. A cover letter explaining the study objectives and a stamped return envelope were enclosed. Follow-up letters were sent approximately three weeks after the initial mailings. Measure development From the literature on contingency, organizational and information systems management theory, this study adopted variables that have been used and validated by other researchers. The research variables were dened as briey as possible using

multiple indicator items. Organizational readiness was measured using four items amended from the works of Legare (2002) as well as Ying and Wang (2007) to make them relevant to the context of the implementation of e-business strategies. Environmental dynamism was measured using the approaches developed by King and Sabherwal (1992) as well as Teo and King (1997). Items for measuring task uncertainty were modied from the work of Rai and Hindi (2000) to make them relevant to the context of the implementation of e-business strategies. IS core competence was measured using ve items amended from the work of Teo and King (1997). Furthermore, the quality of the implementation of e-business strategies was amended from the work of Ying and Wang (2007). Finally, a seven-item measure taken from the works of Chen and Chuang (2003) as well as Plant et al. (2003) were used to assess the e-business performance. All variables were measured with multiple items on a ve-point Likert-type scale, ranging from (5) strongly agree to (1) strongly disagree. Pre-testing The questionnaire was rened through two rounds of rigorous pre-testing. The pre-testing process focused on instrument clarity, question wording and validity. During the rst round of pre-testing, three MIS doctoral students from two universities and two MIS professors were interviewed. The construct measures were revised based on the comments of these ve individuals. During the second round of pre-testing, a revised questionnaire was pre-tested by four senior IS executives involved in manufacturing. Each of these IS executives was actively involved in implementing e-business applications and had signicant experience in IS management. The IS executives were given the questionnaire and asked to examine it for meaningfulness, relevance, and clarity. Data analysis and results Sample characteristics Of the 650 questionnaires distributed, 118 were returned, for a response rate of 16.3 percent. However, 12 respondents indicated that they did not implement any e-business applications in their organizations, and thus 106 completed usable questionnaires were used to perform the statistical analysis. Gay (1992) thought the purpose of correlational studies is to investigate if there are relations among parameters. The number of samples for appropriate statistical analyses should be at least 30. Therefore, samples retrieved in this research were suitable for statistical analyses. The respondents were all information systems professionals. Their job titles of the respondents showed them generally occupy fairly high levels in their organizations. The respondents came from various manufacturing rms, including those in the electronics, semiconductor, photonics/communications, computer, optical precision, electronics machinery and other industries. The wide range of industries represented implies that e-business applications are implemented in a wide variety of manufacturing rms. Reliability and validity of the research variables The alpha reliability coefcients for the six multiple-item scales exceed the commonly applied standard of 0.7 (Nunnally, 1978), suggesting reasonable item convergence (as shown in Table I). The content validity of the questionnaire was established via a series of personal interviews with three information systems executives. Furthermore,

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construct validity was determined using factor analysis of the construct items. Principal component factor analysis with varimax rotation was used to determine whether all items measuring a construct cluster together, and selection of factors with eigenvalues greater than one. Items with loadings of less than 0.5 on any factor were dropped from subsequent analyses. The results of the factor analyses for independent variables conrm that each construct is distinct from other constructs. Hypothesis testing The hypothesized relationships depicted in the research model (Figure 1) were tested using multiple regression analysis. No apparent colinearity problem among independent variable exists, because the variance ination factors (VIF) for all independent variables are less than three (Neter et al., 1996). The results related to the hypotheses are discussed below. Hypotheses were tested using a series of multiple regression analyses. The results related to the hypotheses discussed here. Based on the analytical results, organizational readiness is signicantly related to the quality of e-business implementation process, so H1 is supported (b 0.362, t 3.84, p , 0.001). Furthermore, IS core competence is signicantly related to the quality of e-business implementation process so H2 is supported (b 0.281, t 2.913, p , 0.01). Environmental dynamism is not signicantly related to the quality of e-business implementation process, so H3 is not supported (b 0.-0.059, t 2 0.683, p . 0.05). The quality of e-business implementation process is signicantly related to the e-business performance, so H6 is supported (b 0.568, t 7.037, p , 0.001). To test the interaction relationship of H4, an equation with a multiplicative interaction term was established. Based on the results of the regression analysis for the interaction model and the main effect model for these variables: the interaction was positive and insignicant. Also the improvement of the goodness-of-t (R 2) only increases 0.014. These results do not support hypothesis H4. Task uncertainty and organizational readiness did not exhibit an interaction effect on the quality of the implementation process for e-business applications (b 0.688, t 1.581, p . 0.05). The results did not support the contingency relationship between the two variables as suggested by the theoretical model. High organizational readiness thus only improves the quality of the implementation process for e-business applications, but can not reduce the negative impacts of task uncertainty on the implementing process of e-business applications. To test the interaction relationship of H5, an equation with a multiplicative interaction term was also established. Regression analysis of the interaction and main effect models for these variables: the interaction was positive and insignicant. Also the improvement of goodness-of-t (R 2) only increases 0.014. These results do not support hypothesis H5. Task uncertainty and IS core competence did not
Variables Organizational readiness IS core competence Task uncertainty Environmental dynamism Quality of the implementation process E-business performance Number of items 5 4 4 4 4 7 Cronbachs a 0.82 0.83 0.87 0.91 0.87 0.91

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Table I. Reliability coefcient of research variables

exhibit an interaction effect on the quality of the implementation process for e-business applications (b 0.674, t 0.977, p . 0.05). The results thus do not support the contingency relationship between the two variables as suggested by the theoretical model. Therefore, high levels of IS core competence only improve the quality of the implementation process for e-business applications, but do not reduce the negative impacts of task uncertainty in the implementation of e-business applications. In sum of the six hypotheses, three hypotheses are supported, including H1, H2 and H6. The other three hypotheses are not supported, including H3, H4 and H5. The implications of the empirical results are discussed in next section. Discussion Empirical results of this study support the hypothesis that organizational readiness signicantly affects the quality of the implementation process for e-business strategy. Previous studies have stressed the importance of organizational readiness. For example, Rau (2004) indicated that organizational readiness and stakeholder participation are critical success factors in implementing a new IT governance system. Furthermore, according to a study conducted by MacKay et al. (2004), the results also indicate that organizational readiness, including ability to attract volunteers and/or in-kind donations, ability to raise funds, and strategic readiness, positively inuenced EC adoption. Moreover, Gargeya and Brady (2005) found that the lack of appropriate culture and organizational readiness was the main contributor to the failure of SAP implementations. Appropriate culture and organizational readiness were the main contributors to successful SAP implementation. Analysis results indicate that IS core competence is positively and signicantly associated with the quality of the implementation process for e-business strategy. This result was consistent with previous ndings of similar studies, indicating that information systems competence was an important predictor of effective integration between business planning and information systems planning (Teo and King, 1997). Empirical analysis results demonstrated that environmental dynamism did not inuence the quality of the implementation process for e-business strategy. A possible explanation is that the study sample comprises large manufacturing rms in Taiwan, which have better understanding of the external business environment and assess environmental dynamism while implementing e-business strategies. Conclusions Based on the empirical results of this study, businesses should emphasize organizational readiness and core competence in information systems to avoid failure in implementing e-business applications. Organizational readiness includes top management commitment to providing resources and improving business process in the process of e-business implementation, and organizational members are ready to accept the associated change and risks in implementing new e-business applications. Furthermore, this study also suggested that businesses should evaluate IS core competence before implementing e-business applications. Fenny and Willcocks (1998) indicated that information systems capabilities are crucial to the future capability of businesses to successfully exploit IT. Based on the work of Fenny and Willcocks (1998), this study suggests that enterprises should seek to enhance nine core IS capabilities, including IS/IT leadership, business systems thinking, relationship

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building, architecture planning, making technology work, informed buying, contract facilitation, contract monitoring and vendor development. This study has some important implications for practitioners initiating or implementing e-business strategies. First, the investigated environmental, organizational and technological factors provide practitioners with a set of potentially important considerations. Specically, business managers or IS executives of enterprises should consider these factors when implementing e-business strategies. Second, given the importance of organizational readiness for the quality of the implementation process for e-business strategy, it is necessary to consider how organizations can improve their organizational readiness in implementing e-business strategies. Finally, given the importance of IS core competence for successful implementation of e-business strategies, methods of improving organization IS core competence must be considered. Based on the work of Fenny and Willcocks (1998), this study suggests that businesses should enhance nine core IS competences, including IS/IT leadership, business systems thinking, relationship building, architecture planning, making technology work, informed buying, contract facilitation, contract monitoring and vendor development. This study has the following limitations. First, while the subjects are IS executives and managers of manufacturing rms in Taiwan, yet cultural differences may exist between Taiwan and other countries. Second, the sample population only included manufacturing rms in Taiwan, and similar studies targeting the service industry should be conducted to examine these differences. Third, besides the factors considered in this study, numerous other environmental, organizational and technological factors may also affect the implementation of e-business strategies, and future studies should consider the effects on e-business strategy implementation] of more general organizational and technological factors such as decision-making models and organizational structure.
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