Impact of Technology on Organizational Performance - Research Proposal Example

Impact of technology on organizational performance Modern business value the effort put on monitoring and managing organizational performance throughthe use of information technology. Research studies in this regard have adopted a plethora of approaches aimed at evaluating the various mechanisms through which technology helps generate value in the business by estimating quality and magnitude. Earlier research studies have indicated that Information technology does indeed help in the development and enhancement of various aspects under organizational performance. The extent of the value provided through the use of technology to the business organization depend on a number of factors that include comprise the organizational structure, the practices followed by the management as well as the kind of IT infrastructure and technology in use. Further, the competitive as well as the business environments play crucial roles in this regard and the level of value generated by them within the business cannot be solely estimated through the contribution from technology alone. The estimation of value also depends on the feedback from trading partners, customers, prices offered for products and services as well as the quality provided (Daniel Druckman, 1997, pg. 24). Over the years, the industry has moved towards an organization centric mindset based on internal processes, structure and practices at the workplace and is consistent with the established paradigms in the technological world that are known to dominate industrial norms even prior to the advent of the internet. During the earlier years, mainframes and minicomputers were used to handle all the information needs of a company, and process the information as required. To continue to provide the industry with better practices and tools, it is necessary to expand the level of conceptualization that modern business value requires. Additionally, in this age of networking where every organizational process depends on interaction and the exchange of information across several nodes, it is necessary to provide the possibility to proliferate and alter the ways in which firms manage to factor all necessary inputs and turn them into the production of useful products and services. This also graduates towards the distribution of these products to the customers thereby raising questions on how technology can improve the performance of the organization across all these domains. for instance, a firm may want to know about the possibility of interlinking with several partners to improve the communication mechanism thereby adding to the performance standards. Companies today want to know about ways in which IT can enhance the competitive advantage and efficiency of the company. further, attributing technology to organizational performance also helps in understanding the competitive environment in a better manner (Richard Swanson, 2007, pg. 56). Despite these basic elements, the overall knowledge of assessing the scope and relevance of technology towards organizational performance in this network era remains unsystematic, untested, and underdeveloped. The primary purpose of the current paper is to summarize some of the facts about the business values technology provides along with a special emphasis on the IT aspect. The will be an elaborate discussion on the specification of certain metrics suitable in evaluating the contribution of technology in this regard and explain the contribution towards continuous improvement. This will incorporate all core as well as enabling technologies and will evaluate them from the perspectives of organizational structure, behavior, and relationships. This will also take into account the diverse functional roles within a typical organization ranging from finance, technology, human resources to customer satisfaction. Basic concepts The primary purpose of using IT in the organization is to create a benefit through the improvement of performance and ensure that there is no reduction in this aspect. This resource intensive approach takes into consideration the economics as well as the management traits of the organization. The competitive environment and the base of trading partners help shape the degree to which such technological implementations may help shape the performance within the organization. Additionally, secondary theories such as microeconomics and industrial organization also play a critical role in the determination of these aspects. the subsequent paragraphs provide an insight into a number of these considerations, whose provisions will serve as some of the core metrics for managing organizational performance. Economics Financial theory provides a range of methods to help determine requisite constructs through appropriate models and mathematical techniques. The theory of production has proved quite useful in the conceptualization of processes such as production and distribution and has helped provide an empirical perspective to enable the estimation of the level to which finance plays a role in the inclusion of technology. Previous studies have also used accounting and consumer theory as basis for determining the influence of marketing and sales as primary reflections of organizational performance (John Miner, 2007, pg. 42). Any finance department of a business organization is also entrusted the task of determining all inherent risks and uncertainties to its investments through the construction and use of appropriate pricing models. Many firms have adopted IT technologies that implement such approaches. Firms in the modern day also lay emphasis on analyzing real options on a constant basis through the use of pricing models and are also deeply involved with the electronic banking network owing to regular financial transactions. In all these scenarios, it is essential for the company to handle all the financial requirements in a timely manner and to provide for any necessary scaling or reorganization of the resources as the needs within the company and the industry change. As such, the importance of finance must not be underestimated given its important function within any business and encompass rather wide ranging phenomena (Tom Forester, 2008, pg. 52). Organization Theory Business organizations operate across sectors in the market and often collaborate to achieve common aims. in this context, it is interesting to understand the ways in which companies initiate these interactions that also characterize the associated investment decisions, and the agreements on how the benefits would be distributed. In popular terms, the use of the game theory has helped provide answers to these questions that has helped explain how firms interact in a competitive market as part of their individual strategic initiatives (Kim Cameron, 2006). Additional methods such as the agency theory and the transaction cost theory have helped understand the role played by Information technology in reducing the costs of transactions to the organization. Socio-Political perspective Apart from seeking profits and ensuring sustainable growth, organizations are also motivated to achieve these purposed through the maximization of efficiency within the workplace. To achieve this in the current information age, companies have begun to realize Information technology as an effective foundation to help achieve some of the most important and common goals that are relevant to all organizational stakeholders. This practice is now widespread given the increased dependence of most companies on IT for the management of virtually every single organizational task. The state of the internal economy, the management of the human resources, and the quality of work being done, help in shaping the internal social networks. The embedding of technology among all these determinant factors explains the logic behind the adherence to the economies of scale and time as well as the enhancements to allocative efficiency (Robert Mills, 2007, pg. 61). Technology has also helped organizations undertake complex procedures of adaptation with relative ease. Research studies have used the theory of embeddedness to study the impact of IT on inter organizational relationships especially in cases where the business is highly dependent on electronic resources. Modern research into examining the sociological relevance of IT in businesses has studied the rationality behind using IT. Such studies have helped explain the relationships and mutual trust that exist across companies. Further, conclusive explanations into the certain specific implementations such as in the case when using such a method on an inter organizational basis to try to and combine several textile industries during the 90s are also determined. The issue lies in the complexity involved in correlating IT to organizational performance based on inputs from several theoretical paradigms (Rodrigo Magalhaes, 2004, pg. 34). This has been the case owing to the absence of a unified approach to overlap multiple tasks carried out regularly within organizations. Industry experts therefore stress that a robust formulation for future IT systems in the corporate in terms of the relevant logic that can enable them to study these organizational process in a highly contextual manner by using technology as the basic access medium. Metrics for measuring Organizational performance The Resource based perspective of analyzing a firm emphasizes on the importance of resources as the basis for gaining any competitive advantage. Such a standpoint remains grounded in the studies by economists and points to concerns primarily with the heterogeneous and imperfect nature of competition in the market. An emphasis on the relevance of firm heterogeneity as a balancing act against the structure of the market plays a role in the determination of profits and maintaining competition in an imperfect environment. Resource perspective According to Penrose (2006), firm growth can be attributed to the management of a bundle of resources through the administrative framework within the organization. Evolutionary economists have used the idea of Schumpeterian competition along with tacit routines and procedures that help extend the thinking towards a static equilibrium. In addition to specification of various resources, it is also necessary to examine the barriers that exist to obtaining, and managing such resources, whose correlation with the profitability of a firm ensures a final say in the competitiveness that the firm possesses within the market, thus providing further scope to study the nature of interdependence among organizations. In addition to looking from the top with a resource based perspective, it is also necessary to evaluate the value associated with every such entity and prioritize them depending on their importance to the firm in attaining the highest levels of efficiency. For instance, if any valuable resource is found to be rare or in quantities lesser than required levels, fewer firms would be able to access it and would have to pay a much higher price or effort to obtain, sustain them. Firms that manage to gain access to such scarce resources are undoubtedly at a competitive advantage although this could remain temporary. In many cases, lack of knowledge over competitors results in a deficiency in understanding the factors that are necessary to ensure success. Any entity within the firm overseeing the management of such resources must also be aware of their substitutability, which also helps in determining the ease with which the firm would be able to make adjustments in its strategy in response to changing conditions in the market (Mehdi Khosrowpour, 2005, pg. 78). Companies which have a resource that is generally scarce are at a competitive advantage and would be able to derive better benefit provided they manage them efficiently. The pattern of managing these resources thus provides additional metrics in determining the level of performance of these governing elements. The general accepted parameter for success in this regard is associated with the creation of a value additive strategy that any other current or prospective competitor is unable to imitate or duplicate. In Short, to determine a sustainable form of competitive advantage through technological means, it is necessary to consider metrics such as value, availability, degree of substitutability, and inimitability. Business value and Competitive advantage Apart from examining the resources, IT management systems improve other specific attributes such as culture, organizational processes, regular routines and even to propagate the growth of entrepreneurship within the organization. These elements are also advantageous towards providing an overview of the competitive advantage enjoyed by the firm through the use of various IT systems. Such an approach to measure organizational competitiveness is helpful in terms of assessing the implications in addition to the advantages of such systems and to evaluate ways of improving such systems and the benefits they provide (John Miner, 2007, pg. 82). Additionally, it is also necessary to determine the complementary traits of using IT systems over the other resources of the organization. All these aspects contribute in developing an integrated value model. One of the limitations in determining relevant metrics to measure performance under conventional approaches result from the assumption that any resource or strategy used is applied in their best and most optimum forms and do not devote enough time to analyze the manner in which they are implemented. In effect, this means that conventional techniques to measuring performance have certainly provided an overview over the set of conditions required to attain a competitive advantage. However, they do not delve into specifying the various underlying mechanisms that help them achieve such an advantage systematically thereby providing no information that could allow future implementations to gain advantage from. Lack of knowledge in this aspect or the deficiency among companies to record these mechanisms has often forced them to rely constantly on secondary theories when trying to define any IT driven business strategies resulting in more time being spent to chalk out a new strategy time and again (Richard Swanson, 2007, pg. 45). Performance measurement models The development of a number of models over the years has led to the study of the various methods adopted to evaluate the impact of technology on organizational performance. With the rising complexity in technological innovations over the years and their increased acceptance in business, it has become a challenge to provide requisite evaluation models that could enable a comprehensive measurement of all parameters. The most commonly used method to evaluate performance has been through the production function that consists of input parameters such as material cost, labor, IT, and capital invested. The orientation of newer models tends to be towards the process based on the argument that the correlation between IT resources and the performance tends to attenuate as the discrepancy between the causes and effects widen (Mehdi Khosrowpour, 2005, pg. 23). Well (1992) has come up with a model that has measured the ability of firms to transform their IT resources into measurable organizational performance that has also taken into account several factors that influence the effectiveness of such conversions. Galal (2005, pg. 105) has proposed a model that concentrated on the range of managerial choices made by the firm in determining the course of the company and consists of a mix of the contributions from the management, the administration, and the employees through their use of technological methods to perform their regular duties. Markus (2006, pg. 62) went a step further by choosing to concentrate solely on the IT elements of the industry by trying to evaluate the transformation of investment to IT assets and their conversion to relevant impacts whereby the impact helps determine the relevant organizational performance. In summary, analysis of business value models that concentrate on technology reveal a number of points. Information technology impacts the levels of organizational performance through a range of intermediate processes. Several organizational resources interact with the technology in place in diverse roles ranging from a moderator to a mediator and work towards the attainment of the necessary impacts for the organization. The external environment comprising the market and the competition plays a critical role in shaping this value generation (Daniel Druckman, 1997, pg. 87). Given the enormity of the tasks that IT implementations set out to perform, it is necessary to segregate them into simpler components thereby helping in the summarization of the relevant business models. If the right technology is applied to the appropriate business process, an improvement in the performance and the efficiency of that process will result. However, this is subject to the conditions that appropriate investments acting on a complementary note help shape the practices and structure that is in turn driven by the competitive environment. Fishbone Diagram More Maintenance inadequate benefits improper planning Stress Lack of spare parts inadequate coordination No appraisal No freedom of expression bad decisions Price wars Inflexible hours deficient allocation better products References 1. Daniel Druckman (1997), Enhancing organizational performance. Boston: National Academic Press. 2. John Miner (2007), Organizational behavior. London: Sharpe. 3. Kim Cameron (2006), Diagnosing and changing organizational culture: based on the competing values framework. New York: John Wiley. 4. Markus (2006), “Information Technology and Organizational Change: Causal Structure in Theory and Research,” Management Science. New York: Prentice. pp. 583-598. 5. Mehdi Khosrowpour (2005), Managing web-enabled technologies in organizations: a global perspective. Cambridge: Idea Group. 6. Penrose (2006), The Theory of the Growth of the. London: Blackwell. 7. Richard Swanson (2007), Analysis for improving performance: tools for diagnosing organizations and documenting workplace expertise. London: Berrett-Koehler. 8. Robert Mills (2007), Instructional technology: foundations. London: Lawrence Elbraum. 9. Rodrigo Magalhaes (2004), Organizational knowledge and technology: an action-oriented perspective on organization and information systems. London: Edward Elgar. 10. Tom Forester (2008), The Information technology revolution. MIT Press. 11. Weill (1992), “Building IT Infrastructure for Strategic Agility. Sloan Management Review. pp.57-65. Read More