Product Differentiation in IT Industries: The Interplay between M&As and In-House Innovation and Exploitative Innovation Orientation

2023 | Journal of the Association for Information Systems | Citations: 0

Authors: Qi, Kangkang; Han, Sumin; Jeong, Yeasung; Rhamati, Pouya; Susarla, Anjana; Sambamurthy, Vallabh

Abstract: Firms in IT industries are under constant competitive pressure from incumbent f ... Expand

Abstract: Firms in IT industries are under constant competitive pressure from incumbent firms and startups to offer innovative products and services. This study explores the effect of mergers and acquisitions (M&As) on firms' product differentiation in IT industries. The unique characteristics of IT industries, namely hypercompetition, distributed innovation, modularity of products, and the tacit nature of knowledge, make M&As an attractive mechanism to enable IT firms to stay competitive. Drawing on product differentiation theory, we hypothesize a positive effect of M&As on product differentiation and suggest that this relationship is more potent in firms with higher in-house innovation, an exploitative innovation orientation, and under high levels of industry turbulence. We test our hypotheses using M&A transactions from 1996 to 2016 and a unique 10-K textual analysis-based measure of product differentiation. Using the difference-in-differences identification strategy, the following findings are supported: (1) M&As lead to higher product differentiation, (2) in-house innovation capability and exploitation-oriented innovation strategy positively moderate the positive effect of M&As. These results, which are robust to endogeneities and other robustness tests, contribute to theory and managerial practice by shedding light on the role of M&As as an essential mechanism for product innovation and the complementary role of in-house innovation capability and strategy for firms that intend to take advantage of M&As for creating a competitive edge through differentiating their products and services from competitors. These findings have important managerial value, providing an alternative narrative to the current view on M&As in IT industries as a means of absorbing and dismantling the competition. served or serves on the editorial boards of Information Systems Research and MIS Quarterly. Her research has been funded by prestigious organizations such as the National Institute of Health (NIH).Vallabh "Samba" Sambamurthy is the Albert O. Nicholas Dean of the Wisconsin School of Business at the University of Wisconsin. He is a leading expert on how businesses compete in the digital economy. He has published his work in several leading journals and served on the editorial boards of premier academic journals, including two terms as editor-in-chief of Information Systems Research, and has held leadership roles in professional associations. Sambamurthy has garnered several recognitions for contributions to teaching, research, outreach, and mentoring. Collapse

Topics: product differentiation innovation management database system environmental uncertainty research and development

Methods: robustness check longitudinal research statistical hypothesis test difference in differences propensity score matching

The Relationship Between Unlearning and Innovation Ambidexterity with the Performance of New Product Development Teams

2021 | Group Decision and Negotiation | Citations: 0

Authors: Açıkgöz, Atif; Demirkan, Irem; Latham, Gary P.; Kuzey, Cemil

Abstract: Previous research has suggested that unlearning is not linked to performance imp ... Expand

Abstract: Previous research has suggested that unlearning is not linked to performance improvements in a team setting. Further, unlearning may have deleterious effects on performance outcomes because when it happens, teams are likely to lose the way they perform tasks and the reasons for their operational existence. In contrast, this study predicts that teams can conduct exploitative and exploratory activities in a balanced manner predicated on unlearning practices to improve new product development (NPD) performance. We hypothesized that while unlearning allows NPD teams to balance exploitative and exploratory learning activities, simultaneous yet balanced exploitation and exploration at high levels, namely innovation ambidexterity, links unlearning practices to NPD performance. This occurs by providing task-relevant knowledge for the replacement of outdated routines and beliefs during NPD processes. Data were collected from 198 NPD teams (i.e., 464 individual participants). The examination of ordinary least squares regression-based path analyses revealed that innovation ambidexterity mediates the relationship of unlearning with NPD performance, operationalized as product development speed, cost, and product success. Overall, this study shows that the unlearning-performance relationship occurs through simultaneous exploitative and exploratory learning activities in a balanced manner. Collapse

Topics: innovation management new product development team productivity strategic management decision making

Methods: survey statistical hypothesis test chi squared test data transformation descriptive statistic

Theories: learning theory

The effect of process tailoring on software project performance: The role of team absorptive capacity and its knowledge-based enablers

2021 | Information Systems Journal | Citations: 0

Authors: Lee, Jung-Chieh; Chou, I.-Chia; Chen, Chung-Yang

Abstract: Software process tailoring (SPT) is a team-based and learning-intensive activity ... Expand

Abstract: Software process tailoring (SPT) is a team-based and learning-intensive activity that addresses the particular dynamic characteristics of a development project. Because SPT critically influences how projects are conducted, its performance should be investigated. However, the extant literature lacks empirical evidence on how the underlying effects of SPT performance and its team-supportive factors operate and influence software project performance. From the knowledge perspective, this study adopts dynamic capabilities theory and considers the learning ability and absorptive capacity of software project teams to develop a theoretical model to address this gap. The results of an empirical examination of the model with 135 software project teams advance our understanding of how team-level learning antecedents—experience, communication quality and trust—dynamically facilitate teams' absorptive capacity (AC) when they conduct SPT, which in turn reinforces project performance. The mediating effects of the proposed model are unveiled and discussed, and theoretical implications as well as practical guidance for how AC and these factors promote SPT and project performance are suggested. Collapse

Topics: project productivity absorptive capacity systems development agile software development electronic mail

Methods: survey partial least squares regression statistical power analysis design methodology path analysis

Theories: dynamic capabilities theory

Hierarchical business value of information technology: Toward a digital innovation value chain

2020 | Information & Management | Citations: 6

Authors: Hensen, Alexander H. R.; Dong, John Qi

Abstract: Information technology (IT) increasingly changes the ways through which firms de ... Expand

Abstract: Information technology (IT) increasingly changes the ways through which firms develop and commercialize innovation. Prior studies have mainly focused on the direct effect of IT use on innovation performance, while little is known about how IT use for different purposes in the innovation processes leads to innovation performance at the organizational level. Drawing on the routine-based absorptive capacity (AC) framework, we conceptualize IT use for knowledge search and relational search as IT-enabled internal and external AC routines and unveil the hierarchical benefits resulting from IT use for innovation. We propose a model in which firms need to purposefully use IT to search for knowledge in the new product development process or search for relationships in the collaborative innovation process, leading to first-order benefits (i.e., internal innovation benefits and open innovation benefits) and, in turn, second-order benefits (i.e., innovation performance). By using a unique data set from 1028 German firms between 2003 and 2007, we find that IT use for knowledge search enhances internal innovation benefits, whereas IT use for relational search increases open innovation benefits. More importantly, internal and open innovation benefits mediate the relationships between IT use for knowledge and relational search and various innovation performance measures. Taken together, our findings shed light on a deeper understanding of the digital innovation value chain. Collapse

Topics: innovation management information system use open innovation research and development digital innovation

Methods: survey theory development mediation analysis literature study design artifact

Fostering Value Creation with Digital Platforms: A Unified Theory of the Application Programming Interface Design

2020 | Journal of Management Information Systems | Citations: 15

Authors: Wulf, Jochen; Blohm, Ivo

Abstract: While many firms in recent years have started to offer public Application Progra ... Expand

Abstract: While many firms in recent years have started to offer public Application Programming Interfaces (APIs), firms struggle with shaping digital platform strategies that align API design with aspired business goals and the demands of external developers. We address the lack of theory that explains the performance impacts of three API archetypes (professional, mediation, and open asset services). We couple survey data from 152 API product managers with manually coded API design classifications. With this data, we conduct cluster and regression analyses that reveal moderating effects of two value creation strategies (economies of scope in production and innovation) on the relationships between API archetype similarity and two API performance outcomes: return on investment and diffusion. We contribute to IS literature by developing a unifying theory that consolidates different theoretical perspectives on API design, by extending current knowledge on the performance effects of API design, and by empirically studying the distinct circumstances under which digital platforms facilitate economies of scope in production or in innovation. Our results provide practical implications on how API providers can align API archetype choice with the value creation strategy and the API's business objective. Collapse

Topics: application programming interface economies of scope value creation innovation management digital platform

Methods: cluster analysis survey data transformation qualitative content analysis regression analysis method

Theories: theory of dominant design

The role of IT application orchestration capability in improving agility and performance

2018 | Journal of Strategic Information Systems | Citations: 0

Authors: Queiroz, Magno; Tallon, Paul P.; Sharma, Rajeev; Coltman, Tim

Abstract: This paper investigates how IT application orchestration – a dynamic capability ... Expand

Abstract: This paper investigates how IT application orchestration – a dynamic capability encapsulating a firm’s ability to refresh its application portfolio through a process of building, buying, and retiring IT applications – impacts firm performance. We propose a conceptual model in which the effect of IT application orchestration on firm performance is mediated by process agility. We further propose that a firm’s strategic orientation moderates the effect of IT application orchestration capability on process agility. Analysis of data from an international survey of IT executives supports our proposed hypotheses. This research contributes to the emergent literature on dynamic capabilities by proposing and testing a theory of how IT application orchestration capability affects agility and firm performance. Collapse

Topics: organizational productivity information technology capability strategic management IT manager innovation management

Methods: survey self reported survey archival research statistical hypothesis test survey design

Theories: dynamic capabilities theory

Improving strategic flexibility with information technologies: insights for firm performance in an emerging economy

2017 | Journal of Information Technology | Citations: 42

Authors: Chen, Yang; Wang, Yi; Nevo, Saggi; Benitez, Jose; Kou, Gang

Abstract: As the business environment becomes more turbulent, firms ponder how to become m ... Expand

Abstract: As the business environment becomes more turbulent, firms ponder how to become more flexible in reallocating or reconfiguring resources, processes, and strategies to respond more efficiently and effectively. In this context, the question of whether and how information technology (IT) can support strategic flexibility remains unresolved. This paper theorizes that firms that use IT to support core competencies will experience improved strategic flexibility, which may enhance their performance. It further theorizes that these effects are contingent on the form and nature of the firm’s IT infrastructure, as well as its type of ownership – state-owned or private. Using data from a matched survey of IT and business executives in 148 Chinese manufacturing firms, we reveal positive, significant links between IT support for core competencies and strategic flexibility, and between strategic flexibility and firm performance. The findings further show that the effect of IT support for core competencies on performance is partially mediated by strategic flexibility, and that IT infrastructure positively moderates the link between IT support for core competencies and strategic flexibility. We also demonstrate that state-owned firms are less likely to apply IT applications to collect and analyse market information and thus surrender opportunities for achieving strategic flexibility and stronger firm performance. Collapse

Topics: system support organizational productivity information technology infrastructure IT manager IS value

Methods: survey data transformation PLS tool survey design partial least squares regression

Theories: core competency theory dynamic capabilities theory

Does Institutional Change in Universities Influence High-Tech Entrepreneurship? Evidence from China’s Project 985

2016 | Organization Science | Citations: 0

Authors: Eesley, Charles; Li, Jian Bai; Yang, Delin

Abstract: This paper contributes to institutional theory on cognitive and normative instit ... Expand

Abstract: This paper contributes to institutional theory on cognitive and normative institutional change targeted at altering beliefs, behaviors, and ultimately firm performance. Prior work emphasizes institutional changes where the ideas and beliefs originate from those within the institutional context. Under examined are cases of institutional changes in beliefs and behaviors imposed from outside of the context, which may result in inconsistencies among cognitive, normative, and regulatory institutional pillars. Project 985 was a program implemented by the Chinese government that provided funding for a set of universities to build new research centers. We found that graduates of these universities subsequently expressed greater beliefs in innovation and founded more high-tech ventures, but that entrepreneurs influenced by the reform were not as financially successful as entrepreneurs who founded firms before the reform or from non-985 universities. We explain this surprising finding as caused by the fact that Project 985 was institutionally inconsistent with China’s broader institutional environment. An important implication is that institutional changes may alter beliefs and behavior, but they must be consistent with the broader institutional environment to improve firm performance. Collapse

Topics: research and development innovation management entrepreneurship organizational productivity missing data

Methods: survey experimental group regression analysis method qualitative interview path analysis

Theories: institutional theory

Business Model Development in IT Startups - The Role of Scarcity and Personalization in Generating User Feedback

2015 | European Conference On Information Systems | Citations: 2

Authors: Koch, Oliver

Abstract: Despite the widely recognized importance of continuous business model developmen ... Expand

Abstract: Despite the widely recognized importance of continuous business model development for achieving product market fit, very little remains understood about efficient methods that may support this process in the context of nascent IT ventures. Contributions for supporting value proposition development, especially in the popular field of open innovation, have largely focused on well established firms and more traditional approaches such as the lead user method. More recent findings suggest novel ways of virtual user integration, like the collection of user feedback via promotional campaigns, which is particularly prevalent among IT startups. However, these contributions have remained conspicuously theoretical. Therefore, by drawing on an experimental study in the context of the online fashion startup StyleCrowd, we investigate the role of scarcity and personalization, two classical promotional cues that have become ubiquitous on the web yet have been overlooked by research, in enhancing the virality of nascent ventures’ online promotional campaigns to enhance user feedback. Our analysis reveals that while scarcity cues affect social sharing regardless of whether a campaign is personalized or not, personalization cues are particularly effective when scarcity is absent, yet are cancelled out when scarcity is prevalent. We discuss implications for research and practice. Collapse

Topics: usability personalization information privacy concern business model electronic mail

Methods: experiment survey survey design logistic regression experimental group

Using Perspective Taking to De-Escalate Commitment to Software Product Launch Decisions

2014 | International Conference on Information Systems | Citations: 0

Authors: Lee, Jong Seok; Lee, Hyung Koo; Keil, Mark

Abstract: In software product development settings when things go awry and the original pl ... Expand

Abstract: In software product development settings when things go awry and the original plan loses credibility, managers often choose to honor the originally announced product launch schedule anyway, in effect launching a product that may be seriously compromised in terms of both functionality and reliability. In this study, we draw on the perspective of escalation of commitment to investigate adherence to original product launch schedules despite negative feedback. Specifically, we use the notion of perspective taking to propose a de-escalation tactic. Through a laboratory experiment, we found strong support that taking the perspective of individuals that can be negatively influenced by a product launch can indeed effectively promote de-escalation of commitment. Furthermore, we found that the experiences of anticipated guilt mediate the relationship between perspective taking and de-escalation, and this indirect effect is significantly greater when a decision maker’s personal cost associated with deescalation is high rather than low. Collapse

Topics: new product development IT project behavioral intention

Methods: experiment theory development laboratory experiment statistical hypothesis test literature study