Management Information Systems Quarterly

Digital Business Strategy and Value Creation: Framing the Dynamic Cycle of Control Points

Margherita Pagani — Tue, 21 May 2013 15:18:11 PDT

Within changing value networks, the profits and competitive advantages of participation reside dynamically at control points that are the positions of greatest value and/or power. The enterprises that hold these positions have a great deal of control over how the network operates, how the benefits are redistributed, and how this influences the execution of a digital business strategy. This article is based on a field study that provides preliminary, yet promising, empirical evidence that sheds light on the dynamic cycle of value creation and value capture points in digitally enabled networks in response to triggers related to technology and business strategy. The context used is that of the European and U.S. broadcasting industry. Specifically, the paper illustrates how incremental innovations may shift value networks from static, vertically integrated networks to more loosely coupled networks, and how cross-boundary industry disruptions may then, in turn, shift those to two-sided markets. Based on the analysis, insights and implications for digital business strategy research and practice are then provided.

Visions and Voices on Emerging Challenges in Digital Business Strategy

Anandhi Bharadwaj et al. — Tue, 21 May 2013 15:18:11 PDT

This section is a collection of shorter “Issue and Opinions” pieces that address some of the critical challenges around the evolution of digital business strategy. These voices and visions are from thought leaders who, in addition to their scholarship, have a keen sense of practice. They outline through their opinion pieces a series of issues that will need attention from both research and practice. These issues have been identified through their observation of practice with the eye of a scholar. They provide fertile opportunities for scholars in information systems, strategic management, and organizational theory.

"Leadership in a Digital World: Embracing Transparency and Adaptive Capacity" Warren Bennis (pp. 635-636)

"Transparency Strategy: Competing with Information in a Digital World" Nelson Granados and Alok Gupta (pp. 637-641)

"Value Architectures for Digital Business: Beyond the Business Model" Peter Keen and Ronald Williams (pp. 642-647)

"Commoditized Digital Processes and Business Community Platforms: New Opportunities and Challenges for Digital Business Strategies" M. Lynne Markus and Claudia Loebbecke (pp. 649-653)

"Revealing Your Hand: Caveats in Implementing Digital Business Strategy" Varun Grover and Rajiv Kohli (pp. 655-662)

Content or Community? A Digital Business Strategy for Content Providers in the Social Age

Gal Oestreicher-Singer et al. — Tue, 21 May 2013 15:18:10 PDT

The content industry has been undergoing a tremendous transformation in the last two decades. We focus in this paper on recent changes in the form of social computing. Although the content industry has implemented social computing to a large extent, it has done so from a techno-centric approach in which social features are viewed as complementary rather than integral to content. This approach does not capitalize on users’ social behavior in the website and does not answer the content industry’s need to elicit payment from consumers. We suggest that both of these objectives can be achieved by acknowledging the fusion between content and community, making the social experience central to the content website’s digital business strategy.

We use data from Last.fm, a site offering both music consumption and online community features. The basic use of Last.fm is free, and premium services are provided for a fixed monthly subscription fee. Although the premium services on Last.fm are aimed primarily at improving the content consumption experience, we find that willingness to pay for premium services is strongly associated with the level of community participation of the user.

Drawing from the literature on levels of participation in online communities, we show that consumers’ willingness to pay increases as they climb the so-called "ladder of participation" on the website. Moreover, we find that willingness to pay is more strongly linked to community participation than to the volume of content consumption. We control for self-selection bias by using propensity score matching. We extend our results by estimating a hazard model to study the effect of community activity on the time between joining the website and the subscription decision. Our results suggest that firms whose digital business models remain viable in a world of "freemium" will be those that take a strategic rather than techno-centric view of social media, that integrate social media into the consumption and purchase experience rather than use it merely as a substitute for offline soft marketing. We provide new evidence of the importance of fusing social computing with content delivery and, in the process, lay a foundation for a broader strategic path for the digital content industry in an age of growing user participation.

Leveraging Digital Technologies: How Information Quality Leads to Localized Capabilities and Customer Service Performance

Pankaj Setia et al. — Tue, 21 May 2013 15:18:09 PDT

With the growing recognition of the customer’s role in service creation and delivery, there is an increased impetus on building customer-centric organizations. Digital technologies play a key role in such organizations. Prior research studying digital business strategies has largely focused on building production-side competencies and there has been little focus on customer-side digital business strategies to leverage these technologies. We propose a theory to understand the effectiveness of a customer-side digital business strategy focused on localized dynamics—here, a firm’s customer service units (CSUs). Specifically, we use a capabilities perspective to propose digital design as an antecedent to two customer service capabilities—namely, customer orientation capability and customer response capability—across a firm’s CSUs. These two capabilities will help a firm to locally sense and respond to customer needs, respectively. Information quality from the digital design of the CSU is proposed as the antecedent to the two capabilities. Proposed capability-building dynamics are tested using data collected from multiple respondents across 170 branches of a large bank. Findings suggest that the impacts of information quality in capability-building are contingent on the local process characteristics. We offer implications for a firm’s customer-side digital business strategy and present new areas for future examination of such strategies.

Design Capital and Design Moves: The Logic of Digital Business Strategy

C. Jason Woodard et al. — Tue, 21 May 2013 15:18:08 PDT

As information technology becomes integral to the products and services in a growing range of industries, there has been a corresponding surge of interest in understanding how firms can effectively formulate and execute digital business strategies. This fusion of IT within the business environment gives rise to a strategic tension between investing in digital artifacts for long-term value creation and exploiting them for short-term value appropriation. Further, relentless innovation and competitive pressures dictate that firms continually adapt these artifacts to changing market and technological conditions, but sustained profitability requires scalable architectures that can serve a large customer base and stable interfaces that support integration across a diverse ecosystem of complementary offerings. The study of digital business strategy needs new concepts and methods to examine how these forces are managed in pursuit of competitive advantage. We conceptualize the logic of digital business strategy in terms of two constructs: design capital (i.e., the cumulative stock of designs owned or controlled by a firm) and design moves (i.e., the discrete strategic actions that enlarge, reduce, or modify a firm’s stock of designs). We also identify two salient dimensions of design capital, namely, option value and technical debt. Using embedded case studies of four firms, we develop a rich conceptual model and testable propositions to lay out a design-based logic of digital business strategy. This logic highlights the interplay between design moves and design capital in the context of digital business strategy and contributes to a growing body of insights that link the design of digital artifacts to competitive strategy and firm-level performance.

How a Firm's Competitive Environment and Digital Strategy Posture Influence Digital Business Strategy

Sunil Mithas et al. — Tue, 21 May 2013 15:18:07 PDT

In this paper, we examine how the competitive industry environment shapes the way that digital strategic posture (defined as a focal firm’s degree of engagement in a particular class of digital business practices relative to the industry norm) influences firms’ realized digital business strategy. We focus on two forms of digital strategy: general IT investment and IT outsourcing investment. Drawing from prior literature on determinants of IT activity and competitive dynamics, we argue that three elements of the industry environment determine whether digital strategic posture has an increasingly convergent or divergent influence on digital business strategy. By divergent influence, we mean an influence that leads to spending substantially more or less on a particular strategic activity than industry norms. We predict that a digital strategic posture (difference from the industry mean) has an increasingly divergent effect on digital business strategy under higher industry turbulence, while having an increasingly convergent effect on digital business strategy under higher industry concentration and higher industry growth. The study uses archival data for 400 U.S.-based firms from 1999 to 2006. Our findings imply that digital business strategy is not solely a matter of optimizing firm operations internally or of responding to one or two focal competitors, but also arises strikingly from awareness and responsiveness to the digital business competitive environment. Collectively, the findings provide insights on how strategic posture and industry environment influence firms’ digital business strategy.

Information Technology and Business-Level Strategy: Toward an Integrated Theoretical Perspective

Paul L. Drnevich et al. — Tue, 21 May 2013 15:18:06 PDT

Information technology matters to business success because it directly affects the mechanisms through which they create and capture value to earn a profit: IT is thus integral to a firm’s business-level strategy. Much of the extant research on the IT/strategy relationship, however, inaccurately frames IT as only a functional-level strategy. This widespread under-appreciation of the business-level role of IT indicates a need for substantial retheorizing of its role in strategy and its complex and interdependent relationship with the mechanisms through which firms generate profit. Using a comprehensive framework of potential profit mechanisms, we argue that while IT activities remain integral to the functional-level strategies of the firm, they also play several significant roles in business strategy, with substantial performance implications. IT affects industry structure and the set of business-level strategic alternatives and value-creation opportunities that a firm may pursue. Along with complementary organizational changes, IT both enhances the firm’s current (ordinary) capabilities and enables new (dynamic) capabilities, including the flexibility to focus on rapidly changing opportunities or to abandon losing initiatives while salvaging substantial asset value. Such digitally attributable capabilities also determine how much of this value, once created, can be captured by the firm—and how much will be dissipated through competition or through the power of value chain partners, the governance of which itself depends on IT. We explore these business-level strategic roles of IT and discuss several provocative implications and future research directions in the converging information systems and strategy domains.

Digital Business Strategy: Toward a Next Generation of Insights

Anandhi Bharadwaj et al. — Tue, 21 May 2013 15:18:05 PDT

Over the last three decades, the prevailing view of information technology strategy has been that it is a functional-level strategy that must be aligned with the firm’s chosen business strategy. Even within this so-called alignment view, business strategy directed IT strategy. During the last decade, the business infrastructure has become digital with increased interconnections among products, processes, and services. Across many firms spanning different industries and sectors, digital technologies (viewed as combinations of information, computing, communication, and connectivity technologies) are fundamentally transforming business strategies, business processes, firm capabilities, products and services, and key interfirm relationships in extended business networks. Accordingly, we argue that the time is right to rethink the role of IT strategy, from that of a functional-level strategy—aligned but essentially always subordinate to business strategy—to one that reflects a fusion between IT strategy and business strategy. This fusion is herein termed digital business strategy.

We identify four key themes to guide our thinking on digital business strategy and help provide a framework to define the next generation of insights. The four themes are (1)　the scope of digital business strategy, (2)　the scale of digital business strategy, (3)　the speed of digital business strategy, and (4)　the sources of business value creation and capture in digital business strategy. After elaborating on each of these four themes, we discuss the success metrics and potential performance implications from pursuing a digital business strategy. We also show how the papers in the special issue shed light on digital strategies and offer directions to advance insights and shape future research.

The Impact of Shaping on Knowledge Reuse for Organizational Improvement with Wikis

Ann Majchrzak et al. — Tue, 21 May 2013 15:18:04 PDT

In this study, we explore the Wiki affordance of enabling shaping behavior within organizational intranets supported by Wikis. Shaping is the continuous revision of one’s own and others’ contributions to a Wiki.　 Shaping promotes knowledge reuse through improved knowledge integration.　 Recognizing and clarifying the role of shaping allows us to theorize new ways in which knowledge resources affect knowledge reuse.　 We examine the role of three knowledge resources of a Wiki contributor: knowledge depth, knowledge breadth, and assessment of the level of development of the Wiki community’s transactive memory system. We offer preliminary evidence based on a sample of experienced organizational Wiki users that the three different knowledge resources have differential effects on shaping, that these effects differ from the effects on the more common user behavior of simply adding domain knowledge to a Wiki, and that shaping and adding each independently affect contributors’ perceptions that their knowledge in the Wiki has been reused for organizational improvement. By empirically distinguishing between the different knowledge antecedents and consequences of shaping and adding, we derive implications for theory and research on knowledge integration and reuse.

Knowing What a User Likes: A Design Science Approach to Interfaces that Automatically Adapt to Culture

Katharina Reinecke et al. — Tue, 21 May 2013 15:18:03 PDT

Adapting user interfaces to a user’s cultural background can increase satisfaction, revenue, and market share. Conventional approaches to catering for culture are restricted to adaptations for specific countries and modify only a limited number of interface components, such as the language or date and time formats. We argue that a more comprehensive personalization of interfaces to cultural background is needed to appeal to users in expanding markets. This paper introduces a low-cost, yet efficient method to achieve this goal: cultural adaptivity. Culturally adaptive interfaces are able to adapt their look and feel to suit visual preferences. In a design science approach, we have developed a number of artifacts that support cultural adaptivity, including a prototype web application. We evaluate the efficacy of the prototype’s automatically generated interfaces by comparing them with the preferred interfaces of 105 Rwandan, Swiss, Thai, and multicultural users. The findings demonstrate the feasibility of providing users with interfaces that correspond to their cultural preferences in a novel yet effective manner.

Community Intelligence and Social Media Services: A Rumor Theoretic Analysis of Tweets During Social Crises

Onook Oh et al. — Tue, 21 May 2013 15:18:02 PDT

Recent extreme events show that Twitter, a micro-blogging service, is emerging as the dominant social reporting tool to spread information on social crises. It is elevating the online public community to the status of first responders who can collectively cope with social crises. However, at the same time, many warnings have been raised about the reliability of community intelligence obtained through social reporting by the amateur online community. Using rumor theory, this paper studies citizen-driven information processing through Twitter services using data from three social crises: the Mumbai terrorist attacks in 2008, the Toyota recall in 2010, and the Seattle café shooting incident in 2012. We approach social crises as communal efforts for community intelligence gathering and collective information processing to cope with and adapt to uncertain external situations. We explore two issues: (1)　collective social reporting as an information processing mechanism to address crisis problems and gather community intelligence, and (2)　the degeneration of social reporting into collective rumor mills. Our analysis reveals that information with no clear source provided was the most important, personal involvement next in importance, and anxiety the least yet still important rumor causing factor on Twitter under social crisis situations.

When Filling the Wait Makes it Feel Longer: A Paradigm Shift Perspective for Managing Online Delay

Weiyin Hong et al. — Tue, 21 May 2013 15:18:01 PDT

As one of the most commonly experienced problems on the Internet, download delay is a significant impediment to the success of e-commerce websites. While some research has examined how such delays can be reduced and how much delay online users will tolerate, little research has taken a theoretically grounded approach to managing perceptions of the wait. Based on time perception theories, we develop a research model of the effects of actual wait time, amount of information, and direction of attention on perceptions of the wait. Two empirical studies were conducted using an experimental travel website to test the proposed hypotheses. The results show that with shorter waits, providing additional visual content, such as a travel picture, may make the wait feel longer. However, with longer waits, additional visual content that distracts the user from the passage of time makes the wait feel shorter and reduces users’ negative affect toward the wait. Further, the benefits of providing visual content in longer waits are enhanced as more content is provided. Visual content should also be chosen to distract the user from time and temporal processing, as reminding users of the passage of time can encourage temporal processing and make the wait feel longer, especially in longer waits or when the amount of temporal visual content is high. Our findings extend time perception theories and contribute to the literature by identifying a potential paradigm shift, from the retrospective to the prospective paradigm, when waiting times are prolonged. Post hoc study results confirm the practical contribution of our research, demonstrating that several key findings are counter-intuitive to professional web designers.

Impactful Research on Transformational Information Technology: An Opportunity to Inform New Audiences

Henry C. Lucas Jr. et al. — Tue, 21 May 2013 15:18:00 PDT

Information technology has arguably been one of the most important drivers of economic and social value in the last 50 years, enabling transformational change in virtually every aspect of society. Although the Information Systems community is engaged in significant research on IT, the reach of our findings may be limited. In this commentary, our objective is to focus the IS community’s attention on the striking transformations in economic and social systems spawned by IT and to encourage more research that offers useful implications for policy. We present examples of transformations occurring in four distinct sectors of the economy and propose policy-relevant questions that need to be addressed. We urge researchers to write papers based on their findings that inform policy makers, managers, and decision makers about the issues that transformational technologies raise. Finally, we suggest a new outlet to publish these essays on the implications of transformational informational technology.

The Ambivalent Ontology of Digital Artifacts1

Jannis Kallinikos et al. — Tue, 21 May 2013 15:17:59 PDT

Digital artifacts are embedded in wider and constantly shifting ecosystems such that they become increasingly editable, interactive, reprogrammable, and distributable. This state of flux and constant transfiguration renders the value and utility of these artifacts contingent on shifting webs of functional relations with other artifacts across specific contexts and organizations. By the same token, it apportions control over the development and use of these artifacts over a range of dispersed stakeholders and makes their management a complex technical and social undertaking. These ideas are illustrated with reference to (1)　provenance and authenticity of digital documents within the overall context of archiving and social memory and (2)　the content dynamics occasioned by the findability of content mediated by Internet search engines. We conclude that the steady change and transfiguration of digital artifacts signal a shift of epochal dimensions that calls for rethinking some of the inherited wisdom in IS research and practice.

Positioning and Presenting Design Science Research for Maximum Impact

Shirley Gregor et al. — Tue, 21 May 2013 15:17:58 PDT

Design science research (DSR) has staked its rightful ground as an important and legitimate Information Systems (IS) research paradigm. We contend that DSR has yet to attain its full potential impact on the development and use of information systems due to gaps in the understanding and application of DSR concepts and methods. This essay aims to help researchers (1)　appreciate the levels of artifact abstractions that may be DSR contributions, (2)　identify appropriate ways of consuming and producing knowledge when they are preparing journal articles or other scholarly works, (3)　understand and position the knowledge contributions of their research projects, and (4)　structure a DSR article so that it emphasizes significant contributions to the knowledge base. Our focal contribution is the DSR knowledge contribution framework with two dimensions based on the existing state of knowledge in both the problem and solution domains for the research opportunity under study. In addition, we propose a DSR communication schema with similarities to more conventional publication patterns, but which substitutes the description of the DSR artifact in place of a traditional results section. We evaluate the DSR contribution framework and the DSR communication schema via examinations of DSR exemplar publications

Commonalities Across IS Silos and Intradisciplinary Information Systems Research

Paulo B. Goes — Tue, 21 May 2013 15:17:57 PDT

Table of Contents, Volume 37, Issue 2

MIS Quarterly — Tue, 21 May 2013 15:17:55 PDT