Information Systems Integration, Information Technology Capability, Organizational Ambidexterity and the Performance Of Banks in Kenya
Abstract
Great effort has been made by researchers attempting to examine and explain how IS deployment in organizations relate to firm performance. The findings have been inconsistent, with some studies recording significant positive relationships, others null and still others reporting negative effects. Scholars face difficulties in articulating universally accepted understanding of information systems in organizations. Contributing to the search for clarity on the link between IS integration and organizational performance, this study conceptualized a relationship between IS integration, organizational ambidexterity, IT capability and the overall outcome of the organization. The overriding objective aimed at verifying whether there exists a significant direct relationship between IS integration and organizational ambidexterity and performance. The interactive effect of IT capability on these two associations was of interest too. The mediating influence of ambidexterity on the relationship between IS integration and performance was also considered. Finally, the overall effect of IS integration, IT capability and organizational ambidexterity on firm performance was tested. The inconsistencies of the findings of the relationship between IS and firm performance have partly been blamed on an imbalanced and non-integrated approach of several studies when investigating IS and organizations. There is need to balance the social and technical components of the organization and IS as well. However, relying on theories that focus on a fewer sociotechnical system (STS) constructs, most IS studies have yielded empirical results that explains the technical or social components separately in a narrow context. This could be the source of the incoherency. There may be need to employ meta-theories to guarantee an integrated and balanced approach. Additionally, the theories should provide a linkage between the IS and organization domains. The current study employed a mixed method design of descriptive, exploratory and cross section to investigate the relationships of the constructs in the study. Guided by the adaptive structuration theory (AST) to link the two domains, the current research employed structural equation modeling, specifically PLS-SEM to analyze the relationships between the conceptualized constructs. From the analysis and in conformity with earlier studies, the direct linkage between IS integration and firm performance was found to be insignificant, as was the moderating effect of IT capability on this relationship. The analysis revealed that over 80% of IS integration effect on firm performance is explained through organizational ambidexterity, indicating that ambidexterity fully mediates this relationship. However, the moderating influence of IT capability was found to constraint the relationship of IS integration and ambidexterity. The insignificant linkage between IS and performance and the full mediation of ambidexterity between IS and performance would imply that IS impacts firm performance indirectly. From the findings, the ROI of automation should focus on IS enabled performance proxies not on IS. The study also points to mitigation of the imbalance between social and technical aspects of IS and organization by use of sociotechnical systems theories. With STS meta-theories providing a linkage between IS and organization domains, employing STS theories in IS and organization studies would likely address the inconsistencies witnessed in several studies‟ findings.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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