THE IMPACT OF WEB BASED TECHNOLOGIES IN THE PERFORMANCE OF FINANCIAL INSTUTIONS Abstract Au

OF FINANCIAL INSTUTIONS

Author and author correspondence

Carmen de Pablos

Rey Juan Carlos University, Madrid, SpainPaseo de los Artilleros s/n, 28032 Madrid, Spain

Phone: 34915344257Fax: 34917750170

e-mail: cpablos@poseidon.fcjs.urjc.es

Abstract

As many other authors since early ninties (Armour, H.O.; Teece, D.J., 1978; Summer etal., 1990; Meyer, 1991; Pettigrew and Whipp, 1991; 1993; Thomas et al, 1994) we tryto measure the performance achieved in insurance companies as a result of properlyimplementing new information and communication technologies (specifically those wedefine as web-based technologies). Although organisational performance has beenmeasured in different ways, there are not available guides that allow researchers choosea proper measure. Multiple measures have been chosen in a random way (Kenneth, L.;Lawrence, J.; Boatwright, E., 1996). A way to front this problem is by using a dualperspective. Concretely in this study we propose a new measure in order to evaluate theimpact of web based technologies in the relationship with customers. In this way wespeak about agility as a combination of four different dimensions.

1.- Introduction

Since the resource based theory (Grant, 1996) we can look at information andcommunication technologies as resources and the information system it is designed bymaking a proper use of these resources, a capacity1. One of the main discussions in theTheory of the Organisation and Strategic Management is centered around the role of“the strategic choice” (Astley and Van de Ven, 1983). The ecology of populations andthe perspectives of resource dependence sustain that profits in organisations come fromenvironmental factors and that strategic choices do not influence too much in results(Hannan and Freeman, 1977). However, we support the strategic choice perspective:manager choices can promote differences over organisational results (Child, 1972). Wecan find how some environments allow managers a great level of choice while others donot. Hambrick and Finkelstein (1987) suggest how different environments inorganisations vary according to the capacity of the managerial discretion they allow. Inlow discretion environments, as it is the case of the Financial Sector in Spain,managerial decisions and actions can have a great impact over organisationalperformance.

As many other authors since early ninties (Armour, H.O.; Teece, D.J., 1978; Summer etal., 1990; Meyer, 1991; Pettigrew and Whipp, 1991; 1993; Thomas et al, 1994) we tryto measure the performance achieved in insurance companies as a result of properlyimplementing new information and communication technologies (specifically those wedefine as web-based technologies).

Although organisational performance has been measured in different ways, there are notavailable guides that allow researchers choose a proper measure. Even multiplemeasures have been chosen in a random way (Kenneth, Lawrence, Boatwright, 1996). Away to front this problem is by using a dual perspective. This way, organisationaldesign can be measured by a mix of alternatives dealing with both efficiency andeffectiveness.

Concretely in this study we propose a new measure in order to evaluate the impact ofweb based technologies in the relationship with customers. In this way we speak aboutagility as a combination of four different dimensions:• Ubiquity

• Time responses• Adaptability• Integration

We choose different insurance companies in order to test the reliability of our proposedmeasure.

As main objectives in the study, we have put a special attention in the followingones:

• To identify main web based technologies as resources in the insurance companies.• To identify ways for properly implementing these web based technologies in theinformation system the insurance company needs to achieve the right processessequence.

• To look for optimal performance measures in order to evaluate the impact of the socalled technologies in the insurance companies.

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Capacities are a group of differentiated skills, complementary assets and routines that can promote asustainable competitive advantage in the firm (Teece et al, 1992 :28).

2.- The Information System: procedures of use of information technology

An Information System is a group of persons, procedures and resources that collect,transform and diffuse information in an organisation (Ohmae, 1991). An informationsystem will be practical in an organisation if it allows to offer proper responses to itsreal information needs.

Every information system makes use of a series of items that intervine in the processingof input and ouputs, warehousing and control activities that convert data resources intoinformation products. Automated information systems use hardware, software andtelecommunications, this is, information technology items, in order to transforminformation.

Information is a vital resource in modern societies. Technology has made possible thedevelopment of information systems powerful enough to formulate business strategyaround them by altering the typical organisational structure up to that moment. We livein a global information society, increasingly dependant in the creation, management anddistribution of information resources. Labor force is heavily accumulated in servicesand in the so called “knowledge workers”, who spend a great part of their labor timecreating, using and distributing information2. Most of them are final users that developtheir profession by using information systems to create, distribute and manageinformation products.

Information systems are then “enabling elements” of organisational processes, as theyallow too use scarce resources in a more effective way. Since information systems inmany organisations are interconnected by global, local and regional telecommunicationnetworks, workers can enter and distribute information, manage resources from distantplaces. For that reason, information systems play an important role in our globaleconomy.

We can distinguish some stages along the time in the introduction and use of differenttypes of information systems in the firm, from transactional systems to integratedinformation systems.

Figure 1: Evolution on information systems in the firm

Data processing systems (1950-1960)

Management information systems (1960-1970)Decision support systems (1970-1980)Experts systems for final user (1980-1990)Global integrated information systems(1990-.....)

Automation of routines in the operational level

Obtention of structured information for decision makingInformation and communication technologies allow aninteractive help for the process of decision making in theorganisation

use of information technology to directly supporting finaluser, expert systems, pieces of advice based in the expertknowledge for final users, strategic information systemsInformation systems are integrated by playing differentroles in the process they are in

Source: Own elaborated

The strategic role of information systems mean using information technologiesto develop products, services and capacities that make the firm achieve a competitiveadvantage to front with sucess challenges in the global market.

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We include here a wide range of employments: executives, managers and supervisors, independentprofessionals, accountants, engineers, scientifists, intermediates, teachers, secretaries and administrativeworkers.

Information systems can in a direct way support competitive strategies. Next figureshows some examples in the ones, given a group of strategic objectives, actions forsupporting a strategy in cost leadership can be developed in relationship with any of thePorter’s competitive forces (1985).

Figure 2: Strategic objectives and competitive strategies

Customers

StrategicTo attract newobjectivescustomers and

fidelise actualones by creatingcosts of change

Strategy in costTo offer lowerleadershipprices

Providers

To attractproviders

looking for costsof changeTo help

providers to lowprices

CompetitorsTo throw outcompetitors byattractingcustomers andprovidersTo improvecompetitorprices

New entrantsTo createbarriers to goinside theindustry

SubstitutesTo make

substitution lessattractiveDisincentive theentrance ofsubstitutiveproductsTo offersubstitute

characteristics.To producesubstitutes

Disincentive theentrance toinvestments inthe sector

Strategy ofTo offer betterTo helpTo removeTo complicatedifferentiationquality,providers tocompetence withentrance

technicalimproveexclusivedecisions.characteristicsservices.products.To enter inand service.To develop anTo offerpotentially newTo offer newonly serviceproducts andmarketsproducts,offer or establishservices that areservices oralliances withnot traditionallymarketsprovidersoffered together.

Source: adapted from O´Callaghan (1991)

The value chain framework (Porter, 1985) can help to decide where and how toimplement strategic capacities in the information systems to get profits. Figure 3 showssome examples.

Figure 3: Benefits from the implementation of strategic capacities in the informationsystems.

Tangible benefits

To increase sales or benefits

To decrease information processing costsTo decrease operational costs

To decrease the investments required

To increae the operative skills and the efficiencyIntangible benefits

Better or different information availabilityCustomer service improvedEmployee’s moral improvedDecision improved

Competitive position improved

Improved image in organisational actions

Example

Develop of computer based products or servicesremoval of uneeded procedures or documentsreduction of inventory costs

Reduction of required inventory investmentsTo increase skills in productionExample

More appropriate information and on time and new typesof information

Faster response timesRemoval of boring tasks

Better information and decision analysissystems that block customers

Agressive image as the one percieved by customers,providers and investors

Source: own elaborated

In this evolutive process, isolated information systems are replaced in the organisations.Since the smallest microprocessor to the biggest mainframe, computers are in a networkor interconnected through telecommunication links with other information systems.This distribution of power in the computers in an organisation is called distributedprocessing and it often takes the shape of a client/server architecture, by means of finaluser computers (clients) and servers sometimes linked to little computers or mainframes

acting as superservers. Interconnected computer systems allow final users tocommunicate themselves in an electronic way and to share the use of hardware,software and other information resources. For example, final users of software, laserprinters groupware databases.

This way, many information systems are composed by peripherical items interconnectedby communication links to central processing units. Besides, networked computingdepends on telecommunications. This way, networks of small computers are now analternative to big information systems, as organisations decrease the size of theirComputer equipments3. For example, a network of various microcomputers can replacea great information system. Interconnected microcomputers seem to be easier to install,use and maintain, besides they offer a more efficient, flexible y less costly alternative tobig computer systems for many applications.

Nolan et al. (1996) sustain that a new technology in the firm must be introducedassuming changes in its organisational structure. Information technology itself does notallow organisations better business results, but combined with new ways of developingtasks can be a way to achieve dramatic improvements in productivity. This way, in acronological point of view, different stages have been distinguished in the introductionof information technology in the organisations to support information systemsfunctions.

Figure 4: Stages in the introduction of information technology in the organisations

Data processing era

Information technology era

Networking era

1969 1980 1995 2010

Source: adapted from Powell and Dent-Micallef (1997)

We will use a dual tipology of information technology adoption in our study. For that, alist of information technologies and procedures of use has been proposed to becontrasted in the insurance spanish sector. This list has been later revised by a group ofinsurance managers. We distinguish among this two types of technology adoption(Damanpour et al. 19).

a) The adoption of information technology refers to the equipments ofhardware, software and communications used to process information related to productsor services. One adoption of information technology can then be the adoption of a newtool for the firm, as for example, a software for managing electronic mail (Daft, 1978 ;Damanpour, 1992 ; Damanpour, Szabat and Evan, 19).

b) The procedures of use of information technology, are defined, for thepresent work, as rules, steps and structures related to the use of information andcommunication technologies and the interchange of information amongst the membersof a firm. They constitute in this sense measures of functioning or infrastructure policiesand human resources that have as objective the formation and modification ofadministrative procedures facing a great absortion of information technologies and waysof using them.

As it has already been stressed in the previous paragraph, the information technology isnot a direct source of competitive advantage, but properly implemented in a certaininformation system, and once established some habits in its correct use, it can be

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This process of evolution from mainframes to computer networks is called downsizing

decisive in obtaining better results (Daft, 1978 ; Damanpour, 1992 ; Damanpour, Szabaty Evan, 19).

Since there are not clear classifications of information technologies in the organisations,being the more usual one the differentiation according to the decision level, we haveestablished a list of two types of information technology adoption, taking into accountthe work of Subramanian and Nilakanta (1996) and distinguishing between informationtechnologies and procedures of use.

Figure 5: Information technologies and procedures of use

Information technologies

Databases

Specific software for an insurance companyElectronic data interchange (EDI)Local area networks (LAN)Toll free numbers

Electronic document managementElectronic mailVideoconferencingSelfservice terminalsEIS and DSSExpert systems

Computer aided learningInternetIntranetInfovíaVideotextGroupwareWorkflow

Procedures of use4Procedures of information files for customersProcedures of database management systemsFax transmisions

Procedures of phone salesProcedures of Internet selling

Automated systems for channel distributionOn-line customer systemsCustomer services by phoneAutomated data systems

Explicit computer aided plans

Computer aided management by objectivesComputer aided process redesignTraining computer aided programsComputer aided job rotation

Computer aided flexible labor timetable (partial timework, teleworking, etc.)

Computer aided special labor force for ad hocproblems (consultants, etc.)

Computer aided incentives/reward systems forchannel distribution

Computer aided incentives/reward systems for otherworkers outside the channel distribution

Source: own elaborated

3.- Information technologies and performance

Some studies in the organisational level have checked the relationship between the

investments in information technologies with some indicators of performance, asoperational costs, return on assets and return on equity. They allow to get an improvedproduct in variety, quality, and customer satisfaction. At the same time it makes easierthe development of managerial processes and enables a greater work productivity.However, the achieved improvements do not have an impact in financial performanceratios, since benefits can be redistributed in the organisation or go to the consummers.Due to that, the study of the effects of the implementation of technologies overorganisational performance must be based in intermediate measures that can betterconfirm the advantages in their use.

McFarlan (1981), Cash y Konsynski (1985), Charnes et al. (1985) y Conte et al.(1986) announced in the eighties that the adoption of information technologies wasimportant since it was going to build the key for achiving a future competitiveadvantage. Others, as Dickson et al. (1984) and Clemons and Row (1991) have stressed

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and policies of organisational functioning or infrastructure and human resources policies. In this sense, and for thisstudy, under the name “procedures of use of information technologies“, we also mean a group of working measuresor infraestructure policies and computer aided human resources that have as objective the training of employees andthe modification of administrative procedures facing a greater absortion of information technologies or ways of usingthem.

that the introduction of information technology in the firm is, above all, a necessity, andthe lack of it could drive towards a clear disadvantage in some organisations.Unfortunately the established relationships between information technology andorganisational performance have been based under specific cases, for that, we mustrecognise that there is still an important gap in the studies that try to analise the impactsin information technology adoption and organisational performance (Mahmood, 1997).In the ninties some sectorial studies have appeared. This last ones have inspired us inthe search of relations amongst performance measures and information technologyadoptions.

Amogst the studies that relate information technology adoption and performance andapply their empirical analysis to concrete cases, we can stress the ones from McFarlan(1981), Cash y Konsynski (1985), Charnes et al. (1985) y Porter y Millar (1985).Charnes et al. (1985) support that the adoption of information technologies in the firmproduce a better performance in processes measured in typical efficiency ratios, asreturn on assets and return on investments. McFarlan (1981) emphasised thatinformation technologies improved the general performance in the organisations as theymade possible the creation of entrance barriers, creating costs of change andtransforming the base of the competence. Porter and Millar (1985) confirmed thatinformation technologies can help to improve the performance in an organisation byoffering a competitive advantage since they allow actions such as, decrease costs andpromote product differentiation. In this first group we can also stress the research ofClemons and Row (19) and Clemons (1991) who support that information technologyis a need that makes firms to adopt a proper position to develop tasks, but not so easilyto a better performance.

In a second group of literature, the ones that use the sector as the unit of analysiswe have not found conclusive studies (Barua, Kreibel y Mukhapadhyay, 1995 ; Nault,1995). Only the ones developed by Behrens (1993) and Hitt y Brynjolsson (1994)concluded in a clear positive relationship between information technology adoption andperformance measures.

In this study, taking into account the assumptions of Mahmood (1997) about the need toincorporate new efficiency measures in order to be able to establish a relationshipbetween information technology adoption and organisational performance, we havetried to make a different approach by considering the agility, a new qualitative measureintegrated for four different factors in order to contrast the following hypothesis:H* : There is a direct relationship between information technology adoption and theorganisational agility.

Organisational agility

To introduce agility in our model we have considered some past literature,

Goldsmith and Clutterbuck (1985), Viedma (1992), Campion, Papper and Medsker(1996) in the ones the need to complete traditional measures used to make an approachto performance, in a quantitative way, with new qualitative ones are stressed. We alsotake as reference, as more relevant one, the work of Blackburn (1991), Goldman et al.(1995), Lieberman et al (1997), Pennings et al. (1997) y Moss-Kanter (1998) to explainthe different dimensions we have included in the variable agility. These authors makeconcrete references to adaptability, shorter answer times, ubiquity and task integrationas defined elements of agility. Additionally, a part about perception of critical successfactors have been included in the questionnary, a group of questions to check if really in

the sector we develop the study, agility is perceived as an important factor in order toevaluate it. Due to the found consistency, with high perceptions, summed in thefollowing figure, we have decided to include agility as an additional measure ofperformance and incorporate it to the present study.

Figure 6: Perception of critical succes factors

ariableV eaningm eanm PFCEP erception in the firm ofp ,7353

different components of

agility as critical sucess

factors

perception in the sector of different components ofagility as critical sucess

factors

index of perception of different components ofagility as critical sucess

factors

Standard deviation 0,515 minimum 2,90 maximum 4,95 PSFCE 3,927 0,377 3,25 4,80 PFCE (=PPFCE+PSFCE)/2)

3,831 0,366 3,08 4,72 Source: own elaborated

Technology adoptions, specially those provoked by the direct implementation of

information technologies in firm processes, cause agility in the processes insurancecompanies develop. Goldman et al. (1995) define agility as a reasonable answer tochallenges in a firm environment dominated by change and uncertainty.

We consider firms as agile ones if they are able to reduce time responses in the delivery

of goods or services, if they can, in a dynamic way, integrate processes, creatinginteractive relationships wirt customers and providers, in the way they can be present indifferent places without being physically in them, and if they are able to properly adaptto some changing circumstances in the environment.

Agility defines a framework for business action at different levels:

• In a level of marketing we can perceive a firm as agile if it enriches thecustomer by offering him individualised combinations of goods andservices.

• In a production level, an agile firm produces goods and/or services adjustedto individual needs.

• In an organisational level, an agile firm tries to join learnt productivecapabilities and new ones by following actions of resource optimisation.• “It is a dynamic and opened term: agil firms are always prepared to knowwhat they need to know, and learn to get benefits from new opportunities”(Goldman et al, 1995:42).

The actual competitive firm power do not just come from human or technological

resources but from the way they are coordinated to achieve a group of commonobjectives. Ackoff, makes a comparison with cars: “for a car to properly work all piecesmust be matched in a correct way, not each in its individual way” (Goldman et al,1995:72).

Agile organisations are distinguished by the intensity of cooperative relation the search

and by the virtual relations they create by implementing some technologies to theirprocesses. Under some circumstances, the achieved agility in the firms, in thedimensions here considered, can lead them to develop new ways of selling, buying andproducing, by developing different comercial relations and the use of new means.Agility allows firms to react faster now that in the past and implies, for that reason, aproactive attitude to customer requirements.

To get agility, the consideration of some characteristics in the organisational structures

is needed. In some cases, this is translated in a new management philosophy thatincludes a new and different use of elements and relationships produced in the day today operations. Apart from that, it is going to demand substantial investments in orderto make attractive ways that allow the change. Goldman, Nagel y Preiss (1995) stressthe atributes of the agile firm, as actions around its flexibility.

Figure 7: Atributes of the agile firm

roducts in an agile firm are perceived as solutions for individual needsP nrich the customerE

o get products or services in the market as soon as possible since the costs point of view; oneT ooperateC

way is by using the existent resources independently where they are or who they belong to. Forthat multifunctional equipments are used, empowerment, concurrent engineering, virtualprocesses, subcontracting and alliances.

To manage the change and the uncertainty a flexible enough structure must be got in order to allow a redesign of human and physical resources

Managers must control the impact of personal change, by making use of some tools as authority distribution, providing the needed resources to accomplish new operations

Organise for the change Manage the change impact ource: own elaboration from Goldman, Nagel and Preiss (1995)S

Information and comunication technologies are enabling tools that can contribute in

organisational aspects as design, configuration, coordination, decrease distances, etc. Itis obvious that traditional space and time concepts change in the organisations whennetworks are being used.

For this work, organisational agility is divided in four characteristics or elements. As the

organisation reaches them, as a consequence of implementing technologies in its tasks,it can get a greater efficiency in the development of processes (Pennings et al., 1997 ;Moss-Kanter, 1998).

Elements in the organisational agility

Taking into account the literature about agility (Blackburn, 1991 ;Goldman et al., 1995 ;

Lieberman et al., 1997 ; Pennings et al., 1997 ; Moss-Kanter, 1998) we have consideredfour main components. In this sense, we want to check if the organisations that moreadopt information technologies, considering the two dimensions in this study, get or nota better performance.1. Capacity of adaptation Adapting consists of answering at an optimal time to changes in the environment(Goldman et al., 1995). Organisations need, in this sense, do it. As Maruta’s affirms(1997:13) : “the challenge is to have an organisation constantly searching itsrenovation”.

Firms are changing from a sequence of strategy, structure and processes to another one,in which after strategy, processes should be taken into account before organisation.Information technology is one of the means that have allowed the capacity of adaptationof organisations joined to competence, globalisation, surplus of products and services(Brynjolfsson, 1994). They are allowing the development of new structures.

Tarragó (1995) refers to the concept of autopoiesis as the capacity of organisationaladaption that gives autonomy and allows redesign in a constant way looking forstructural fit. Learning can be a source to get this structural fit (Andreu et al., 1996).

The need to rapidly offer services and products converges with the idea of givingflexibility to the organisation through the integration of people and decision processes5,this way, technologies allow the coexistant of different options that before where notpossible, removing their constraints.

2. Shorter answer times

We stress as a second constitutive element of agility, time response, as the mean time to

offer a finalised good or service to the consummer (Lieberman et al., 1997).

Achiving shorter time responses for the customers is very important, specially when we

are changing from a traditional model based in cost decrease and increasing quality toanother model in which on trying to answer customer requirements firms must do it invery short times. For that reason, it is needed to develop redesigns in the organisationsby removing “waste times” or “death times”.

With this idea, to remove innecesary times generated in the processes, the “time based

competition”, defended by Stalk et al (1992) appears, as a consequence of studying thesystem “just in time” in Toyota. Stalk et al (1992) support that for being a time basedcompetitor one must incide in different places in the value chain, act in the delaysproduced in the various phases in the elaboration of a product or service.

3. Ubiquity

We define ubiquity as the capacity of being present in a certain place without being

physically in that place (Fernandez, 1997).

The development of some information technologies, as electronic processing networks,

can reduce the distance amongst regionally sparce points and can allow, for example,the centralisation of the decision making.

Information technologies can impact in two important aspects to achieve the ubiquity:

⇒ Configuration: how value chain activities are going to be geographically

distributed.

⇒ Coordination: the way and degree of activity interrelation; data transmission do

not depend too much on data volume, nor the distance but in connection timeand line capacity.

Kogut el at. (1996:506): “the essence of the design of a global strategy is in theconjunction of uses, way in which they must be performed”. Porter (1996), refering tothe problems in developping global strategies, distinguishes between advantagesderived from the global activity system, which means a global coordination of activities,and the ones derived from the geographical localisation of activities in diferent places.By using information and communication technologies a constant flow of information

establishing conscient connections amongst those implied in the firm management.Collaboration allows communication and cooperation amongst members of a dispersedequipment. Collaboration allows communication and cooperation in the members of adispersed equipment and can effectively share all their knowledge and uncertainties,increasing the possibility of generating reach economies.4. Task integration through information technologies 5

Information technologies, for example, allow the centralisation and decentralisation of processes in asimultaneous way.

Task integration consist of organising in a proper way a needed interrelation amongstthe activities developed in the different firm processes (Moss-Kanter, 1998).

Information technologies can widely decrease the costs of interrelating tasks integration.As these costs decrease, many business tasks, previously internally designed, can berealised through other external agents.

Information technologies can make the change easier. Indeed, organisational networksare composed by firms, parts or institutions, little ones sometimes, that are joined to actas a group. Some innovations, as the ones coming from the introduction of informationtechnologies favourish the integration of tasks by making possible to disperse actors tocoordinate, operate in a joint way in big distances, during long periods and under thebase of more and better information.

Chandler (1990) supports that every coordinated activity improves organisationalefficiency since it allows a better use of production factors.Williamson (1985)vindicates the concept of modern coorporation as the result of a group of firms that haveas main purpose to economise transaction costs.

Information technologies influence the coordination mechanisms that allow to integratethe desintegrated work in little, dispersed units. Big firms can, be divided in a group oflittle articulated units, that can offer the environmental demanded flexibility, combiningthis way the advantages of the big and small size.4.- Model of the proposed analysis

Under the following analysis, in a graphical way, the theorical framework of the presentstudy can be reflected.

Figure 8: Theorical framework of the study

Organisational efficiencyOrganisational Design Agility STRATEGY STRUCTURE Source: own elaborated

EFFECTIVENESSOrganisation is created with some concrete objectives reflected in the concept of firmstrategy. The development of the proper processes to get the objectives, case in whichorganisational effectiveness6 would be achieved, it is developed in a certain structure.This structure, result of disposing design parameters in the organisation (in bothdimensions differentiation and integration) provokes agility in the business processeshelping to get the planned objectives.

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Degree in which the organisation reaches its objectives (Etzioni, 1965).

Model of the proposed analysis

The following figure represents the scheme we try to develop in the research

Figure 9: Research schema

ICT ENABLINGENVIRONMENTINTRODUCE VIRTUALITY IN THE PROCESSES (EXTERNAL AND INTERNAL ONESCAUSESAGILITY inthe organisation:ubiquityadaptabilityresponse timescooperationCAUSES“RESULTS”“BENEFITS”“VALUE CREATION”-COSTS, +QUALITYCHANGE IN THE ISflow design,communicationSource: own elaborated

The implementation of information and communication technologies in theorganisations allows the introduction of virtuality in their processes. This causes agility,measured through a group of variables and it can be translated in better business results.Study focus

Data in this study have been collected through a quesionary based in a group ofquestions related with the different variables that we have tried to measure and to checkthe hypotheses. Domain in the sample is the spanish insurance sector, specificallycompanies that operate in the sector, with a high rate in the implementation ofinformation and communication technologies7. We have contacted with 100 companiesfor this study. Companies have been selected from the ICEA report nº 654 “evolution ofcomputers in the spanish insurance sector”, that groups the first one hundred firms withbetter results in Spain in 2000. To choose this selection we have taken into account thatthe spanish insurance sector is a highly concentrated one, where a little number of firmsget the highest percentage of premiuns in the whole sector (Martínez, 1994). The samereport signals how the first twenty companies, measured through the volumen ofpremiuns achieved in 1999, had the 87,6% of the total volumen of sales in the sector inSpain. Final sample is comprised by the 33% of the sent questionnaries8. Now let usbriefly describe variables used in this work.

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according to the Report nº 654 from ICEA (Cooperative Research of Insurance Companies), “Survey over theevolution of computers in the Insurance Sector”.8

thirteen surveys have been unestimated for uncomplete information.

Information technology adoption

We can understand information technology adoption, as we have already expressed, as aproblem of organisational and strategic character. Organisations that incorporateinformation and communication technologies exhibit a consistent innovative behavior intime (Subramanian y Nilakanta, 1996). Any valid measure of information technologyadoption must, then, capture this temporal dimension. In previous studies to the justmentioned, adoption of information technology had been considered as a uniquemeasure, by employing time of adoption. Organisational change studies measure theadoption as the number of innovations adopted in a firm (Damanpour y Evan, 1984 ;Damanpour y Childers, 1985). These measures of information technology adoptionhave some limitations:

1.- Research in information technology adoption is typically refered to the diffusion ofone or few technologies. If a firm adopts a technology before others, this do notneccesarily means that it will exhibit the same behaviour for other technologies. Forthat, valid measures for information technology adoption must be based in the adoptionof various technologies (Damanpour, 1987).

2.- Studies that have measured information technology adoption based in the number oftechnologies adopted have not considered time of adoption of every technology. Byexcluding time of adoption, however, important differences in the capacity andpropension to adopt technology can not be determined. This could be a main dificulty,since some research in the area of strategic management have showed that theadvantages of “moving first” have been translated into important competitiveadvantages (Porter, 1985 ; Zangwill, 1993).

3.- Almost all studies in the adoption of technology have worked with the adoption at amoment in time. A significant exception are Damanpour and Evan (1990), theymeasured the capacity of adoption by fixing changes in the mean time of technologyadoption in two different periods of time. Due to the fact that environment and internalconditions in the firm rarely change, it seems logical to assume, under the strategicchoice and contingency theories, that the rythm in the adoption of technologies willchange in time. However, if technology means very complex changes and of difficultimplementation, firms will keep innovated through time. That it is, firms that adoptinformation technologies will develop a high level of “innovative consistence”, in thesense of maintaining a certain information technology active along the time. Many ofthe developed research over this subject have ignored the consistency in technologyadoptions.

The survey has also been used for collecting data over time of adoption of everyinformation technology and procedures of use, if the mentioned technology has beenimplemented in the firm. The three dimensions of adoption in this study, are the onesconsidered by Nilakanta and Subramanian (1996) and they are obtained as follows:1. Mean number of adopted information technologies and procedures: the totalnumber of adopted information technologies and procedures for each firm. Most partof them had been implemented in the period from 1988-96.

Damanpour y Evan (1990), in their study, made use of data in a five year period,because they sustain that this period is long enough to show the effects of suchadoptions in the organisational performance.

In our study, the mean number of adopted technologies and procedures is obtained asfollows: first, the number of years between the first and last adoption is considered,second, the mean number of adopted technologies and procedures is calculated bydividing the total number of implemented information technologies and procedures

of use by the number of years between the first and the last implemented technologyand procedure of use.

2. Mean time in the adoption of the information technology and procedures of useof the technology: this variable will be used to measure the time of adoption of theinformation technology and procedures of use of the technology for each firm incomparison with other firms. For each information technology and procedure of use,the moment of adoption of the last adopting firm has been determined. Time ofadoption of a firm for each technology and procedure has been calculated by addingone unit to the last year of adoption by sustracting of this value, the year of adoptionof that technology and procedure of use in the firm. Those firms that have notadopted one technology or procedure of use mantain a level of 0. Mean adoptiontime for each technology and procedure of use for each firm and for all informationtechnologies and procedures of use is calculated.3. Consistency in the time of adoption: this variable has been used to measure theconsistency in which many firms have adopted information technologies andprocedures of use soon or late. This variable is calculated for each firm by fixing thecoeficient of variability in the adoption of technologies or procedures. The coeficientis a normalised measure. It is calculated by dividing the standard deviation of a groupof measures by the mean value of that group of measures. In this concrete case it iscalculated by dividing the time of adoption of each information technology andprocedure of use by the mean time of adoption of all firms in relationship with thattechnology or procedure of use. It is calculated for each technology and procedure ofuse of each firm and an unique mean index for all adoptions in a firm is calculated.This way, firms that adopt information technologies in a consistent way, sooner orlater than others, will have lower coeficients of variability than the firms that wererelatively inconsistent in their time of adoption.Organisational performance

As we have already shown, we have chosen a new way of measuring performance, the“organisational agility”. We consider it as an additional measure of performance to theclasic ones with a more qualitative character. Studies from Goldsmith and Clutterbuck(1985), Viedma (1992), Campion, Papper y Medsker (1996) promote the need tocomplete measures of performance of a mere quantitative character, with other newones, more qualitative that complete the previous. For the election of the dimensionsthat compound agility, we have consider, amongst others, as more relevant the work ofGoldman et al. (1995), Lieberman et al. (1997), Pennings et al., (1997) and Moss-Kanter (1998) refered to adaptability, shorter time responses, ubiquity and tasksintegration as components of the so called agility.

Next table show the characteristics we try to collect dimensions of agility in thequestionarym applied to the insurance sector.Figure 10: Characteristics and dimensions of agility

Characteristics

Fast change adaption of business procedures

Higher worker knowledge of their own responsabilities

Personalisation of the insurance contract to the specificconditions of the customer

High mormalisation of information, specially in the

Dimensionscapacity of adaptionmanagement of codes related to data

Resolution of organisational aspects in the change inproductive terms, as standards, route definition

Resolution of organisational aspects in marketing inchanges in relationship with customer, marketingconditions, tariffs, risks

Easiness to decentralise operationsEasiness to centralise operations

Punctuality of the needed information to develop processes,functions

Fastness in the process of insurance contractingFastness in the process of sinister management

Fastness in the relationship of the company with the channeldistribution

Fastness in the rest of processes in general

Actualisation of information over products in the channeldistribution

Proper interpersonal communication flows inside the firmEasiness of communication with the used channeldistribution

Easy capture of information in the point it is generated

Easy access to the information generated by the firm indisperse places, in a fast way

Easiness in the capture of information in the informationsystems in general

Easiness in the process of information of informationsystems in general

Easiness in knowing where the information isWork evaluation in general

Source: own elaboration

Faster answer times

Ubiquity

Tasks integration

The Spanish Insurance Sector

The insurance sector is a mature one. It mainly deals with information: collecting,processing, warehousing and diffussing it.It is characterised by constantly processingand diffusing information in a group of permanent interrelations produced amongstcustomer, distribution channel, company and other companies, in a base of directinsurance, reinsurance or coinsurance agreements.

It is a highly globalised sector that traditionally has made used of information andcommunication technologies in order to support own business processes, mainly basedin treating and transporting information. This has made it to be constantly inmersed in astrong dymamic of change.It is highly regulated by existing homogenity in the legalrequirements in insurance companies according to the branches they comercialise.

Telecommunication networks are used for internal and external, private and public firmrelationships, specific for the companies and general for a group of companies.

It is a sector that highly search for cost reduction in the relationships amongst differentpartners in the management of insurance and tries to add differentiation to a group oflegally standardised products.

It is a sector where the essential competences of the partners in the management of theproduct are well defined.

Amongst the different interactions in an insurance company we can stress the following.Each of them is coordinated through any of the mechanims: authority, co-operation,market.

• Agent of sales-company• broker-company• bank-company

• other alternative channels -company• company-same company• company-other companies• companies-customers

• customers-distribution channels

The following figure represents the structure of the Insurance Industry.Figure 11: Insurance Industry Structure

Authorities of supervisionDGS // Consorcio

Reinsurances Insurance companies Networks of insurance distribution

Other financial services (Banks, etc.)

CustomersSource: own elaborated

5.- Results

In november 2000 the letters with surveys have been sent. A two month period has beengiven to receive them.

In the month of February 2001 the proper statistics analysis have been made by usingSPSS.

As we try to know if there are or not relationships amongst a group of variables, we aregoing to use as statistical technique the general regresion and the correlation.Generalregresion allows us to determine the structure of dependence that better express the kindof relationship amongst both analysed variables. Correlation will express the degree ofthe relation.

• In relation with the hypothesis, we get a significant regression: The adoption ofinformation technologies is directly related with agility.

The equation we have got

LAGIL = 434290216LNCADOPTIPU - 200650918

In our case, for a reliance interval of 95% and a significance level of 0,05, we observe

that:

F = 7,41224 Signif F = 0,0116

Which means that the model is optimal. If we analyse the significance of T, sig T, for

every one of the variables, we confirm the final result:

ariableV

adoptipuC

ig TS

,01160

Besides, on considering the beta signals, we can confirm that:

High levels of information technology adoption are related to high levels of agility.

6.- Conclusions

As typical analyses in the approach of changes due to the incorporation of technologies

and its impact in organisational performance we can stress the ones coming fromArmour and Teece, 1978; Summer et al., 1990; Meyer, 1991; Pettigrew and Whipp,1991; 1993; Thomas et al., 1994. However, Brynjolfsson (1994) and Mahmood (1997)have found some deficiencies in those studies due to the way information technologyadoption has been measured (not wide enough) or the ratios used to measureorganisational performance. However we have found some quite conclusive ones(Behrens, 1993; Brynjolfsson, 1994) who conclude that high levels of informationtechnology adoption are related with high levels of organisational performance. In bothcases return on equity has been used as organisaitonal performance measure, but whileBehrens has developed the study in the industrial sector, Brynjolfsson makes a similaranalysis in the service sector.

In this study, by following the one from Subramanian and Nilakanta (1996), we have

tried to reinforce these deficiencies, by not only considering the mean time ofinformation technologies and procedures of use adopted in a firm, but also mean time ofadoption of information technologies and procedures of use and the consistency in theadoption.

Results show that information technology adoption improves organisationalperformance by using agility as a measure of performance and considering the duality inthe measuring of information and communication technologies.

The analysed sector, perceives agility as an important element in considering processesperformance. For that, since the point of view of adoption of information technologies,the role that information technologies play in achieving agility has been highlyevaluated.

There is a high variability in the collected values over the mean time of informationtechnologies and procedures of use adopted, mean time of adoption and consistency inthe time of adoption of these dimensions.References

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