Prof. Dr. Wolfgang König, Prof. Dr.-Ing. Ralf ... - E-Finance Lab

2
Mindfully resisting the bandwagon M Wolf et al
Ramiller, 2004; Butler and Gray, 2006). Bandwagons are
defined as diffusion processes that are reflected by the
individual or organizational adoption of an idea, technique,
technology or product solely as a result of the number of
organizations that have already adopted it (Abrahamson
and Rosenkopf, 1990).
As one specific instance of a complex and thus
demanding IT innovation, the study at hand analyses the
assimilation of Grid-based architectures (Foster and
Kesselman, 1999; Buyya et al., 2009). In essence, Grid-based
architectures serve to meet the volatile IT resource and
IT service demands of organizations in highly turbulent
environments (Hackenbroch and Henneberger, 2007).
Following the seminal definition by Foster (2002), a Grid
is a system that coordinates IT resources that are not
subject to centralized control; uses standards, open
protocols and interfaces; and delivers non-trivial qualities
of service. Accordingly, Grid computing enables heterogeneous
and geographically dispersed IT resources to be
virtually shared and accessed across an industry, organization
or workgroup. Increasingly, large-scale enterprise
applications are no longer running on dedicated, centralized
computing facilities. Instead, they operate on heterogeneous
Grid resources that may span multiple
administrative units across different locations within an
organization (Strong, 2005). Depicting the continuous
growth of the associated market for virtualized IT resource
services, the market research company IDC (2010) projects
that, with regard to revenues, the market will grow by
27.4% per annum up to 2014. The report estimates that
worldwide revenues from virtualized IT resource provisioning
will grow from US$16 billion in 2009 to $55.5 billion
in 2014 (IDC, 2010). Recently, the core concepts of Grid
computing have transitioned to the domain of Cloud
computing (Foster et al., 2008; Weinhardt et al., 2009),
which represents a paradigmatic change in the dynamic
provisioning of IT resources (Gartner, 2010).
In general, IT innovations can be classified, according to
Swanson (1994), into Type I innovations, which are purely
technologically driven (e.g., database systems), and Type II
innovations, which involve the technological support of
administrative tasks (e.g., payroll or human resources
systems). Since Grid-based architectures will eventually
foster the development of advanced data processing, data
mining and (inter-)organizational collaboration capabilities,
they have the potential to generating strategic value
through integration with firms’ core business model. They
can therefore be classified as Type III innovations, which
potentially can affect the entire business strategy, and thus
are especially susceptible to bandwagon phenomena
because of their strategic complexity. Despite their strategic
potential, Type III innovation studies are still rarely
covered by the existing literature. In particular, there has
been little empirical research to explicate and quantify the
interplay of mimetic pressure (MP) and resulting bandwagon
phenomena influencing IT innovation assimilation that
stem from environmental turbulence (ET) (Fiol and
O’Connor, 2003; Pavlou and El Sawy, 2006). Furthermore,
few studies have focused on dynamic capabilities, such as
OM, which help to mitigate negative consequences of
bandwagons. OM is defined by a firm’s ‘rich awareness of
discriminatory detail and a capacity for action’ (Weick
et al., 1999:37). OM is one means by which organizations
can successfully overcome critical events, and master
scenarios of high uncertainty, such as complex IT innovation
processes. Such processes exhibit a high probability
of negative consequences, such as significant monetary
losses.
In the context of IT innovation assimilation, OM is
assumed to foster the identification of and resistance to
purely mimetic IT assimilation behaviour (Fiol and
O’Connor, 2003; Swanson and Ramiller, 2004). Moreover,
as an outgrowth of a dynamic capability, OM might help
organizations to cope better with ET and the resulting
high uncertainty (Weick and Sutcliffe, 2007), eventually
leading to above-average IT-based business value generation.
Despite several calls to integrate the interplay between
OM and MP in IT innovation assimilation processes
(Fichman, 2004; Swanson and Ramiller, 2004), to the best
of our knowledge this issue has not been addressed so
far. Accordingly, our research conceptualizes this interplay
as one instance of the institutional pressures driving the
assimilation of IT innovation and OM against the background
of a highly turbulent environment, such as the
recent financial crisis. The research model draws on
institutional theory to account for mimetic influences,
and on the theory of the dynamic capabilities of the firm to
integrate OM.
The remainder of the paper is structured as follows.
First, the research questions and their relevance are
introduced in the context of the overall research model.
Second, the theoretical background that informed the
research model is depicted, and the related hypotheses
are introduced. Then the research method used for the
field study conducted among senior Anglo-Saxon IT
decision makers and the results of partial least squares
(PLS) analyses of 302 complete responses are depicted.
Finally, the paper concludes by illustrating the contributions
of this analysis, and highlighting some further
research opportunities.
Interplay between institutional pressure and mindfulness in
highly turbulent environments
Our study analysed the Anglo-Saxon financial services
industry during the 2007–2009 financial crisis, as a recent
example of a highly turbulent environment. During this
extraordinary period the financial industry exhibited a high
extent of market volatility and uncertainty about further
market developments. This uncertainty resulted from rapid
changes in the market (e.g., rapid developments and
uncertainties in the corporate bond, mortgage and derivative
markets), and from concurrent technological demand
(resulting from new regulatory requirements, such as the
Basel II accord), which are subsumed by the concept of
ET (Pavlou and El Sawy, 2006). During this period, the
highly turbulent market required organizations and financial
services providers in particular, to assimilate IT
innovations that were suitable to deal with these rapid
changes. Concurrently, 172 US American banks failed,
resulting in systemic bandwagon phenomena that exacerbated
the extent of uncertainty and ET (FDIC, 2012). Even
in times of low market volatility, the financial services
industry is exposed to an above-average extent of