Challenges In The Adoption Of E Commerce Technologies In India

ARTICLE IN PRESS International Journal of Information Management 26 (2006) 428–441 www.elsevier.com/locate/ijinfomgt Challenges in the adoption of E-Commerce technologies in India: The role of organizational factors Monideepa Tarafdara,Ã, Sanjiv D. Vaidyab a College of Business Administration, University of Toledo, 2801 W. Bancroft Street, Mail Stop # 103, Toledo, OH 43606, USA b Management Information Systems Group, Indian Institute of Management Calcutta, Diamond Harbour Road, Joka, P.O. Box 16757, Alipore Post Office, Kolkata 700027, India Abstract Organizations differ significantly in their inclination to deploy E-Commerce (EC) technologies. It is necessary to analyze the factors that determine the organizational inclination to deploy EC technologies because this would help firms design appropriate interventions in order to control it. This paper proposes a framework that explains the influence of organizational factors on the propensity to employ EC technologies. The framework is based on qualitative data on EC adoption from four firms in the financial services industry in India. It explains why organizations vary in their propensity to deploy EC technologies, and highlights the role of top management, aspects of organization culture, characteristics of Information Systems professionals, and organization structure. Overall, the paper provides a structure by which specific organizational drivers of EC deployment can be analyzed and controlled and relevant managerial issues can be addressed. r 2006 Published by Elsevier Ltd. Keywords: Electronic commerce adoption; Developing nations; IS professionals; Organizational factors; Case study 1. Introduction 1.1. Motivation Many firms in developing countries are in the preliminary stages of the adoption of E-Commerce (EC).1 The transition of firms in these countries to more sophisticated levels of EC use and adoption depends in part, on the extent to which they are inclined to use these new technologies for their business. Not all organizations are equally strongly inclined towards adopting EC (Iacovou, Benbasat, & Dexter, 1995; Mehrtens, Cragg, & Mills, 2001). Studies (Beatty, Shim, & Jones, 2001; Crook & Kumar, 1998; Iacovou et al., 1995; Payton, 2000; Premkumar, Ramamurthy, & Nilakanta, 1994) have suggested that the extent of EC adoption depends on the attitude of the organization towards EC technologies and the inclination or the propensity to deploy and use them. These findings have parallels in studies on the individual acceptance of technology (Davis, ÃCorresponding author. Tel.: +1 419 530 2442; fax: +1 419 530 2290. E-mail addresses: monideepa.tarafdar@utoledo.edu (M. Tarafdar), sdvaidya@iimcal.ac.in (S.D. Vaidya). 1 In this paper, E-Commerce has been defined as ‘‘the use of the Internet and other networking technologies for conducting business transactions’’ (Turban et al., 2004). 0268-4012/$ - see front matter r 2006 Published by Elsevier Ltd. doi:10.1016/j.ijinfomgt.2006.08.001

ARTICLE IN PRESS M. Tarafdar, S.D. Vaidya / International Journal of Information Management 26 (2006) 428–441 429 Bagozzi, & Warshaw, 1989; Venkatesh & Davis, 2000), and the diffusion of innovations in organizations (Cooper and Zmud, 1990; Rogers, 1995). Understanding of the causal factors behind differences in organizational inclination towards EC adoption is essential for enabling organizations to assess the extent to which they are inclined to develop, deploy and use EC. It also gives pointers to possible factors, which can be controlled in order to alter and manage the extent of this inclination. Existing research does not provide an analysis of factors that lead to these differences. This paper examines and identifies factors that determine the organizational inclination for the adoption of EC, and explains the nature of their influence. It also points towards appropriate management interventions for managing these factors, so as to increase the organizational inclination towards EC deployment. In doing so, it provides a framework for identifying and directing relevant issues for managing organizational and cultural aspects of the EC adoption process. 1.2. Research objectives We report the results of an exploratory study on EC adoption in four firms based in India. India forms an interesting context and domain for the study. This is because economic liberalization, initiated in India in the 1990s, has resulted in attempts at overall modernization and information technology (IT) adoption across industries, as domestic companies have responded to increased competition resulting from a de-regulated economic environment. At the same time, there is a relative lack of familiarity with, and confidence in IT, among organizations. Reliable IT infrastructure is also largely absent. Organizations in India have encountered organizational and cultural problems during the adoption and implementation of new IT in general (Dasgupta, Agarawal, Ioannidis, & Gopalakrishnan, 1999). As a result, all firms are not positively inclined towards the adoption of EC technologies and many are wary of taking the first steps towards introducing them. We addressed the following research questions. 1. What are the organizational factors that determine the extent to which organizations in India are inclined towards developing EC technologies? 2. How do these factors, individually and together, influence the inclination to use such technologies? Given the motivation for our research and the emergent nature of the problem domain, we adopted a qualitative, multiple case study based research method (Yin, 2003; Lee, 1989). The rest of the paper is structured as follows. Section 2 contains a description of the literature. Section 3 describes details of the research design, data collection and analysis. Sections 4 and 5 present the results of the study, and the framework that was developed. Section 6 concludes with a discussion of the contributions and implications for further research. 2. Literature survey All organizations are not equally inclined to develop and deploy new IT. The adoption of new IT applications is influenced largely by factors related to overall organizational attitudes and culture (Cooper & Zmud, 1990). Ginsberg & Venkatraman (1992) have suggested that different managers and organizations adopt different attitudes towards IT, depending on its perceived usefulness in the context of their work, and on organizational norms regarding the acceptance of new IT. Similar findings have been reported in the literature on EC adoption. Iacovou et al. (1995) and Crook and Kumar (1998) suggest that organizations may be differently inclined towards EC adoption. The literature identifies two broad aspects, top management and organization culture, that influence organizational inclination to adopt EC. 2.1. Aspects of organizational leadership—the role of top management Top management attitudes towards adoption of EC differ across organizations. A proactive approach and active championship on part of top managers can lead to the adoption of EC systems (Beatty et al., 2001;

ARTICLE IN PRESS M. Tarafdar, S.D. Vaidya / International Journal of Information Management 26 (2006) 428–441 430 Crook & Kumar, 1998; Grover, 1993; Premkumar & Ramamurthy, 1995). The following characteristics of leaders help create a positive organizational inclination for EC adoption. First, leaders can influence the extent of EC adoption by clearly defining the role that they want EC to play. Premkumar & Roberts (1999) and Payton (2000) have suggested that top management often provides the initial impetus for the initiation of EC projects. Crook and Kumar (1998) have reported that in organizations that are proactive and aggressive adopters of EC, leaders play a visible and vocal part in planning for new systems and specifying desired organizational returns from the adoption of EC. Second, senior managers play an important part in guiding and completing projects relating to new EC applications. Support of top management, for new EDI related projects for example (Payton, 2000; Premkumar & Ramamurthy, 1995), and championship of EC projects (Grover, 1993), has been seen to encourage organizations to adopt EC. Third, top management plays a role by providing infrastructure for adoption of new EC technologies. Grover (1993), Crook and Kumar (1998) and Beatty et al. (2001), suggest that a proactive approach on part of leaders in providing resources to EC initiatives, positively affects the organization’s inclination to adopt EC. In this context, top management can help by sponsoring projects, ensuring the availability of technical and human resources and eliminating unnecessary bureaucratic procedures (Kempis & Ringbeck, 1998). 2.2. Aspects of organization culture Studies suggest that the core values of a firm can predispose it towards a particular strategic alternative or technology (Pettigrew, 1979; Van de Ven, 1986). Similar findings have emerged with respect to organizational inclination to adopt EC. Payton (2000) suggests that end user support and political issues play an important role in determining the organizational inclination to adopt EC. There are two aspects of organization culture that can influence the propensity to adopt EC. First, managers’ exposure to EC technology, through interactions with vendors and professional associations increases their awareness and understanding of it. This has a positive influence on their inclination to consider new IT, as reported by Nambisan (1999). Iacovou et al. (1995) and Mehrtens et al. (2001) report that the existing level of sophistication of IT usage influences the inclination for EC adoption. Organizational IT capabilities, technical knowledge and skills (Mehrtens et al., 2001; Slywotzky, 2000) and IT sophistication (Chwelos, Benbasat, & Dexter, 2001) increase the inclination to adopt different EC technologies. While Mehrtens et al. (2001) and Crook and Kumar (1998) report that the level of IT knowledge among functional managers and end users determines the extent to which the organization would be inclined to adopt EC, Chircu and Kauffman (2000) have found that inability to acquire skill and expertise in new technologies, and a lack of training and education form significant barriers to the adoption of EC systems. Second, some organizations have cultures that support discussion of new and innovative ideas related to IT. This has a positive influence on the ability and inclination of managers to develop and adopt applications with new technology. Hoffman and Klepper (2000) have found that ‘‘sociable cultures’’, where ideas and innovations with respect to IT are freely shared, can potentially help to strengthen the organizational inclination towards new IT adoption. IT champions (Beath, 1991) for example, can accelerate the development and adoption of new technology. A favorable organizational attitude towards systems innovation increases the adoption of EC technologies (Iacovou et al., 1995; Mehrtens et al., 2001). It has also been suggested that the context, need and preference for EC varies across firms. Premkumar et al. (1994), Premkumar and Ramamurthy (1995) and Chircu and Kauffman (2000) argue that different organizations feel the need for EC to different extents. Moreover, EC technologies which are perceived as being consistent and compatible with past systems and present needs are more likely to be adopted than those which are not (Beatty et al., 2001). The findings of the literature survey have been summarized in Fig. 1. The literature describes two broad factors that influence organizational inclination towards EC deployment. However, the combined effects of these factors have not been studied, and the interactions between them have not been understood. For instance, both top management support and an organizational culture that supports innovation, lead to a positive attitude towards EC adoption. However, there is no explanation of how EC adoption would be affected if one of these factors were present, and the other is not. Considering possibilities such as these, the

ARTICLE IN PRESS M. Tarafdar, S.D. Vaidya / International Journal of Information Management 26 (2006) 428–441 431 Aspects of Organizational Leadership IS planning and IS role definition [Crook & Kumar 1998, Premkumar & Roberts 1999, Payton 2000] Support for new projects [Scarborough & Lannon 1988, Grover 1993, Premkumar &Ramamurthy 1995, Payton 2000] Infrastructure Design [Grover 1993, Premkumar &Ramamurthy 1995, Kempis & Ringbeck Inclination for adopting EC 1998, Payton 2000] technologies. [Premkumar et al 1994, Beatty et al 2002, Aspects of Organizational Characteristics Chwelos et al 2001, Mehrtens et al 2001, Iacovou & Benbasat 1995, Crook & Core values of a firm Kumar 1998] [Pettigrew 1979, Van de Ven 1986] Understanding of Technology [Iacovou & Benbasat 1995, Crook & Kumar 1998, Nambisan 1999, Mehrtens et al 2001, Slywotzky 2000, Chircu & Kauffman 2000, Chwelos et al 2001] Expression and discussion of IT related innovative ideas [Scarborough &Lannon 1988, Beath 1991, Grover 1993, Premkumar et al 1994, 1995, Iacovou & Benbasat 1995, Chircu & Kauffman 2000, Hoffman & Klepper 2000, Mehrtens et al 2001] Information Technology Champions [Beath 1991, Grover 1993] Fig. 1. Literature survey. objective of this research was to understand in an integrated manner, the effect of different factors on the organizational inclination to deploy EC technologies. 3. Research design 3.1. Research methodology Our intent was to explore and analyze the factors that influence the organizational inclination to deploy EC technologies. A qualitative method of enquiry was adopted in view of the lack of literature and the nature of the research questions (Strauss & Corbin, 1998; Yin, 2003). Qualitative methods have been productively applied where there is a need to describe and explain the phenomenon under study (Kerlinger, 2000; Markus, 1997; Yin, 2003). These methods have been used in Information Systems (IS) research, for example, for explaining processes of technology adoption and studying the use of EC (Crook & Kumar, 1998; Hart & Saunders, 1997; Iacovou et al., 1995; Majchrzak, Rice, Malhotra, & King, 2000; Trauth, 2001). Broadly there are two aspects to qualitative research. First, there is the data, which can come from sources such as interviews, reports and documents, and secondary industry information. Second, there are the procedures for data analysis that are used to interpret the data. These procedures, collectively known as ‘‘coding’’ (Yin, 2003) consist of identifying conceptual categories from the data and relating them to one another. We briefly describe these two aspects below. 3.2. Data collection We used a multiple case study design (Lee, 1989; Yin, 2003) to collect the data. Four firms were selected in the financial services industry in India, as the sites for this study. It was decided to confine the study to one

ARTICLE IN PRESS M. Tarafdar, S.D. Vaidya / International Journal of Information Management 26 (2006) 428–441 432 industry, to neutralize cross industry variances such as intensity of competition and product—market characteristics, and to ensure consistency for purposes of comparison. This was done because we felt that these factors could also have a bearing on the extent of EC adoption. The financial services industry was chosen as it provides an appropriate empirical backdrop for studying EC deployment for a number of reasons. First, the industry was deregulated in the early 1990s, which led to new competition from foreign companies. This resulted in an increase in industry wide spending on IT, to enhance infrastructure and gain competitive parity. Second, the information intensity of the financial sector being high, companies in this industry are among the most sophisticated users of IT in the country. Third, they have also been among the earliest to adopt EC technologies, particularly in the B2C sector. The financial services sector in India consists of broadly two kinds of organizations. First, the relatively ‘‘older’’ companies were established before economic liberalization in 1991. Second, there are the ‘‘newer’’ firms that were established after 1991. In general, these two kinds of organizations differ quite clearly in their organizational characteristics. Those established before 1991 tend to have a more conservative leadership, unionized employees, and have been slow to adopt EC. Those established after 1991 have a relatively younger workforce and are often advanced users of IT and EC. We selected two organizations of each kind. The four companies differed in the extent of EC adoption and provided four different kinds of organizational settings within which the influence of organizational factors on the inclination to adopt EC technologies was explored. The specific EC technologies that were included in the study were Internet based banking systems and stock trading systems. We promised anonymity to these companies. Therefore, we shall refer to them as PioneerCo, Table 1 Description of companies and interviewees Organization: Brief description Number of Background of interviewees interviewees Pioneer Co 3 1. Executive head of one of the largest regional offices, PioneerCo was a stock and securities exchange and the who over saw the implementation of EC technologies largest user of IT in the country, with one of the largest 2. IS chief of the same office who was responsible for corporate satellite networks in the world. All customer- EC implementation and was in charge of based transactions were electronically executed and infrastructure and maintenance existing products were delivered through the EC 3. Junior IS Executive infrastructure AdvancedCo 3 1. Executive head of one of the largest regional offices, AdvancedCo was one of the first privately controlled who over saw the implementation of EC technologies financial and banking companies to be set up after 2. IS chief of the same office who was responsible for liberalization of the Indian financial sectors. EC EC implementation and was in charge of technologies were introduced in its banking operations in infrastructure and maintenance 1999. At the time of the study, more than 50% of the 3. Senior functional executive institutional customers and 30% of the retail customers used the Internet to conduct their transactions LateCo 5 1. Present company CEO LateCo was one of the oldest financial services 2. Past CEO whose organizational tenure had been 25 companies in the country. At the time of the study, none years of the crucial processes of the company were based on 3. IS chief who was responsible for IT acquisition and EC technologies maintenance 4. Junior IS executive 5. Senior functional executive LaggardCo 4 1. Executive head of one of the largest regional offices LaggardCo was one of the largest government-controlled 2. IS chief of the same region (federal) banks in India. The firm had lagged behind 3. Senior functional executive other firms in the industry, in the deployment of EC 4. Manager of one of the largest branches of the bank technologies. The company’s crucial processes, although computerized, did not primarily use the Internet as a medium for information transfer and exchange

ARTICLE IN PRESS M. Tarafdar, S.D. Vaidya / International Journal of Information Management 26 (2006) 428–441 433 AdvancedCo, LaggardCo and LateCo. Three or five people were interviewed in each organization. The length of each interview varied from thirty minutes to an hour. Brief descriptions of each company and the interviewees have been provided in Table 1. We collected data from multiple sources. First, we used the literature to develop an interview schedule. We then interviewed five managers from two firms (other than the firms we studied), for discussions on general validity of the questions. Based on their suggestions, we modified some of the questions. The interviews with managers from the four firms were conducted face-to-face by one of the co-authors, and formed the primary source of data. Although we used the interview schedule to guide our questions, we were open to new findings, which we expected would emerge. Information about the following was collected. 1. Inclination of the organization to adopt EC technologies, as analyzed by studying existing and planned EC applications. 2. Characteristics of organizational leaders, with respect to their orientation towards EC deployment. 3. Elements of organization culture and the nature of their influence on EC deployment. 4. Additional factors which could influence the inclination to adopt EC technologies. 5. Possible interactions of the different factors, and their effect on the inclination to adopt EC technologies. Additionally, the following secondary sources of data were used. 1. Industry data from Center for Monitoring Indian Economy (CMIE) databases, business and technology press reports and web sites, for information on how the company was externally perceived, in the context of its use of EC technologies. 2. Documents of configurations of existing and past information systems. 3. Internal administrative records of the companies (minutes of meetings, etc.), to determine the organizational influences responsible for EC adoption. 3.3. Data analysis The data was transcribed, and the process of coding (Miles & Huberman, 1994; Strauss & Corbin, 1998; Yin, 2003) was used for analysis. We used axial coding to identify portions of the data that corresponded to concepts identified in the literature. These included instances from the data that described aspects of organizational leadership and culture. Open coding was done to categorize parts that revealed new factors. As described in Section 5, these included instances of the data that revealed the influence of IS professionals and the extent of centralization. In the following sections, we describe the findings from the study. We first describe briefly, the ‘‘within-case’’ analysis (Yin, 2003), that is, the data from each of the four companies. We then present the ‘‘across case’’ analysis, that is, we describe the different factors that influence the inclination towards EC adoption, by identifying the major conceptual themes across the cases. 4. Within case analysis—brief description of cases As described in Table 2, the four companies provided four different kinds of organizational settings within which the influence of organizational factors on the inclination to adopt EC technologies was explored. PioneerCo and AdvancedCo were pioneers in their respective sectors, and were among the first to adopt EC technologies. LaggardCo and LateCo used EC technologies either in a limited way or not at all. These were among the last in their sectors to adopt these technologies. 4.1. PioneerCo PioneerCo was one of the most sophisticated users of EC technologies in Asia. Its first EC systems were installed in 1999, when online connectivity was provided to clients through Internet based electronic links. The company was the largest user of IT in the country and had one of the largest corporate satellite networks in the

434 Table 2 Within case analysis—summary of case study observation Company Case observations in line with existing theoretical concepts which explain EC adoption New observations which propose a more complete understanding of EC adoption Characteristics of leadership Specific aspects of the organization culture Characteristics of IS professionals Decision making characteristics Inclination to adopt EC technologies, as given by existing and planned EC technologies, in the organization PioneerCo Enthusiastic about the use of EC Organization as a whole aware of the CIO a central part of the top management Decision-making regarding the Organization a proactive adopter of technologies. importance of EC in the operations of the team and greatly able to influence the acquisition and deployment of EC. company. organizational perspective towards EC. EC technologies centralized. More than 80 % of consumer related Employees enthusiastic about using new CIO an active member of many IS operations carried out through technologies and processes. professional associations. Internet based B2C distribution Attempts at innovation with EC. IS managers well integrated with managers channels. of the other functional areas and had a good understanding of the business requirements from EC. IS professionals were proactive in solving technical problems of end users. AdvancedCo Guarded and cautious about the use Organization as a whole appreciative of the Head of IS function (who also supervised Central top management team Fairly widespread adoption of EC. of EC Technologies. importance of EC. EC initiatives), a member of the top in consultation with the line Not against their use in principle. Organizational members not very management team. managers took decisions innovative on their own, as regards the use IS professionals provided innovative regarding the acquisition and of EC However, they followed the solutions to difficult and important end deployment of EC technologies. instructions of the IS personnel and did not user problems. offer any resistance. IS department conducted regular feedback surveys to find out the requirements of the user departments and the areas where training and development was required. LaggardCo Did not consider the use of EC Active unionized resistance to the adoption Head of the IS function did not have any Decision making regarding the EC technologies not adopted in any technologies to be strategically important of EC. authority to take decisions relating to EC acquisition and deployment of crucial process. ARTICLE IN PRESS for the company. Employees not aware about the strategic acquisition and deployment. EC technologies, taken by the and operational benefits from the use of IS professionals did not make proactive central top management team, EC technologies. attempts to convince top management or in consultation with the line Reluctance to use EC technologies. educate employees about the benefits of managers. emerging EC technologies. Implementation of new technology decentralized and controlled by individual departments. LateCo Against the adoption of EC for critical Middle and junior managers indifferent to the Head of IS function did not have the Decision-making regarding the Adoption of IT in crucial processes was processes. use of EC. authority to influence decisions regarding acquisition and deployment of minimal, only in response to competitive the acquisition and deployment of EC. EC technologies was imperatives or regulatory pressures. He was unpopular with other managers, centralized. and did not have good personal and M. Tarafdar, S.D. Vaidya / International Journal of Information Management 26 (2006) 428–441 professional relationships with executives from other departments. IS professionals did not interact with end users in other departments.

ARTICLE IN PRESS M. Tarafdar, S.D. Vaidya / International Journal of Information Management 26 (2006) 428–441 435 world. All customer-based transactions were electronically executed and services were delivered through the EC infrastructure. PioneerCo was at the forefront of new EC technology acquisition in the industry and regularly upgraded its infrastructure in line with new technology developments and new product introduction plans. The organizational leadership was strongly inclined towards acquisition and deployment of EC technologies. The CEO was convinced about its strategic impact and necessity and considered the EC infrastructure to be a central part of the operations of the company. Top management encouraged employees to be innovative about the use of IT in general and EC in particular. Most employees were professionally qualified, with degrees in economics and finance. They were keen to learn about the use of new EC technologies. For instance, line managers had conceived of and influenced the design of a data warehousing system to store customer data. The CIO was part of the company’s top management and knew about the use of EC in the financial services industry, worldwide. There was close interaction between the IS function and the top management, regarding strategic possibilities of EC applications. Decisions to introduce new products and services were taken by the central board of directors in consonance with the suggestions of the CIO. IS professionals interacted regularly with line managers and proactively provided end user support, for maintenance and development projects. New ideas regarding design, enhancement and maintenance of EC technologies were generated within the IS department through brainstorming and suggestion box schemes. The IS professionals liked working with new technologies and were well integrated within the mainstream organization. 4.2. AdvancedCo AdvancedCo was one of the first privately controlled financial and banking companies to be set up after liberalization of the Indian economy in the early 1990s. It had made significant investments in IT. The organization introduced EC technologies in its banking operations in 1999. Initially a website was developed and used as brochure-ware, to present information about different products and services. Subsequently, customers could log in and retrieve information about their accounts from the bank database. At the time of the study, more than half of the institutional customers and a third of the retail customers used the Internet to conduct their transactions. The company had sophisticated transaction processing and disaster recovery systems and was among the first Indian banks to introduce Internet banking facilities. Organizational leaders were favorable towards the introduction of EC technologies. However, they were wary of making fundamental technology driven changes in their products and processes based on new and untested technology. EC related decisions were taken centrally by the top management team, based on the inputs provided by the line managers. The CIO participated in these. At the time of the study, AdvancedCo had the largest number of Internet customers for any one bank in India, and was planning to get into Internet based cash management services for its institutional customers. Most functions heavily used IT and many of the customer interface functions were Internet based. Even though end users—managers and staff—were not directly involved in IT related innovation, they appreciated the importance of IT and followed instructions from IS personnel. EC champions were present in middle management and used their role in the IT decision- making processes to push through EC projects. The CIO was a member of IS professional associations and was well connected with other CIO’s in the industry. He was partly instrumental in convincing the top management to offer Internet based banking services and plan for the required infrastructure. IS professionals were responsible for end user education and support, maintenance, upgrades. End user feed back mechanisms were used to assess the effectiveness of the IS department and identify training requirements. 4.3. LateCo LateCo had a conservative approach towards IT and was strongly inclined against proactively introducing IT driven changes in its operations. The acquisition of new IT was driven primarily by competitive pressures and federal regulatory instructions. At the time of the study, none of the crucial processes of the company were based on EC technologies.

ARTICLE IN PRESS M. Tarafdar, S.D. Vaidya / International Journal of Information Management 26 (2006) 428–441 436 All IT decisions were centrally taken by a Central Board of Members (CBOM), which was the top management team. CBOM members were IT averse and strongly against introducing EC driven innovations. IT planning was executed top down. The general attitude of managers mirrored that of the top management, in the extreme reluctance to use EC technologies. Employees were resistant to adopting and using IT, and expressed their displeasure at regulatory requirements, which required the introduction of IT related changes in crucial processes. The IS department was headed by the General Manager of Systems and IT, and had four junior executives and three data entry operators. The General Manager was not a member of the CBOM and did not have any influence on their EC related decisions. The IS department did not have adequate technical skills and had in the past, provided incorrect or non-operational solutions to end user problems. Hence they did not have the confidence of other functional executives. 4.4. LaggardCo LaggardCo was one of the largest government controlled banks in India. The firm had lagged behind competitors in the deployment of EC technologies. Senior managers and policy makers of the firm were professional administrators, bureaucrats and finance professionals. They were indifferent to the possibilities of EC and a typical reaction was ‘‘We are a large government bank and most of our customers are in the rural areas. We don’t see the Internet as being very important for us.’’ IT planning was done centrally by the top management team in consultation with the line managers and departmental heads. The implementation of IT initiatives was decentralized. More than three quarters of the employees performed low skilled and clerical tasks. There were powerful employee unions strongly opposed to the adoption of IT in general and were determined to block the introduction of EC. Overall, the employees did not have any awareness regarding EC technologies. The IS department was headed by a senior manager, who reported to the head of the finance function. He was not an IT professional and did not proactively follow technological developments in the field. He did not independently take decisions relating to EC deployment and he did not have significant influence on top management, to be able to change their inclination towards IT. Most IS personnel had earlier worked in other functions and were subsequently trained to take over the tasks of the IS function such as database administration and maintenance. They had no formal education in computer hardware or software. They provided end-user technical support when asked for, but did not proactively interact with end users. 5. Across case analysis—organizational factors that affect the deployment of EC technologies In this section, we present findings across the four case studies and develop a framework to explain the role of different organizational factors on EC adoption in Indian organizations. The four case studies have shown that organizations differ in their inclination for using EC technologies. Some organizations believe that the use of EC technologies can yield operational and strategic benefits, and hence strongly favor their adoption. AdvancedCo and PioneerCo are examples of such companies. Others, like LateCo and LaggardCo, are skeptical about the benefits of EC, and reluctant to deploy them. Such firms typically adopt EC only after being forced to, by competitive or environmental pressures. The ‘‘across case’’ analysis showed that there are four factors that influence the organizational inclination towards deploying EC technologies. Two of these factors, ‘‘Leadership Characteristics’’ and ‘‘Organizational Characteristics’’ have been mentioned in the literature and were confirmed in our findings as well. They were analyzed through ‘‘axial coding’’. In addition, we found two more factors, ‘‘Characteristics of Information Systems Professionals’’ and ‘‘Organization Structure’’ that influenced EC adoption. These were analyzed through ‘‘open coding’’. The four factors are described below and shown in Table 3 and Fig. 2. 5.1. Leadership characteristics Organizational leaders influence the adoption of EC technologies by virtue of their formal authority. Leaders who are well informed about emerging technologies can induce other managers to consider their use.

ARTICLE IN PRESS M. Tarafdar, S.D. Vaidya / International Journal of Information Management 26 (2006) 428–441 437 Table 3 Across case analysis—summary of leadership characteristics, organization characteristics and the role of IS professionals Inclination to adopt EC High Fairly high Low Low Extent of EC adoption Widespread Fairly widespread Minimal adoption Minimal adoption adoption of EC adoption of EC of EC of EC Organizational factors influencing EC PioneerCo AdvancedCo LateCo LaggardCo adoption Leadership Characteristics Knowledge about emerging Yes Yes No No developments in EC Favorable attitude towards the Yes Yes No No deployment of EC Influence in ensuring the availability Yes No No No of resources Direct involvement in EC projects Yes No No No Organizational Characteristics Awareness and knowledge about EC Yes No No No technologies amongst managers Comfort with and enthusiasm for, the Yes Yes No No use of EC Existence of EC related innovation No Yes No No Presence of EC champions No Yes No No Characteristics of IS Professionals Frequent interactions with Yes Yes professional bodies and awareness about current trends in EC usage Technical capabilities for developing Yes and implementing EC solutions Actively push the deployment of EC Yes solutions though interactions with top management and end users Mediating role of IS Professionals Reinforcing relationship with top Yes (positive management (centralized organization) influence on EC Adoption) Inhibiting relationship with top Yes (negative management (centralized organization) influence on EC Adoption) Reinforcing relationship with Yes (positive managers and end users (de-centralized influence on EC organization) Adoption) Inhibiting relationship with managers Yes (negative and end users (de-centralized influence on EC organization) Adoption) Leaders who are positively disposed towards EC deployment encourage and support EC-based innovations. Moreover, top management influence in matters of resource availability ensures that adequate money, time and human talent are available for the initiation and completion of new EC projects. These aspects were observed in AdvancedCo and PioneerCo, as shown in Table 3. 5.2. Organizational characteristics Certain organizational characteristics determine the extent of EC adoption. For instance, awareness and enthusiasm about emerging EC technologies, comfort with their use on part of managers, and the existence of

ARTICLE IN PRESS M. Tarafdar, S.D. Vaidya / International Journal of Information Management 26 (2006) 428–441 438 Leadership Characteristics primarily influence the inclination to adopt EC in centralized organizations Leadership Role of IS Professionals Characteristics Sound technical capabilities for maintenance and development of systems IS Professionals can influence inclination to Interaction with the external professional adopt EC through their Organizational environment, and strong awareness of influence on Leadership Inclination for emerging technologies and their Characteristics, in adopting EC implications for the business centralized organizations technologies Active efforts to push for EC technology investments Organizational Good working relations with top management. Capability to influence top Characteristics management thinking with respect to EC. IS Professionals can influence inclination to High degree of interaction with and adopt EC through their influence on, end users, line managers and influence on opinion leaders Organizational Organizational Characteristics, in Characteristics decentralized Awareness of end user and business primarily influence organizations requirements from EC. the inclination to adopt EC in decentralized organizations Fig. 2. A framework for analyzing the organizational drivers of EC deployment. EC related experimentation and innovation positively influence EC adoption. So does the presence of EC champions. EC champions are powerful individuals with high credibility who promote the use of EC, exercise positive influence in the choice, evaluation and approval of EC projects, and help ensure the availability of resources for EC projects. These aspects were found in PioneerCo and AdvancedCo, as shown in Table 3. 5.3. Characteristics of Information Systems (IS) professionals The third factor that influences EC adoption relates to the characteristics of the IS professionals. The following conditions demonstrate the role of IS professionals. 1. IS professionals interact frequently with external organizations and professional affiliates, and understand emerging EC technologies, and their applicability for the business. This condition was observed in AdvancedCo and PioneerCo. 2. They are technically capable or developing EC solutions in the context of the business and providing end user support. This was observed in AdvancedCo. 3. IS professionals are convinced about the usefulness of EC for the business and can educate organizational leaders, end users, opinion makers and other powerful people about the same. They actively push for investments in new applications. This was found in AdvancedCo. 5.4. The influence of organization structure The relative levels of influence of Leadership Characteristics and Organizational Characteristics on the inclination to adopt EC depend on the centralization and decentralization of organization structure as explained below.

ARTICLE IN PRESS M. Tarafdar, S.D. Vaidya / International Journal of Information Management 26 (2006) 428–441 439 5.4.1. Centralized organizations and leadership characteristics The extent to which Leadership Characteristics influences EC adoption inclination depends on the degree of centralization. Leadership Characteristics is therefore the primary determinant of EC adoption inclination in centralized organizations. Centralized organizations where Leadership Characteristics is favorable are likely to have a strong positive inclination for adopting EC technologies. This was observed in PioneerCo and to some extent, in AdvancedCo. Similarly if Leadership Characteristics is not favorable in centralized organizations, EC adoption is expected to be low. This was observed in LateCo. 5.4.2. De-centralized organizations and organizational characteristics In a similar way, Organizational Characteristics predominantly influences EC adoption in de-centralized organizations. That is, if decision-making is de-centralized and Organizational Characteristics is favorable, the inclination to adopt EC is high. This was observed in AdvancedCo. Conversely, if end users and line managers in a decentralized organization are not favorably oriented towards the adoption of EC, then EC adoption is likely to be low, as was observed in LaggardCo. 5.4.3. The mediating role of IS professionals IS professionals play a mediating role in influencing EC adoption. The nature of the mediation depends on the organization structure. In centralized organizations, IS professionals can influence EC adoption, through their influence on top management. If mutual relations are friendly and accompanied by exchange of ideas, IS professionals can influence leadership attitudes about EC adoption. Therefore in centralized organizations, if IS professionals are proactive about EC adoption and there is close interaction between the IS professionals and the top management, then unfavorable attitudes of organizational leaders be changed to favorable ones, over time. This was observed in PioneerCo. Conversely, in LateCo, which was also a centralized organization, leadership attitudes towards EC adoption were largely unfavorable. Characteristics of IS professionals was also not favorable. Further, there was no interaction between IS professionals and the top management. Hence IS professionals did not have any significant influence on top management attitudes towards EC. EC adoption therefore remained low. In decentralized organizations, IS professionals can influence line managers to consider the adoption of EC technologies, where there is a high degree of interaction between IS professionals and line managers. Therefore in decentralized organizations, if IS professionals are proactive about EC adoption and there is close interaction between them and end users, then unfavorable attitudes of functional executives and line managers can be changed to favorable ones, over time. This was observed in AdvancedCo where interactions with IS professionals convinced line managers about the benefits of EC technologies and hence helped increase EC adoption. Conversely, in LaggardCo, the IS department was indifferent towards EC adoption and there was not much interaction between IS professionals and line managers. Hence IS professionals could not alter the unfavorable aspects of organization culture. Therefore EC adoption remained low. 6. Discussion In this section, we first describe managerial implications from this study. We then mention the contributions and limitations of this research. Finally, we suggest areas and scope for further exploration. 6.1. Implications for managers The findings of this study point to practical guidelines for managing relevant aspects of the adoption of EC technologies. Organizations having negative attitudes towards EC technologies and consequently, low EC adoption, can follow appropriate management strategies depending on the organization structure. In primarily centralized organizations, the emphasis should be to try and influence top management attitudes towards the adoption of EC. This would, in general strongly influence EC adoption. An alternate management strategy would be to ensure that IS professionals are favorably inclined towards EC, and then institute mechanisms to increase the

ARTICLE IN PRESS M. Tarafdar, S.D. Vaidya / International Journal of Information Management 26 (2006) 428–441 440 extent of interaction between IS professionals and top management. The combined effects of these steps, over a period of time, can increase EC adoption. In de-centralized organizations, the predominant mechanism for increasing EC adoption would be to influence the attitudes of functional executives and end users. Line managers, departmental heads and end users should be encouraged to increase their understanding of the applicability of emerging technologies for the business, through interactions with professional organizations and sources. EC innovation by users should also be encouraged and EC champions given important responsibilities in EC projects. Simultaneously, IS managers should be directed to interact with end-users and functional executives, such that they can educate, influence and create awareness about EC technologies. This would, over a period of time, positively influence attitudes towards EC technologies, as well as EC adoption. This study shows that there is significant scope for IS professionals to influence organizational attitudes towards deploying EC technologies, through their influence on top management leadership and on managers and end users. Organizations should therefore find ways to enhance the capabilities of their IS personnel, with regard to EC technologies. IS professionals should be encouraged to increase their knowledge about current technologies, develop professional affiliations in their specialized fields and increase their understanding of the business. Mechanisms and programs should also be instituted to increase the interaction between IS professionals, line managers and end users, so that there are possibilities for interchange of ideas and transfer of awareness and interest. The head of the EC initiatives within the organization should be made a member of the top management team, so that he can take part in decisions determining the organizational focus towards EC. 6.2. Contributions, limitations and scope for further research This paper identifies factors that influence the inclination to adopt EC technologies in Indian organizations. The specific contributions are: 1. The paper explains how relationships between organization structure, leadership characteristics and organizational characteristics determine the inclination to adopt EC. In this context, the influence of decentralization/centralization on EC adoption has not been explored in current literature. 2. The study also reveals an interesting connection between the characteristics of IS professionals and the overall organizational inclination towards the adoption of EC technologies. Although different characteristics of IS professionals, such as business and technical orientation (Swanson, 1994), and extent of coupling with the other functions (Scarbrough & Lannon, 1988; Venkatesh, 1999), have been discussed in literature, the nature of the influence of IS professionals on the organizational inclination to adopt IT in general and EC in particular has not been explored. 3. Overall, the framework identifies specific factors that can be controlled in order to change the organizational inclination towards the adoption of EC technologies. It further develops management prescriptions and interventions for increasing EC adoption. A limitation of this study is that the conclusions are based on exploratory findings from a few case studies. However, the qualitative approach used here was thought to be appropriate, given the lack of literature on the adoption of EC in Indian organizations. The case studies have enabled us to develop detailed descriptions of the different organizational aspects of EC adoption, so that we have been able to study and analyze the different facets of the phenomenon in some depth. The model developed here serves as a point of departure for lines for further research, for understating the role of organizational factors in general and IS professionals in particular, in influencing the adoption of EC. Case studies and statistical testing in different industries would further enhance the external validity and generalizability of this model. References Beath, C. M. (1991). Supporting the information technology champion. MIS Quarterly, 15(3), 155–371. Beatty, R. C., Shim, J. P., & Jones, M. C. (2001). Factors influencing corporate web site adoption: A time based assessment. Information and Management, 38(6), 337–354.

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Challenges In The Adoption Of E Commerce Technologies In India

by Raju Nair on Mar 25, 2009

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Challenges In The Adoption Of E Commerce Technologies In India Document Transcript