The ICT technologies and their constant evolution has placed substantial demands on the structure of the organisation. As a result the concept of organisational effectiveness is central to how an organisation combines ICT technologies and their organisational structure, processes, and outputs. The pace of change is so rapid that how organizations manage change is critical for their futures. In the rapidly changing business environment, uncertainty and equivocality become major obstacles for firms. Information technology then becomes a vehicle for helping firms to reach their business goal more effectively.
ICT technologies can be a powerful resource that can lead to competitive advantage for companies if harnessed properly, to achieve this competitive advantage companies must understand how to mobilise and deploy ICT based resources in combination or copresent with other resources and capabilities. ICT based resources can be divided into three categories: IT infrastructure, human IT resources, and IT enabled intangibles. The overall IT infrastructure compromises the computer and communications technologies and the sharable technical platforms and databases.
2. Organizational Structure The organisation structure institutionalises how people interact with each other, how communication flows, and how power relationships are defined. The structure of an organization reflects the value based choices made by the company; it refers to how job tasks are formally divided, grouped, and coordinated. How these value based choices are structured determines how the company will adjust to the evolving market and constantly evolving demands from customers. Organisational structure can take many forms, ranging from highly mechanistic to highly organic.
Mechanistic structures are typically highly formalized, non-participative, hierarchical, tightly controlled, and inflexible. Organic structures, on the other hand, are characterized by informality, decentralization of authority, open channels of communication, and flexibility. Based on above, the organisational structure is viewed as facilitating interaction and communication for the coordination and control of the organization’s activities. Considering the characteristics of IT capability above, it can be argued that organizational structure has some interaction with IT capability.
The presence of paid staff and the ability to obtain information and use it strategically via information technology in order to manage the challenge of maintaining congruence between resources and demands are the critical elements of organizational capacity that contribute to organizational effectiveness. The so called ability in this study has the same attributes with IT capability. As mentioned above, IT capability is defined as “a firm’s ability to mobilize and deploy IT-based resources in combination or co present with other resources and capabilities”.
Based on these components, it can be argued that IT capability has a positive relationship with organizational effectiveness too. Organizational human resources include the training, experience, relationships, and insights of its employees. The two critical human IT resource dimensions identified are: the technical IT skills and managerial skills. Technical skills are those related to programming, systems analysis and design, and competencies in emerging technologies.
Managerial skills include abilities such as the effective management of IS functions, coordination and interaction with the user community, and project management and leadership skills. Firms with strong human IT resources are able to integrate the IT and business planning processes more effectively; conceive of and develop reliable and cost effective applications that support the business needs of the firm faster than the competition; and communicate and work with business units more efficiently while anticipating future needs of the firm and innovating valuable new product features before their competitors.
The logic described above suggests the proposition that superior human IT resources are positively related to organizational effectiveness IT is a resource that generates competitive value only when it leverages or enables pre-existing firm resources and skills. There are many enabling roles of IT with respect to several organizational intangibles. There are three key dimensions of organizational intangibles, which are customer orientation, knowledge assets and synergy. The positive impact of customer orientation on firm performance has been widely documented.
A key capability for superior customer orientation is the ability to track and predict changing customer preference, especially in volatile markets. IT enables firms to track shifts in customer choices much more rapidly and effectively. As for knowledge assets, it is embedded in the skills and experience of its employees, as well as in its processes, policies, and information repositories. Effective knowledge management is an inherently social process that requires tremendous organizational change.
Synergy refers to the sharing of resources and capabilities across organizational divisions. Knowledge and information sharing across functional units enables firms to be more flexible and efficient in responding faster to market needs. 3. Conclusion An effective organizational structure institutionalizes how people interact with each other, how communication flows, and how power relationships are defined. It takes many forms, ranging from highly mechanistic to highly organic.
Organic organizations are open, with a free flow of information throughout the organization. Their operational styles vary freely, and decision-making is based on the expertise of the individual. They have loose, informal control with emphasis on a norm of cooperation. Participation and group consensus are highly encouraged. As mentioned above, IT capability is a firm’s ability to mobilize IT related resources copresent with other resources and capabilities. It consists of three components: IT human resources, IT infrastructure, and IT enabled intangibles.
To develop IT capability, a firm needs to develop a flexible operation style. This requires an open communication system and strong cooperation between departments. Additionally, in order to develop superior IT capability, a firm needs to be innovative and willing to accept adaptation. Organic structure provides such an environment for developing superior IT capability. Thus, we propose that organic structures encourage firms to develop information technology capability. Firms with organic structure will develop IT capability more easily.
Concerning managerial contributions, firm managers, which are faced with heterogeneous and dynamic environments, can benefit from understanding the significance of IT capability and organizational structure appropriate for fostering such a capability. Such firms can enhance their organizational effectiveness by developing IT capability and building organic structure. Information technology plays a critical role in business performance. Inclusion of information technology capability can add more to the understanding of organizational effectiveness.
4. References: 1. Morgan Henrie & Oliver Hedgepeth, University of Alaska Anchorage. August 2003, Size Is Important In Knowledge Management [Online] available: URL (http://www. tlainc. com/articl53. htm). [28 Feb 2010] 2. Moon-Koo Kim and Kyound-yong jee, August 2007, ETRI Journal, Volume 29, Number 4, Factors Influencing Strategic Use of Information Technology and Its Impact on Business Performance of SMEs 3. Anders henten, Morten Falch & Reza Tadayoni, January 2002. Some Implications for Regulation of ICT and Media Convergence.
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