The effect of transaction costs on the decision to replace ‘off‐the‐shelf’ software: the role of software diffusion and infusion

This study examines the extent to which software diffusion and infusion affect the decision to replace ‘off‐the‐shelf’ software, using the example of spreadsheet software. Transaction cost economics motivates the propositions that higher levels of software diffusion and higher levels of software infusion act as disincentives on the firm’s decision to upgrade or change off‐the‐shelf software. Our focus on software diffusion and infusion extends previous research that only examined hardware infusion and diffusion. Results from the study, using a survey, newsgroups and interviews, generally support the propositions and show that the more software is diffused and infused into a firm, the less likely it is to be changed or upgraded. More specifically, the results also show that, while software infusion acts directly to reduce the likelihood of software replacement, software diffusion only affects it indirectly through its effect on infusion.

[1]  K. Jöreskog.  Statistical analysis of sets of congeneric tests , 1971 .

[2]  J. W. Taylor.  The role of risk in consumer behavior. , 1974 .

[3]  D. Cameron,et al.  The business who's who of Australia 1974 , 1974 .

[4]  O. Williamson,et al.  Markets and Hierarchies: Analysis and Antitrust Implications. , 1977 .

[5]  B. Muthén,et al.  Assessing Reliability and Stability in Panel Models , 1977 .

[6]  O. Williamson.  Transaction-Cost Economics: The Governance of Contractual Relations , 1979, The Journal of Law and Economics.

[7]  P. Bentler,et al.  Significance Tests and Goodness of Fit in the Analysis of Covariance Structures , 1980 .

[8]  C. Fornell,et al.  Evaluating structural equation models with unobservable variables and measurement error. , 1981 .

[9]  E. Carmines,et al.  Analyzing models with unobserved variables: analysis of covariance structures , 1981 .

[10]  R. Zmud.  An Examination of Push-Pull Theory Applied to Process Innovation in Knowledge Work , 1984 .

[11]  Malcolm Munro,et al.  Information Technology Assessment and Adoption: A Field Study , 1985, MIS Q..

[12]  Peter M. Bentler,et al.  Practical Issues in Structural Modeling , 1987 .

[13]  George William Kent Moore,et al.  End user computing and office automation: a diffusion of innovations perspective , 1987 .

[14]  Louis E. Raho,et al.  Assimilating New Technology into the Organization: An Assessment of McFarlan and McKenney's Model , 1987, MIS Q..

[15]  P. Joskow.  Asset Specificity and the Structure of Vertical Relationships: Empirical Evidence , 1988 .

[16]  Robert W. Zmud,et al.  Microcomputer adoption - The impact of organizational size and structure , 1989, Inf. Manag..

[17]  R. Zmud,et al.  Information technology implementation research: a technological diffusion approach , 1990 .

[18]  James C. Wetherbe,et al.  The Adoption of Spreadsheet Software: Testing Innovation Diffusion Theory in the Context of End-User Computing , 1990, Inf. Syst. Res..

[19]  D. D. Vaus,et al.  Surveys in Social Research , 1991 .

[20]  Izak Benbasat,et al.  Development of an Instrument to Measure the Perceptions of Adopting an Information Technology Innovation , 1991, Inf. Syst. Res..

[21]  Robert W. Zmud,et al.  Measuring technology incorporation/infusion , 1992 .

[22]  Mary B. Alexander,et al.  The diffusion of database machines , 1992, DATB.

[23]  B. Everitt,et al.  Modelling Covariances and Latent Variables Using EQS , 1993 .

[24]  Stuart Bretschneider,et al.  Organizational Adoption of Microcomputer Technology: The Role of Sector , 1993, Inf. Syst. Res..

[25]  Albert H. Segars,et al.  Scale Development in Information Systems Research: A Paradigm Incorporating Unidimensionality and Its Assessment , 1994, ICIS.

[26]  Detmar W. Straub,et al.  The Effect of Culture on IT Diffusion: E-Mail and FAX in Japan and the U.S , 1994, Inf. Syst. Res..

[27]  Ron Weber,et al.  The Impact of IT Infusion and Diffusion on Some Characteristics of IS Planning: A Model and an Empirical Test , 1995, ICIS.

[28]  B. Byrne,et al.  Structural Equation Modeling with EQS and EQS/Windows. , 1996 .