Managing impressions with information technology (extended abstract): from the glass house to the boundaryless organization

The inability to demonstrate the economic payoffs from investments in information technology (IT) has become known as the “productivity paradox”. One would think that the value of large investments in JT should be easy to demonstrate. But despite the lack of clear connection between IT and economic return, investments in IT continue to represent a significant portion of capital expenditures throughout the world. In this paper, we argue that the symbolic role of IT may help to explain the absence of demonstrable economic reasons for IT investments. An organization may implicitly justi~ the acquisition and possession of IT because of its symbolic importance rather than its economic value. IT’s symbolic role may have an indirect effect on economic performance, especially in cases where an organization is able to sustain its legitimacy and survive within an institutional environment. Thus, we consider a symbolic analysis of investments in IT to complement more circumscribed economic analyses. The purpose of this paper is to apply a recently developed theory from the study of organizational behavior -impression management -to the productivity paradox. We argue that information technology has symbolic consequences and that it is acquired in part as a means for an organization’s members to manage impressions they make on peers, customers, competitors, and others. We trace the origins of impression management theory, articulating its basic constructs and propositions, and show how it maybe applied in organizational settings. We apply the logic of impression management to explain the patterns of acquisition and deployment of IT in three distinct periods of time: (1) the glass-house era (circa 19601980), (2) the desktop era (1980-1990), and (3) the current era of the boanalwyless organization. We conclude the paper by discussing the relationship between economic and symbolic explanations of IT investment arguing that, by creating positive impressions, members of an organization may produce economic returns on its investments in IT that are not directly associated with standard economic analyses. Potiscion to copy without f.. ctl or part of this rnctericl is grwrtut providod thct ttro copios ●r. not rncdo or distributed for direct cornnnrcicl cdvmtage, the ACM copyright notice ●nd tho rid. of ttw publkotion ●nd its dam cppocr, ●nd notioo is @v*n thct copying is by pordscion of the Aswciation for Computing Mcchinwv. To copy othorwhe, or to repubtish, requires a f.. ●rid/or specific gmrnisciono StQCPR94-3&M&kr~~USA @ 1994 ACM 0%97sI~-~..w.so The word “potential” appears frequently in the literature on information technology (IT). Leavitt and Whisler (1958), who also coined the term information technolo~, spoke of the poiential of IT to reshape individual tasks, eliminate certain levels of organizational hierarchy, alter organizational structures, reshape boundaries, decentralize, shorten feedback loops, and improve the quality of decisions. Thirty years later, Applegate, Cash and Quinn Mills (1988) revisited these predictions and concluded that, while Leavitt and Whisler were “downri@ visionary,” much of the potential attributed to IT had yet to be realized. As the 21st century approaches, potential remains a major selling point for IT and its ancillary services. IT has the potential to provide an organization with strategic opportunity (Jarvenpaa & Ives, 1990; Johnston & Grrico, 1988; Vitale, Ives, & Beath, 1986; Banker & Kauffman, 1988), competitive advantage (Copeland & McKenney, 1988; Ludlum, 1989; Porter & Millar, 1985), improved customer service (Ives & Mason, 1990), and increased productivity and efficiency (Banker, Kauffman, & Morey, 1989; Weill, 1992; Zimmerman, 1988). While both academics and practitioners have provided accounts in which IT has realized its potential to improve organizational performance (e.g., Bender, 1986; Brynjolfson & Httt, 1993; Harris & Katz, 1988; 1991), other authors have reported neutral or negative effects of IT on performance (e.g., Cron & Sobol, 1983; Banker, Kauffman, & Morey, 1990). On balance, there is no consistent evidence that investments in IT generate positive fucial returns (Roach, 1988; Kauffman & Weill, 1989). Indeed, most of the evidence has been inconclusive. For example, Loveman (1987) showed no evidence of any positive relationship between IT investment and business performance, after controlling for the time lag between the development and acquisition of IT and its effect on the acquiring organization. A more recent study (Des Santos, Peffers, and Mauer, 1993) indicated that the average net present value to the fm of an investment in IT was zero. The inability to demonstrate the economic payoffs from investments in IT has become known as the “productivity paradox” (Due’, 1993; Powell, 1992; Drucker, 1991; Haynes, 1990). It is paradoxical that investments with an average net present value of zero would account for 32.5 percent of all lJ.S. capital equipment expenses in 1986, exclusive of expenditures for software and systems development (Roach, 1987). One