Enhancing the performance effects of information technology through de/centralization: The role of corporate exploration and exploitation
Information technology (IT) has been a central issue in research on firm performance and organization design for more than 50 years (Zammuto et al., 2007). Early research on the relationship between IT and firm performance uncovered a so-called ‘productivity paradox’ (Brynjolfsson, 1993; Solow, 1987). Subsequent studies found positive returns to IT (Anderson et al., 2006; Bharadwaj et al., 1999; Dewan and Kraemer, 2000; Mukhopadhyay et al., 1997), but also a substantial variation of IT payoffs across firms (Brynjolfsson and Hitt, 1995; Loveman, 1994). Further results have led to the growing consensus that the returns to IT are dependent on the presence of complementary organizational factors (Aral and Weill, 2007; Bertschek and Kaiser, 2004; Bresnahan et al., 2002; Brynjolfsson et al., 2002; Sabherwal et al., 2006). Particularly, there is solid evidence that IT payoffs are enhanced by a greater decentralization of organizational decision-making authority (Bresnahan et al., 2002; Brynjolfsson et al., 2002; Hitt and Brynjolfsson, 1997). I extend this line of research by arguing that the effects of IT on firm performance may also be increased by greater centralization, depending on the type of corporate learning that is pursued by a firm.
KeywordsInformation Technology Firm Performance Organization Design Human Resource Management Practice Great Centralization
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