Employing the literature on IT governance and the structuration theory of technology assimilation, this research develops a conceptual model to examine decision execution mechanisms of IT governance in post-adoption stages of CRM diffusion, i.e. CRM use, impacts on business processes, and impacts on firm performance. While the literature mainly addresses the forms and contingencies of IT governance structures for decision making, we focus on IT governance mechanisms for decision execution, that is, the role of top management, business managers and IT managers in post-adoption stages of technology diffusion and how these groups are held accountable for their role. We conceptualize decision execution mechanisms of IT governance as including two dimensions: vertical advocacy from top management and horizontal coordination between business and IT managers. Decision execution mechanisms are assumed to facilitate CRM use and value creation. We analyze a dataset of 82 Chinese firms to examine the model and associated hypotheses. Our results show that: (1) decision execution mechanisms, including both vertical advocacy and horizontal coordination, significantly contribute to the three stages of CRM diffusion; (2) vertical advocacy has a notably greater effect on CRM use and firm performance gains than horizontal coordination, which has a greater effect on process gains. (3) CRM use creates operational and strategic benefits in customer-oriented business processes, which further improves firm performance. These findings have important implications for understanding how IT governance shapes the diffusion of CRM technology.
As firms are investing heavily in enterprise digital platforms such as enterprise resource planning (ERP), customer relationship management (CRM), and supply chain management (SCM), IT governance has been regarded as an important issue for realizing effective IT deployment (Agarwal & Sambamurthy, 2002). Especially, CRM systems have received increasing attention by firms (Rigby, Reichheld, & Schefter, 2002). Customer relationship management (CRM) systems are enterprise applications that integrate and manage all aspects of customer interactions with the organization to improve the efficiency and effectiveness of customer-oriented business processes, including marketing, sales and customer service ( Gefen and Ridings, 2002 and Karimi et al., 2001). As CRM systems facilitate customer-oriented business processes across multiple business units, effective IT governance for such applications involves extensive organizational efforts in aligning corporate strategy, business processes, management support, and skill development ( Bull, 2010, Goodhue et al., 2002 and Reychav and Weisberg, 2009). This raises important new issues regarding IT governance structures and mechanisms, as the traditional view of IT governance may not adequately address today's strategic, managerial, and technological complexity in governing new business innovations ( Agarwal and Sambamurthy, 2002 and Weill and Ross, 2005).
First, the literature on IT governance focuses mainly on determining who makes IT decisions and why (i.e. decision making structures and the factors underlying such structures), while far less on what are the role of different groups (e.g. top management, business managers, and IT managers) in the execution of such IT decisions and how these groups are held accountable for their role (i.e. decision execution mechanisms) ( Boynton et al., 1992 and Weill, 2004).
Second, the traditional view of IT governance classifies decision making structures into three main categories: the centralized models (where top management such as CEO, top executives or IT steering committee holds the authority for making IT decisions), the decentralized model (where divisional business units or functional IT units make IT decisions), and the federal model (where top management makes decisions on IT infrastructure and divisional units make decisions on business deployment of IT) (Boynton and Zmud, 1987 and Von Simson, 1990). Researchers have come to the consensus that the federal model is more appropriate for large firms since it balances enterprise-wide requirements with business unit requirements (Brown and Magill, 1994 and Sambamurthy and Zmud, 1999). However, no matter what a decision making structure firms may have, the execution of decisions on complex, multidivisional business applications such as CRM systems requires significantly high levels of both centralized top management support and decentralized collaboration between business and IT managers (Agarwal & Sambamurthy, 2002). Therefore, even the federal model, which emphasizes different decision makers for different IT applications, may not fully address the fact that executing the decision on one specific multidivisional application demands both centralized and decentralized mechanisms. This further calls for research on decision execution mechanisms.
In this research, we intend to study the decision execution mechanisms in the context of CRM diffusion. CRM systems are intended not only to automate customer-oriented business processes to reduce costs, but also to collect and analyze customer data to improve customer satisfaction and increase selling opportunities (Karimi et al., 2001). Although firms are boosting their CRM investments,1 they have seen vastly different outcomes of such investments (Rigby & Ledingham, 2004). There are a number of studies that have investigated the assimilation and performance effects of CRM, as well as the antecedent determinants (e.g. Karimi et al., 2001, Mithas and Krishnan, 2004 and Romano and Fjermestad, 2001, etc.). In this study, we focus on investigating the specific decision execution mechanisms for CRM diffusion through theoretical lens of IT governance and the structuration theory of technology assimilation. We wish this research would provide a new theoretical perspective for understanding the role of decision execution mechanisms in affecting the use and value of CRM systems.
Motivated by the above considerations, our study focuses on two key research questions:
(1)
What are the key dimensions of IT governance mechanisms for executing CRM decisions?
(2)
How would such decision execution mechanisms influence the use and value of CRM systems? To better understand these issues, we draw upon the structuration theory and the literature on IT governance as theoretical guidance, and develop a conceptual model to examine the role of decision execution mechanisms in CRM diffusion.
As firms are increasingly using CRM systems to integrate customer-oriented business processes, IT governance structures and mechanisms for deploying such multidivisional systems have become more important than ever. This study attempts to present a theoretical viewpoint on understanding the role of IT governance in CRM diffusion, supported by empirical evidence.
Along this line, this paper makes several specific contributions. First, we have developed a conceptual model for understanding decision execution mechanisms—what role different organizational groups play and how they work together to facilitate CRM diffusion—theoretically grounded on the structuration theory and the literature on IT governance. Guided by this theoretical framework, we have identified two significant dimensions of decision execution mechanisms, i.e. vertical advocacy from top management and horizontal coordination between business and IT managers. Further, decision execution mechanisms are found to be critical drivers of CRM diffusion, i.e. CRM use, business process improvements, and firm performance improvements. This study thus contributes to the literature on IT governance, by adding both theoretical rationales underlying the execution of IT decisions and empirical support to such rationales. Furthermore, this research extends the current IT governance research by focusing on the decision execution regarding complex multidivisional enterprise systems, rather than general IT in organizations.
Second, our study sheds new light on the “IT business value” debate in the CRM context. Our results show that CRM technology generates business value through its use in improving customer-oriented business processes. This contributes new evidence to why IT does not always lead to improved firm performance, and thus helps to reframe the conversation from direct relationships between IT and firm performance to intermediate usage and impacts on business processes. We believe this “bridging the gap” effort extends the IT business value literature.
Finally, by identifying specific patterns of decision execution mechanisms, we have empirically found that vertical advocacy is particularly effective in the CRM context. This contributes to the literature on CRM systems by adding new perspectives on the governance of such complex, multidivisional networking systems. This may also provide useful understandings on how enterprise-wide IT applications should be governed in terms of decision making and the execution of such decisions.
In summary, the major contribution of this study lies in its theoretical extension of the literature on IT governance, by conceptualizing the role of decision execution mechanisms in technology diffusion from a view of the structuration theory. Our work highlights the significant effects of decision execution mechanisms including vertical advocacy and horizontal coordination in CRM diffusion. We hope these initial results will motivate more research in this important arena.
