Designing an Information Technology Development ...

Designing an Information Technology Development Index for Business Organizations Tuğba Çekicia, Dilek Özceylan Aubrechta and Erman Coşkunb a

Department of Management Information Systems Sakarya University, Turkey [email protected] [email protected] b

Department of Quantitative Methods Sakarya University, Turkey [email protected]

Abstract As a result of rapidly changing consumer needs, an increasing number of substitution products as well as accelerated contraction of the markets and constantly increasing competition force business organizations to distinguish from others to survive. An important step in achieving competitive advantage is to follow evolving technologies, harmonize their strategies with these developments and adapt innovations as quickly as possible. While there are some reports and studies that describe the development level of countries in the information technology (IT) domain, there is a lack of studies dealing with that issue at the company level. This study therefore aims at developing a multi-dimensional composite index for measuring the development level of business organizations in the IT domain. The purpose of this index is to comparatively evaluate those organizations in terms of their IT ownership and usage, as well as to detect inherent weaknesses. In the course of developing the index, several sub indexes of different dimensions (such as technology ownership, utilization, perception, economical power, institutional structure) and their underlying indicator sets will be determined from literature and opinion of experts. Designated indicators should represent the dynamic structure of the technology to reflect the changes over time. The new index will be expected to provide a better understanding of institutional IT development standards and allow ranking of organizations to stimulate competitive gains. Key words: Information technology, Composite index, IT development level, business organizations.

1 Introduction Up to the present, humanity has experienced three important stages, lived three important revolutions and finally transformed into its present state (Kocacık, 2003). The first stage of this transformation was changing into an agricultural community. The next transformation stage is industrial revolution. Industrialization began with “industry revolution” which consists of a set of technological changes affecting essential tools and instruments used by English people during the 18th century. (Giddens, 2000). The third transformation stage of humanity is referred to as the Communication and Information Revolution. (Kocacık, 2003). As the main characteristics of agricultural, industrial and information societies, all made use of specific technologies respectively. Change in technology makes impacts on societies in economic, social, cultural, political areas and also exposes new changing processes (Erkan, 1998).

Technological development has become an important criterion not only for societies but more specifically also for business organizations. As the importance of this term has been understood, some indexes which are applied for measuring the technological developments of countries and business organizations have been developed. For example; ●

Technology Readiness Index (TRI) developed by Parasuraman (2000) , measures the tendency of nations to embrace new technologies,

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Technology Achievement Index (TAI) demonstrates the formation of technology in one nation and how it harmonizes with skills of people. (United Nations Development Programme, 2001),

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An index developed by Archibugi and Coco (2004) measuring the capacity and development of technology for developed and developing countries by adding one indicator to the initial set of indicators of the Technology Achievement Index.

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The Web Index (2013) is a measure of the World Wide Web’s contribution to development and the fulfillment of basic human rights. The construction of the Index involves a rigorous process of collecting and analyzing data across a large number of indicators and countries.

The indexes mentioned above were generally developed for countries and published in reports. Although, Turkey is one of the developing countries and also has lots of opportunities like its geographical location to trade, productive lands, massive young population, it is not one of the most technologically advanced countries, and moreover its rank is quite low according to these indexes. However, there have been no studies focusing on the technological development area neither for country nor business organizations in Turkey yet. Because of the aforementioned reasons, the purpose of this study is designing a composite “information technology development index” for business organizations, applicable for all of Turkey. Not only business organizations already operating in the sector but also ones that just newly embarked on are targeted with this index. While the index is being developed, consulting decision makers of related sectors and taking into account their knowledge and experience is considered vital. It is assumed that the designed index will reveal significant inter-relationships among the technological development of firms. In order to choose the suitable indicators, as one of the major steps in designing an index, literature has been reviewed and opinions will be obtained from experts as an ongoing part of our study. After the suitable indicators are selected, their statistical suitability has to be tested.

2 Importance of Information Technology for Business Organizations: Starting in the 1950s with the commercial use of computers introduced information technology to the broader society. Until it reached the current form, it had passed through three stages. These stages continued approximately for 15-20 years each and were named as; computing era, micro era and lastly network era. The network age is changing the way (by whom and where) technological innovation is created and disseminated. Global research and development (R&D) activities are increasingly

privatized and networked. Corporations have resources and the ownership (patents) to finance R&D and take products to market (Desai et al., 2002)

It is clear that importance of IT is increasing daily both for institutions and people. Especially for institutions, the necessity of serving vast human needs with limited resources creates a brutal competition. Hence, using IT is inevitable to survive in today’s business environment (Kızılaslan and Gönültaş, 2011). After the 1990s with the increasing effect of globalization, the development of technology forced people to use IT (Perçin and Karakaya, 2012). As the technology spread, use has increased; as the use increased, institutions have visibly changed. Structural, technological and cultural perspectives of them include the most important changes. They become more flexible, dynamic and communicative called structural changes, using ERP systems, increasing the number of R&D personnel called technological changes and the lastly cultural changes includes team work, delegation, much more friendly managers and collaborative work etc. Besides these changes, processing data is also different when compared to the past. When The Global Information Technology Report (GITR) and the Networked Readiness Index (NRI) were created more than 10 years ago, the attention of decision makers and investors was on adopting business and financial strategies that would allow them to develop in the context of a fast-moving but nascent Internet economy. Over more than a decade, the NRI has provided decision leaders with a useful conceptual framework to evaluate the impact of information and communications technologies (ICTs) at a global level, and to benchmark the ICT readiness and the usage of their economies (The Global Information Technology Report, 2013). Business organizations could sell anything they produced and always made profit at the earlier stages of globalization, but now change in demands of customers and market conditions and increasing competition compelled them to differentiate themselves. Their goal has become not only to produce product anymore but also to reduce costs, increase quality standards, use time effectively, satisfy demands of customers, harmonize themselves with the electronical distribution channels, ensure cooperation and reach their strategic goals. They must use IT in every department of their businesses efficiently to survive.

3 Literature Review The determinants of the generation, transmission and diffusion of technological innovations have been studied both from the theoretical and empirical viewpoint by a large body of literature. But the current understanding on the devices of technology creation and transfer are still inadequate, also for the lack of detailed indicators of technological change (Archibugi and Coco, 2004). Our work has been inspired by a variety of attempts to generate measures of technology capabilities. In 2000, the Technology Readiness Index (TRI) was developed by Parasuraman in order to measure the tendency of people to use new technologies. Four dimensions of TRI were proposed: discomfort, insecurity, optimism, and innovativeness. Data were obtained from the volunteers who took the National Technology Readiness Survey (NTRS). Finally the relationship between having technological products, using and diversification of technology based services and TRI was explained. Tsikriktsis (2004) replicated Parasuraman’s (2000) study by collecting data on English consumers and found support for the four TR dimensions, as did a Swedish study by Parasuraman et al. (2004). Liljander et al. (2006) indicated the proposition of Parasuraman (2000) in their study that future studies should investigate the antecedents and consequences of both the TR index and the individual dimensions. After Parasuraman had developed the TRI, Desai et al. (2001) suggested another composite index whose aim was to make a comparison between countries according to their technological development as reported by the United Nations Development Programme (UNDP). That index aimed to capture technological achievements of a country in four dimensions:

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creating new technology

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diffusing recent innovations

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diffusing existing technologies that are still basic inputs to the industrial and the network age

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building a human skill base for technological creation and adoption

Archibugi and Coco (2004) built upon that attempt by Desai et al. (2001) and their Technology Achievement Index (TAI). They designed the “Ar-Co Technology Index” which is similar to TAI in many ways. Their main modifications are enlarging the number of countries examined and allowing comparisons over time. This index has taken into account three dimensions of technological capabilities: the creation of technology, the diffusion of technology and the development of human skills. As a result of the study they grouped the 162 examined countries in different blocks named as “leaders”, “potential leaders”, “latecomers” and “marginalized”. Although UNDP uses TRI; the United Nations Conference on Trade and Development (UNCTAD) adopts a comparative approach based on relative country rankings to identify countries that are making progress in Information and Communication Technology (ICT) development and those which are being left in the digital divide (ICT Index, 2003). In accordance with the Commission on Science and Technology for Development (CSTD), UNCTAD reviewed and evaluated existing work to measure ICTs from different sources including academia, the private sector and international organizations (UNDP, UNIDO, OECD and ITU). The ICT Development Index (IDI) is a benchmarking tool used to monitor information society development worldwide (International Telecommunication Union 2009, 2011: cited by: Dobrota, Jeremic and Markovic, 2012). IDI has three main dimensions; Access, skills and use. Another index called the Web Index (2013) is a measure of the World Wide Web’s contribution to development and the fulfillment of basic human rights in 81 countries. The Index combines existing secondary data with new primary data derived from an evidence-based expert assessment survey. It consists three sub-indexes; universal access, freedom and openness, relevant content and empowerment. Besides these indexes that were generally developed for measuring the technological development of countries, there is no index which compares business organizations in terms of their level of technological developments. In our study, we attempt to design an index which creates added value and supports organizations to survive in the competitive market.

4 Information Technology Development Index This work in progress study will be based on literature review and expert interviews. To achieve the objective of measuring the technological development of organizations, suitable indicators and subindexes need to be determined in a first step. In order to select appropriate indicators, information technology usage has to be understood accurately at the level of the organization. “What must be the indicators measuring the technological development of a business organization?” To find an answer for this question, earlier studies have been reviewed and five dimensions of technological development of a business organization are identified accordingly. 1- ) Technology ownership 

number of computers with or without internet connection (ICT, 2003)

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number of servers and total storage (ICT, 2003)

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internet bandwidth per internet user (ICT, 2003)

2- ) Utilization 

amount, frequency & purpose of use (Petter, Delone and McLean, 2008)

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voluntariness (Szajna, 1993)

3- ) Perception 

perceived ease of use (Venkatesh and Davis, 1996)

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perceived usefulness (Venkatesh and Davis, 1996)

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user satisfaction (Petter, Delone and McLean, 2008)

4- ) Economical power 

percentage of total revenue spent in hardware and software

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percentage of total revenue spent in R&D facilities (Grinstein and Goldman, 2006)

5- ) Institutional structure 

number of people working in R&D department

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number of people working in IT department

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patents (Archibugi and Coco, 2004)

5 Conclusions Designing an index of technological development for business organizations is the main scope of this study. There are many indexes developed for measuring the technological capacities of countries but there is lack at the organizational level It is a work in progress study. Follow-up research aims at including a comprehensive set of indicators and sub-indexes as well as the subsequent index composition. Although, the main indicators and their sub-indexes have been identified at this stage, their setup has not yet been statistically tested. In order to do so, relevant data applicable to quantify the indicators and sub-indexes must be gathered. The selected indicators will provide a basis for further studies investigating technological developments of organizations.

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