STRATEGIC INNOVATION THROUGH ...

12th International Annual Symposium on Management, March, 14th 2015 in Makassar Sulawesi, Indonesia

STRATEGIC INNOVATION THROUGH TECHNOLOGY READINESS AND ACCEPTANCE IN IMPLEMENTING ICT FOR CORPORATE SUSTAINABILITY

John Tampil Purba STIE Pengembangan Bisnis&Manajemen, Jakarta Email : [email protected] ICT usage in managing companies and other organizations become a strategic choice of innovation to achieve competitive advantage nowadays. IT becomes main tool to implement corporate sustainabilty, so the readiness and acceptance of the new technology contributing to organizational effectiveness in running the companies and or organizations. This research was done in Asindo Informatika an ICT training provider company in Jakarta. Total respondents are 215 of trainees in which consisting of IT staffs in their respective companies, the data were analyzed using path analysis, by using statistical software Amos 18 version.The results of the study showed that technology readiness of participants is high, where the average value optimism are 4.257, 4.340 innovativeness, discomfort 2,422 and 2,424 insecurity; so that participants have a high contibutor factor and inhibitors factorare low. Additionally technology acceptance participants also high with an average rating of perceived ease of use of 4.377 and an average value of 4.377 perceived usefulness. And actual average usage 4,307. In path analysis, optimism, and innovativeness are significant and positive effect on perceived usefulness but discomfort and insecurity are not significan affect to perceived usefulness. The affect to another TAM variabel, optimism, innovativeness ,discomfort and Insecurity are not significant effect on perceived easy of use. Perceived for ease of use are significant positive effect on perceived usefulness. Furthermore, perceived usefulness and perceived ease of use were in the significant positive effect on actual usage, the details will be explore in the discussion of this paper. The proposed strategy innovation of this research will be avail in end of this paper. Keywords : Strategic Innovation, Technology Readiness, Technology Acceptance, ICT, Corporate sustainability.

Research Background Global economic and the new high technologies make the world business exchanges on information, trades, payment and others become rely on each other. This situation of circumstances will forced any organisations or institution shall adopt new high end technologies such as Information Technology to optimize the effectiveness and efficiency in the various working processes within the organizations. Demirci, A. and Ersoy (2007) the intensity of competition is rapidly increasing, more companies are offering technology-based products and services to satisfy and exceed the ever-changing expectations of the customers. While the number of innovative high-tech products and services is increasing as we speak, consumers’ experiences with these products and services are becoming a focal point for companies striving to survive in today’s digital world. On the other hand, however, there are a lot of companies and or institutions that run the technology-based products and services never reach the full optimization but some are rejected by the employees. If the new technology cannot run according to the purpose of the organization the spent money for investment are going failed, Venkatesh, V.(2000) failed investments in technology may not


only cause financial losses, but also lead to dissatisfaction among employees. Global situation on economic business purposes overwhelm the activities inside the organizations as the need of the customers’ expectation for the sake of sustainability Purba (2014) said that change in the global situation can not be stopped, so any organization shall prepare good servive management. Turban and his friends stated that, Environmental, the organizational, and technological factors are creating a highly competitive business evironment in which customers are the local point. Because the pase of change and degree of uncertainty in tomorrow’s competitive environment are expected execelerate.(Turban, Leidner, McLean and Wetherbe, 2006). The technology acceptance model (TAM) suggests that perceived usefulness and perceived ease of use are beliefs about a new technology that influence an individual's attitude toward and use of that technology (Davis et al., 1989). In the banking services also use the Information Technology for the sake of growth, sustainability and innovations as Holland, Lockett, Blackman (1997) the combination of new IT, deregulation and globalization ensure that new ideas and innovations spread quickly and break down the traditional barriers to entry in the banking industry. This can be seen clearly in the internationalization of retail financial services (including banking) particularly across Europe and the US, the development of novel banking systems such as IBOS and Digicash, and the growth of retailer and automotive companies’ activities in what were once traditional bank markets such as deposits and loans. In the context of Asindo Informatika that located in Jakarta, where this research done the respondents argumented that the Technology Readiness (TR) of the people inside of every company is a compulsory. It is needed for the sake sustainability and development of the organizations or companies in facing the global economy and global business. Adoption of new technology becomes requirements and important ones for the sustainability of the companies and organizations all over the countries. The companies also need innovation strategy through technology readiness and acceptance in implementing ICT for the corporates sustainability in the future as discuss in this paper. Literature Review Definition or concept of strategic innovation conveys a few of thinking such Kaplan, Soren & Palmer, Derrick (---) Strategic; Innovation is the creation of growth strategies, new product categories, services or business models that change the game and generate significant new value for consumers, customers and the corporation. Strategic Innovation takes the road less traveled–it challenges an organization to look beyond its established business boundaries and mental models and to participate in an open-minded, creative exploration of the real of possibilities. Strategic Innovation is a holistic, systematic approach focused on generating beyond-incremental, breakthrough or discontinuous innovations. Innovation becomes “strategic” when it is an intentional, repeatable process that creates a significant difference in the value delivered to consumers, customers, partners and the corporation. A Strategic Innovation initiative generates a portfolio of breakthrough business growth opportunities using a disciplined yet creative process. Diffusion is a process whereby an innovation spreads across a population of potential adopters over time through various channels (Fichman and Kemerer, 1999). Thus, diffusion of innovation refers to how, why, and at what rate new ideas and technology spread through different cultures. Individuals within the cultures are not passive recipients of innovations. Although it varies in terms of the extent, they seek innovations, experiment with them,


evaluate them, develop feelings about them, complain about them, and gain experience with them often through dialogue with other users (Greenhalgh et al., 2004). Experiences of customers and the perceived value of innovations are among the main factors causing some innovations to spread more quickly than others. Also the characteristics of an innovation have a major impact on its rate of adoption among members of a social system (Rogers, 2002). In addition to the above-mentioned factors, technology readiness of potential users is among the factors affecting how fast and to what extent potential users adopt a technology. The form of the innovation shall consider toward the organizational change Purba, J.T. (2014) management innovation involves the introduction of novelty in an established organization, and as such it represents a particular form of organizational change. In its broadest sense, then, management innovation can be defined as a difference in the form, quality, or state over time of the management activities in an organization. A.T. Kreany (creative trainer module education & culture DG, life learning program, may be 2011) displayed based on experiences in innovation consulting for different branches A.T. Kearney has developed the “House of Innovation”. This model depicts the most important building blocks of successful innovation management. According to the author that the roof of the House of Innovation is innovation strategy, a planning process that clearly defines for which corporate goals innovations are necessary and how they can be supported by resources, processes, technologies and behaviors’ within the company. Technology Readiness (TR) and Acceptance Godoe, Preben & Johansen, T.S (2012) the technology readiness index (TRI) (Parasuraman, 2000) follows this approach. Technology readiness can be viewed as a gestalt resulting from four personality dimensions: optimism, innovativeness, discomfort, and insecurity. The people’s personality inside the organization can be effect of the teachnology readiness as Parasuraman (2000) these personality dimensions affect people’s tendency to embrace and use new technologies. In this respect, optimism and innovativeness function as mental enablers, while discomfort and insecurity function as mental inhibitors to accepting new technologies. For technological acceptance model, Rita & Lemmink (2007) said that Davis included perceived usefulness (PU) and perceived ease of use (PEU) as the two beliefs that determine the attitude towards using an IS. Davis concluded that the relationship between PU and user acceptance was stronger than that of PEU and user acceptance .Explaining and predicting user adoption of new technology has a long history of attention in both academia and practice. While, technology readiness construct can be also seen as the state of mind resulting from a gestalt of mental enablers and inhibitors that collectively determine a person’s predisposition toward using new technologies (Lin, Shih, Sher, 2007). Demirci, A. and Ersoy (2007) added that through his research, found there are a number characteristics that having compliance with the acceptance of new technologies or services resulting in interaction through technology. Thus, the term technology-readiness refers to people's propensity to embrace and use new technologies for accomplishing goals in home life and at work (Parasuraman, 2000). Lin and Hsieh (2007) found that it is critical for firms currently using, or considering using SSTs to address the TR of customers. Lin and Hsieh’s results show that the higher the technology readiness of customers, the higher the satisfaction and behavioral intentions generated when using self-service technologies. At the measurement level, the Technology Readiness Index (TRI) was developed to measure people’s general beliefs and some thinking on technology. In the paper of Demirci, A. and Ersoy (2007) discuss that Technological Readiness construct comprises four sub-dimensions: optimism, innovativeness, discomfort, and insecurity. According to Tsikritis, explanations of these dimensions are (Tsikritis, 2004) as the following:


Optimism: A positive view of technology and a belief that it offers people increased control, flexibility,and efficiency in their lives. • You like the idea of doing business via computers because you are not limited to regular business hours. • Technology gives people more control over their daily lives. • Technology makes you more efficient in your occupation.(Tsikritis, 2004) Innovativeness: A tendency to be a technology pioneer and thought leader. Innovativeness measures the extent to which an individual believes he or she is at the forefront of trying out new technology based products and/or services and is considered by others as an opinion leader on technology-related believing that they tend to be exclusionary rather than inclusive for all kinds of people. The following statements illustrate the types of beliefs contributing to discomfort: • Sometimes you think that technology systems are not designed for use by ordinary people. • When you get technical support from a provider of a hi-tech product or service, you sometimes feel as if you are being taken advantage of by someone who knows more than you do. Insecurity: Distrust of technology and skepticism about its ability to work properly. Although somewhat related to discomfort, this dimension focuses on specific aspects of technology-based transactions, rather than on a lack of comfort with technology in general. The following statements illustrate the types of beliefs contributing to insecurity: • You do not consider doing business with a place that can only be reached online. • If you provide information to a machine or over the Internet, you can never be sure if it really gets to the right place. Definition of Technology Readiness Levels The are a number of levels technology readiness which can be defined for more understanding on technology levels accordingly. According to observation Technologies and Information Technologies Earth Science Technology Office (ESTO) which owned by NASA. Basically, TRL definitions with detailed descriptions for information systems technologies are follows; TRL 1. Basic principles observed and reported: Transition from scientific research to applied research. Essential characteristics and behaviors of systems and architectures. Descriptive tools are mathematical formulations or algorithms. TRL 2. Technology concept and/or application formulated: Applied research. Theory and scientific principles are focused on specific application area to define the concept. Characteristics of the application are described. Analytical tool s are developed for simulation or analysis of the application. TRL 3. Analytical and experimental critical function and/or characteristic proof-ofconcept: Proof of concept validation. Active Research and Development (R&D) is initiated with analytical and laboratory studies. Demonstration of technical feasibility using breadboard or brassboard implementations that are exercised with representative data.


TRL 4. Component/subsystem validation in laboratory environment: Standalone prototyping implementation and test. Integration of technology elements. Experiments with full-scale problems or data sets. TRL 5. System/subsystem/component validation in relevant environment: Thorough testing of prototyping in representative environment. Basic technology elements integrated with reasonably realistic supporting elements. Prototyping implementations conform to target environment and interfaces. TRL 6. System/subsystem model or prototyping demonstration in a relevant end-to-end environment (ground or space): Prototyping implementations on full-scale realistic problems. Partially integrated with existing systems. Limited documentation available. Engineering feasibility fully demonstrated in actual system application. TRL 7. System prototyping demonstration in an operational environment (ground or space):System prototyping demonstration in operational environment. System is at or near scale of the operational system, with most functions available for demonstration and test. Well integrated with collateral and ancillary systems. Limited documentation available. TRL 8. Actual system completed and "mission qualified" through test and demonstration in an operational environment (ground or space): End of system development. Fully integrated with operational hardware and software systems. Most user documentation, training documentation, and maintenance documentation completed. All functionality tested in simulated and operational scenarios. Verification and Validation (V&V) completed. TRL 9. Actual system "mission proven" through successful mission operations (ground or space): Fully integrated with operational hardware/software systems. Actual system has been thoroughly demonstrated and tested in its operational environment. All documentation completed. Successful operational experience. Sustaining engineering support in place. The above described definitions about the level of technological readiness are giving information for how far the employees and trainers experiences in their working daily activities in facing the new technologies in their companies or organizations. To proof the TRAM model, we use the AMOS 18 version. Based on the result, will be discussed the strategy innovation that match to the nature of IT implementation. Hypothesis Parasuraman & Colby (2001) and Tsikriktsis(2004), found that the people who are optimistic and innovative with reference to technology in general are thought to hold positive attitudes toward new technology and technology use. Thus, we hypothesize: H1. Optimism is positively related to perceived usefulness. H2. Optimism is positively related to perceived ease of use. H3. Innovativeness is positively related to perceived usefulness. H4. Innovativeness is positively related to perceived ease of use. In the scope of feelings of insecurity related to technology are on the other hand associated with ambiguity and low usage (Parasuraman & Colby, 2001; Tsikriktsis, 2004). Due to that statement of them, we hypothesize: H5. Insecurity is negatively related to perceived usefulness.


H6. Insecurity is negatively related to perceived ease of use. For dimension of discomfort on the other hand is not expected to have a negative impact on perceived usefulness. One would expect people to see the main value of a system regardless of how they handle it. Still, discomfort is expected to affect perceived ease of use. A system that is not manageable is more likely to be a non-user-friendly system. Thus, we hypothesize: H7. Discomfort is not significantly related to perceived usefulness. H8. Discomfort is negatively related to perceived ease of use. It is widely acknowledged that perceived ease of use contributes to perceived usefulness (King & He, 2006; Lin et al., 2005; McFarland & Hamilton, 2006; Schepers & Wetzels, 2007; Venkatesh, 2000; Yang & Yoo, 2004). This assumption is based on the theoretical argument that some user-friendly applications could be perceived as useful, but not all useful applications are user-friendly. Thus, we hypothesize: H9. Perceived ease of use is positively related to perceived usefulness. Regarding to Davis (1989) the main contributor to actual use of a new technology is its perceived usefulness. Hence, people primarily adopt new technologies based on their functions, rather than based on how easy it is to perform the functions. Users are, for instance, willing to adopt a difficult system if it captures a critical function. However, in practical terms, about 90% of research done on TAM also shows direct effects of perceived ease of use on actual use (Schepers & Wetzels, 2007). Thus, we hypothesize: H10. Perceived usefulness is positively related to actual use. H11. Perceived ease of use is positively related to actual use. Parasuraman, A.(2000) also explains it is possible for the customer to have both positive and negative feelings about technology, especially high technology products and services. In his study also stated that even technological optimists and innovators experience anxiety in the same way as less technology-enthusiastic customers. As noted earlier, technology readiness (TR) refers to the propensity of consumers to embrace and use new technologies for accomplishing goals. He also adds that the technology readiness construct refers to people’s propensity to embrace and use new technologies for accomplishing goals in home life and work.

Research Methods There are 36 items as the content of questionnaires which adopted from Parasuraman concept point of view. Due to the home country situations of Indonesia the researcher modified and adjusted the previous questionnaires to the condition of the company which the research done. The number for Technology readiness questions were assessed through the use Technology Readiness Index (TRI) scale developed by Parasuraman in the year of 2000 and Technology Acceptance Model adopted from Davis’ concept . The Likert type of scale used with responses ranging from Strongly Agree (5) to Strongly Disagree (1). The TRI and TAM measures an individual’s propensity to adopt and use innovative technology by assessing how techno-ready individuals are. In addition, the TRI and TAM helps explains how and why different individuals adopt technology. Data Collection were collected using two independent convenience samples. The population for this study 215 respondents consisted of the Asindo exsiting employees and trainees of various companies and organizations around Jakarta and


other provinces which coming from to this training company which surveyed randomly via a personal questionnaires. Both the questionnaire models used in order to see the technology readiness and technology acceptance of the respondents by combining the both of them in to the model TRAM (Readiness- Technology Acceptance Model. The modeling of TRAM s applied in this study as shown in Figure-1. Results and Discussions In the figure below, there are four dimensions as the independent variables, namely; 1. Optimism, 2. Innovativeness, 3. Discomfort and 4. Insecurity and two as the dependent variables; 1. Perceived usefulness and Perceived ease of use. The four dimensions of the independent variables tested one by one to two variables are bound, also tested together. The first done is assessing the reliability and validity in constructing and translating the scales of TRI and TAM. For confirmation of factor analysis also using structural equation modelling (SEM) was conducted in Amos 18.00 to examine to what degree each item corresponded to its respective latently dimension of variables. Test image above relationship is as shown in the following figure;

Figure 1 : Components of TRI and TAM

Hypotheses testing of the theoritical model In the testing the hypothesis, firstly do the testing the validity and reliability of the data, in the Pearson correlation quantifies the value of each indicator of TRI and TAM questionnaires. Likewise, the reliability test for each group of variables TRI and TAM. The results of the validity and reliability calculations are presented in Table-1 below. Table-1: The result of Validity dan Reliability test Variables Optimism

Pearson Correlation

Variables Innovativeness

Pearson Correlation

Variables Discomfort

Pearson Correlation

OP1 OP2 OP3 OP4 OP5

,498(**) ,483(**) ,431(**) ,616(**) ,409(**)

IN1 IN2 IN3 IN4 IN5

,648(**) ,758(**) ,526(**) ,669(**) ,716(**)

DIS1 DIS2 DIS3 DIS4 DIS5

,595(**) ,679(**) ,677(**) ,583(**) ,662(**)


OP6 OP7 OP8 OP9 OP10

,537(**) ,542(**) ,535(**) ,544(**) ,295(**)

IN6 IN7

,594(**) ,650(**)

DIS6 DIS7 DIS8 DIS9 DIS10

,410(**) ,626(**) ,301(**) ,651(**) ,664(**)

Alpha

,6474

Alpha

,7738

Alpha

,7865,

Variables Insecurity

Pearson Correlation

Pearson Correlation

,582(**) ,606(**) ,170(*) ,606(**) ,561(**) ,606(**) ,496(**) ,582(**) ,471(**)

,555(**) ,723(**) ,478(**) ,593(**) ,711(**) ,535(**)

Variables Perceived ease of use PE1 PE2 PE3 PE4 PE5 PE6

Pearson Correlation

INS1 INS2 INS3 INS4 INS5 INS6 INS7 INS8 INS9

Variables Perceived usefulness PU1 PU2 PU3 PU4 PU5 PU6

Alpha

,6618

Alpha

,6409

Alpha

,6018

,490(**) ,718(**) ,718(**) ,608(**) ,591(**) ,315(**)

** Correlation is significant at the 0.01 level (2-tailed). * Correlation is significant at the 0.05 level (2-tailed).

In table 1, it is seen that the Pearson correlation value for each indicator were significant at the level of confidence 0.01, so that it can be said that every indicator of the questionnaire is valid. Value of reliability (according to Cronbach Alpha coefficients) for each group of variables has been greater than 0.6, therefore the data obtained is in the level of reliable. From the results of this test then those data are qualified to analyzed with the path analysis. The next below table 2 is the average value of varibles in Technology Readiness and Acceptance (TRAM) : Table-2 : The average value Variabel

average

Optimism

4,257

Innovativeness

4,340

Discomfort

2,422

Insecurity

2,424

Perceived easy of use

4,377

Percieved usefulness

4,377

Actual use

4,307

As display in table-2 the average values of trainees indicate that they have nature of optimism and innovativeness are in the high level, it is because of the average value is high, it means that they have high mental enabler. While the average value of discomfort and insecurity are in the low level, it is meaning, they have a low inhibitor properties. Thus their readiness on technology are good enough to receive the ICT in their companies. For easy of use perceived of them, with the average value of 4.377, means that their beliefs to the easily use the technology are aslo high. The average value of 4.377 perceived usefulness, is in the high level, means; they have high confidence that the use of Information and Communication Technologies, it gives many usages. The actual use value is in the level of 4,307, it can be


grouped in high level, meaning of that the frequency of their usage on ICT technology is also high. However, these variables will be tested in the TRAM. The results of path analysis below will describe in the figure 2 and table 3 for the calculation of unstandardized estimate.

Figure-2. Unstandardized Estimate Table-3. Estimate Value Regression Weights

Perceived easy of use Perceived easy of use Perceived easy of use Perceived easy of use Perceives of usefullness Perceives of usefullness Perceives of usefullness Perceives of usefullness Perceives of usefullness actual_use actual_use