J. of the Acad. Mark. Sci. (2007) 35:259–269 DOI 10.1007/s11747-007-0032-6

Utilization of new technologies: organizational adaptation to business environments Namwoon Kim & Jae H. Pae

Published online: 1 May 2007 # Academy of Marketing Science 2007

Abstract The practice of introducing new technologies into the corporate environment has become a well-accepted principle for sustaining or advancing competitive advantages. The current study focuses on the environmental and managerial factors associated with the successful utilization of new technologies. To this end, the suggested framework examines the efforts put forth by the two parties involved (the firm buying and the firm supplying the new technology). We use 112 matched data collected from the suppliers and buyers of the customer relationship management (CRM) system in business-to-business markets. We find that the perceived turbulence of business environments stimulates adaptive efforts from both the supplying and buying firms, which may lead to a high level of utilization of new technologies for the buying firm. Keywords Utilization of technology . Organizational adaptation . Environmental turbulence . Support from supplier Most organizations introduce new technologies into their corporate environment with the strategic intent of sustaining or advancing their competitive positions in the marketplace. Innovation is the lifeblood of firms that determines their chances of survival and growth in dynamic N. Kim Department of Management and Marketing, Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong e-mail: [email protected] J. H. Pae (*) School of Business, Ewha Womans University, Seoul, South Korea e-mail: [email protected]

markets (Cane 2006). While many organizations derive benefits from such investments, recent reports suggest that these cases may be in the minority (Tidd et al. 1997). One reason for this phenomenon is the firm’s failure to attain a sufficient level of organization-wide utilization of the purchased technologies (Swanson and Ramiller 1997; Trott 1998). Previous literature on innovation focuses on a number of issues associated with the decision to procure organizational technologies such as the buying firm’s corporate structure or disposition towards innovativeness, but the seller’s role in the process has been neglected. The purpose of this paper is to advance the understanding of the organizational utilization of technology by pushing the scope of research in two distinct directions: (1) to look beyond the initial decision to purchase and to the phase of utilization; and (2) to widen the framing of the research problem to include seller’s effort. Towards this end, we explore how factors intrinsic to the buying firm (the proactive purchase of new technology and the scope of participation of the buying center) and the seller’s post-sale services may expedite the utilization of a new technology within the buying firm. The technology selected for the current study is the customer relationship management (CRM) system. Specifically, the CRM software package is designed to improve any given organization’s customer retention level by integrating the front- and back-offices with access to the firm’s customer records. That is, by integrating customer records with the firm’s accounting, inventory, and distribution data, the CRM software should facilitate speedier service to customers, minimize errors in fulfilling orders, and improve overall sales productivity and organizational efficiency. Moreover, the flexibility of CRM systems enables them to be customized according to the needs of the user firm: i.e., installing software packages into the personal computers of small- and medium-sized enterprises

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as well as setting up local area networks for larger firms (Case 1993). This type of software-embedded business technology is an example of the organization-wide crossfunctional technology that is being adopted today (Currie 1995). The suggested framework of the current study is illustrated in Fig. 1.

Theoretical background and conceptual development Adapting to the business environment: a contingency theory perspective For the theoretical background of our framework, we draw on contingency theory, which posits that a firm’s business performance is affected by how well its organizational resources match with the corresponding business environment. Previous studies based on the contingency-theory approach have normally emphasized the fit between the business environment and the firm’s organizational structure (Drazin and Van de Ven 1985) or corporate strategy (Zajac et al. 2000). Specifically, Drazin and Van de Ven (1985) argued that if an organization is to survive, its structure and process should fit its context (e.g., culture, environment, or technology). They suggested the context– structure–performance framework. On the other hand, from the perspective of strategic contingency theory, Zajac et al. (2000) argued that environmental factors call for a firm to make an effort to achieve a strategic fit, and that the firm’s strategy should dynamically match with the changes in the environment. They suggested the concept of the dynamic strategic fit of a firm to its environment. For the current study, we integrate both of these (i.e., structural and strategic) perspectives of contingency theory into our conceptual framework in Fig. 1. For example, we submit that environmental turbulence perceived by the Figure 1 Business environment, organizational adaptation, and utilization of new technology.

Business Environments

Environmental Turbulence as Perceived by Supplier

Perceived environmental turbulence and adaptive efforts The perceived environmental turbulence of a firm is defined as the degree and frequency of changes over time occurring to the firm’s environment (Duncan 1972). For the strategic purposes of a firm, it is represented by the rate of change and innovation in the industry as well as by the unpredictability of market activities (Miller 1987; Miller and Friesen 1983). Previous research suggests that in a turbulent environment, a firm will tend to process information more actively and make more adjustments and adaptations to become successful than in a stable environment (Sawyerr 1993). Emphasizing the link between the environment and a firm’s strategy-making behavior, Miller (1987) argues that as perceived environmental turbulence increases, the firm should devote more attention to analysis and innovation to secure advantages from its environment. Based on contingency theory we expect that perceived environmental turbulence encourages adaptive efforts—e. g., structural or strategic responses—from both the buyer and the supplier of a new technology (McKee et al. 1989; Adaptation to Environments

H3

Utilization of New Technology

Support from Supplier H6

H1

Environmental Turbulence as Perceived by Buyer

buying firm (context) leads to diversified member participation in the buying center (structure), which affects the buying firm’s utilization of purchased technologies (outcome). We also posit that perceived environmental turbulence calls for strategic responses (dynamic strategic fit) from both the buyer and the supplier in the form of the buyer’s early purchase of new technology and the supplier’s emphasis on customer services. These strategic responses also facilitate the utilization of new technologies (outcome). In the following sections, we elaborate on our conceptual framework in the context of the business-to-business market where the supplier provides services for the buyer to overcome possible intraorganizational obstacles to utilizing business technologies (e.g., CRM system).

Proactive Purchase of New Technology Relative to Competitors

H4

H5 H2 Scope of Buying-Center Participation

Level of Utilization of New Technology within Buying Firm

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Wilson and Mummalaneni 1986). These adaptive efforts are hypothesized to include (a) the proactive purchase of new technologies relative to competitors and having a purchasedecision group composed of diversified members on the buyer side, and (b) better customer support from the supplier side. We further elaborate on these issues. Buyer’s perception of environmental turbulence In the contingency perspective of organizational strategy, a firm facing a fast-moving business environment needs to take more timely actions in order to maintain a competitive superiority (Slater and Narver 1995; Weiss and Heide 1993). While these timely actions of a firm take various forms (Zajac et al. 2000), managerial initiatives in technological innovations and market opportunities are more distinctive than others (Aragón-Correa and Sharma 2003). In this regard, we argue that securing new technologies earlier than its competitors gives a firm an advantage that could potentially lead to operational efficiency and technological superiority. We contend that the efforts of such a firm to preempt new technologies receive greater encouragement under a turbulent (rather than stable) business environment because firms are required to take more timely strategic actions under a dynamic environment, as discussed above. We propose that: Hypothesis 1 The greater the environmental turbulence perceived by the buying firm, the more proactive the buying firm’s purchase of a new technology relative to its competitors. Because most business strategies are designed to deal with uncertain corporate environments effectively (McKee et al. 1989), turbulent environmental conditions facilitate the gathering and processing of a range of information (Tan and Litschert 1994), as well as necessitate a prompt response from firms (Han et al. 1998). Specifically, under rapidly changing circumstances, buying firms require diverse sources of information to analyze and adapt to dynamic markets and technological trends (McGrath 2001). According to the structural contingency theory, an organization tries to have a structure that best fits its environmental context (Cockburn et al. 2000; Drazin and Van de Ven 1985). More specifically, Drazin and Van de Ven (1985) provide a context–structure–performance framework to explain a firm’s efforts to establish an organizational structure that can fit and best respond to its business context for better business performance. Here, we focus on the structure of the decision-making system (specifically, the purchase decision-making system) of a firm that faces a turbulent business environment. We expect that in turbulent environmental conditions buying firms are concerned about cross functional coordination and the related political issues among different departments in

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technology purchase to respond to market changes more efficiently with concerted efforts. At the same time, the buying firms are willing to have a decision-making process that incorporates as much diverse information and expertise as possible to reduce potential misinterpretations of dynamic market needs and technological trends (Helfat and Raubitschek 2000). In the context of organizational buying, the process of making purchase decisions is well represented by the structure of the buying center,1 specifically, the scope of buying-center participation that indicates how many different departmental representatives participate in the buying center (McCabe 1987; Spekman and Stern 1979). We hypothesize that a turbulent environmental situation, requiring coordinated solutions to political decision-making with diverse sources of information and expertise, encourages various departments to participate in the decision to purchase new technologies, which will result in the buying center having a large scope for participation. Formally stated: Hypothesis 2 The greater the environmental turbulence perceived by the buying firm, the larger the scope of the buying-center participation for purchase of a new technology. Supplier’s perception of environmental turbulence Emphasizing the seller’s strategy, Hallén et al. (1991) and McKee et al. (1989) argue that in rapidly changing and competitive environments, the corporate performance of a technologysupplying firm is dependent on the firm’s adaptiveness. Although the core of adaptive strategies based on contingency theory is commonly applied to both the buying and supplying firms, the latter’s contingent strategies are more directly targeted toward increasing customer satisfaction. A supplier’s adaptive efforts are normally judged and justified by the market’s responses to the products or services it delivers to its customers (Cannon and Perreault 1999). The current study focuses on the supplier’s efforts to provide quality vendor support, which is believed to facilitate the buyer’s utilization of the new technology. In fact, under a turbulent business environment, it is more beneficial for a supplying firm to retain its current customers by providing them with superior support in terms of user-oriented training or quality maintenance services than to launch other marketing programs to attract new customers. This is because such customer-oriented vendor support will enhance customer loyalty, which may lead to repeat purchases from the same buyer or to new 1 A buying center refers to the group of organizational members who become involved in the process of buying a particular product or service for a firm (Spekman and Stern 1979). Organizing and managing a buying center has been a focal topic of research in organizational buying because the buying center is the actual unit for the making of purchasing decisions in a firm (Pae et al. 2002).

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buyers attracted by positive-word-of-mouth recommendations (Kim and Srivastava 1998; Srivastava 1987). Also, the support from a supplier represents the supplier’s recognition of the need to solve problems for its buying partner. Specifically, in the business-to-business technology market, suppliers try to deliver more value added and customized services to their customers to maintain relative advantages over competitors. We expect that such supplier’s support will be enhanced and diversified under changing and unpredictable competitive market environments. Therefore, we propose the following: Hypothesis 3 The greater the environmental turbulence perceived by the supplying firm, the greater the supplying firm’s support for the new technology it has supplied.2

Adaptive efforts and utilization of new technologies Buyer’s proactive purchase, scope of buying center participation, and utilization of new technologies According to the literature on innovation and technology, a firm that has purchased a new technology proactively compared to its competing companies has more time to become familiar with the efficient operation and benefits of the technology (Irani and Love 2001; Lassila and Brancheau 1999). The firm spends this time on building up intra-firm communication channels through which information related to the technology is disseminated among employees (Randles 1983; Rogers 1983). Therefore, with the proactive purchase of a new technology, followed by enough time for members of the organization to adapt to and share information about the technology, the buying firm will have a higher level of utilization of the technology compared with late buyers. In addition, from the perspective of strategic contingency, if we argue that the proactive purchase of a new technology is a reflection of the firm’s adaptive efforts to increase its dynamic strategic fit to the environment, we may contend that the strategic efforts of such a firm will also lead to a corporate/managerial policy supporting the purchased new technology (Leonard-Barton and Deschamps 1988; Venkatesh and Davis 2000). As the proactive technology purchase relative to competitors normally requires a strong managerial support, the purchase-decision group including senior management is concerned about the results of the new technology that it had approved to purchase (Zajac et al. 2000). This managerial support for a purchased new technology will 2 Here, the supplying firm’s support for the new technology is measured by the level of different kinds of after-sales support perceived by the buying firm including customer training, aftersales/maintenance service, and information sharing.

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promote the use of the new technology because extensive use of the technology is usually a way for the purchasedecision group to justify the purchase. We hypothesize that: Hypothesis 4 The more proactive the buying firm’s purchase of a new technology, the higher the level of technology utilization. In the context of organizational buying, the groups of employees that actually use a technology to perform their tasks often do not overlap with those who make the decision to purchase that technology (Kim and Srivastava 1998; Zaltman et al. 1973). The discrepancy between the groups using a new technology and the purchasing team in terms of attitudes towards and evaluations of the technology can sometimes lead to serious conflict (Hutt and Speh 1995). This phenomenon may become distinct when communication between the users and purchasers of the technology is structurally limited within the organization (McCabe 1987). Accordingly, buying firms need to have appropriate control over their purchase-decision processes to ensure that after a purchase the new technologies are well accepted among the user groups in the firm (Robertson and Wind 1980; Spekman and Stern 1979). Existing studies on this issue have focused on the structure of the buying center, which affects the flow of information within a firm on the innovations that have been purchased. Specifically, Johnston and Bonoma (1981) and Woodside et al. (1978) have argued that the scope of the buying-center participation should influence the sharing of technology-related information among all of the members of an organization. We expect that as more user departments become involved in purchase decisions (i.e., as the scope of the buying-center participation increases), the result will be a more rapid dissemination of information about the technology (see Johnston and Bonoma 1981 and Kim and Srivastava 1998 for related discussions). This is because the user groups will have a more positive attitude toward and take a greater interest in a new technology if they are involved with that technology from the initial stage of the decision to purchase (Korunka et al. 1993). In turn, this rapid dissemination and sharing of information will promote the utilization of the technology. These arguments suggest the following: Hypothesis 5 The larger the scope of the buying-center participation for purchase of a new technology, the higher the level of technology utilization. Supplier’s support and utilization of new technologies As profit-seekers, sellers try to secure more buyers and establish more favorable and enduring buyer–seller relationships than their competitors (Hallén et al. 1991; Turnbull and Wilson 1989). While most existing studies deal with the

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supplier’s role in the decision to purchase new technologies (Clark and Staunton 1989; Frambach et al. 1998), only a few have emphasized the efforts of the supplier to facilitate the use of the technology in the buying firm (LeonardBarton and Kraus 1985). The suppliers in the business-tobusiness market find themselves dealing more with services and solutions instead of just selling “boxes” or stuff. Part of the process now entails marketing value added services that solve problems for the buying firms or allow them to better integrate and utilize new technology. These services including customer training, installation/design, and maintenance increase the buying firm’s organizational commitment to the technology (Kim and Srivastava 1998; Leonard-Barton and Kraus 1985).3 Again, this organization-wide commitment on the part of the buying firm will enhance its knowledge of and interest in the technology, which will encourage more employees to use the technology. We posit that: Hypothesis 6 The greater the supplying firm’s support for a new technology it has supplied, the higher the level of technology utilization.

Materials and methods Data A questionnaire on the organizational purchase and utilization of CRM-type database systems was developed for collecting data. For a pre-test, we randomly selected 28 manufacturing firms from the Hong Kong Chambers of Commerce Directory, identified a senior manager of each, and telephoned to ask for his/her cooperation. Of these 28 firms, 18 reported having a CRM-type database system. We then mailed out the pre-test questionnaire to these 18 senior managers and asked them to complete it and to give us any comments they may have on the questionnaire. A careful examination of the ten questionnaires that were returned revealed that virtually all of the items had been well understood by the respondents, and that a diverse range of responses had been given for most items. After refining the questionnaire on the basis of the pre-test results, we finalized the questionnaire for the survey.

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We obtained a list of 480 firms from the Hong Kong Chambers of Commerce Directory. Following the Huber and Power’s (1985) guidelines for collecting reliable informant data, we identified the staff member believed to be the most knowledgeable in providing responses to our questionnaire. Most of these turned out to be senior managers in charge of strategic planning, marketing, database management, or purchasing (especially the purchase of products related to information technology). Each individual respondent was contacted in advance by phone and solicited for cooperation. From the initial phone call, 343 firms currently using a CRM-type database system were identified, and the questionnaires were mailed to the managers of these firms. In order to increase the response rate, follow-up calls were made and the participants were reassured that all responses would be confidential and that only aggregate results would be presented. Of the 343 questionnaires distributed, 163 were finally returned with usable data, for a response rate of 47.5%. The non-response bias was examined by comparing respondent and nonrespondent groups based on their differences in firm size (measured in the number of employees) and the number of years of business. According to the t-test, no significant differences were found between the two groups based on these variables: (a) for the number of employees, the mean value of the respondent group was 40.2 and that of the nonrespondent group was 37.8 with t=0.69, and (b) for the number of years of business, the mean value of the respondent group was 8.66 and that of the non-respondent group was 9.03 with t=−0.47). These results suggest that a non-response bias was not a serious problem for our data. To measure the supplier-reported construct, “Environmental Turbulence as Perceived by Supplier,” we again asked each of the 163 buying firms to identify the company that had installed its CRM database, and 148 buying firms did so. We contacted these 148 suppliers, informed each of them that the buying firm had identified them, and solicited their answers to the items in the questionnaire related to this construct. Usable data for this construct were eventually provided by 112 supplying firms (a 75.7% response rate),4 and we finalized our sample of 112 data points, which included variables for both the buying and supplying firms.

4

3

Leading the drive to put this business philosophy into practice are some high-profile Fortune 500 firms: i.e., Microsoft spends more than 5% of its total revenues on facilitating the use of its new software products by its patron-company employees (Yoffie 1994), and Electric Data Systems (EDS) invests sizable resources in training its patronfirm personnel to migrate from their incumbent system to the new EDS telecommunications network (Currie 1995).

We collected responses from the supplying firms in this way to have matched data for each of the buyers and the suppliers. However, we also note that a potential sample bias may exist for this selection of supplying firms despite a relatively high response rate. As these supplying firms were contacted based on the information from the corresponding buying partners, the sample selection mechanism was nonrandom and the related variable—the environmental turbulence perceived by the supplying firm—was observed in a limited range (Blair and Zinkhan 2006).

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Measurement We adopted measures that had been suggested and validated in the relevant literature and modified them in the context of the current study. All items were answered according to a seven-point Likert-type scale ranging from “Strongly Disagree” to “Strongly Agree.” The scale items used in this study are shown in the Appendix. Environmental turbulence perceived by buying and supplying firms Perceived environmental turbulence, defined as the degree and frequency of a firm’s environmental changes over time, is normally reflected by the rate at which innovations and/or technological changes occur in the industry (Duncan 1972). Miller and Friesen (1983) and Pelham and Wilson (1996) have provided operational definitions of perceived environmental turbulence that include (a) the rate of innovation of new operating processes and products and (b) changes in the market activities of firms. Hambrick (1981) and Sawyerr (1993) have emphasized that technological and market unpredictability is an important factor in perceived environmental turbulence. More comprehensively, Miller (1987) has suggested four items to operationalize perceived environmental turbulence that incorporate unpredictable growth opportunities, rapid changes in production/service technologies, high rates of change in industrial technologies, as well as R&D investment. For the current study, we adopt Miller’s four-item scale for measuring the environmental turbulence perceived by buying and supplying firms. Proactive Purchase of New Technology Purchasing a new technology earlier than its competitors reflects a firm’s innovativeness and provides competitive advantage for the firm’s product markets (Rogers 1983; Zaltman et al. 1973). Kitchell (1995) and Lassila and Brancheau (1999) suggest that a firm’s proactive purchasing behavior of new technologies (or a firm’s innovativeness) be examined by the relative time taken to adopt the technologies. Irani and Love (2001) argue that a firm’s proactive purchase of technologies allows it more time to adjust the purchased technologies to organizational purposes and emphasized the importance of the early procurement of technologies. Frambach and Schillewaert (2002) also noted that the timing of the decision to purchase relative to other firms reflects how proactively a firm responds to its environmental challenges. As these studies suggest, we use a single item (seven-point scale) to ask about a firm’s proactiveness in purchasing new technologies: “How early had your firm purchased the current CRM system compared to the average competing firms in your industry?” (Very Early 7; Very Late 1).

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Scope of buying-center participation Regarding the buying-center structure of a firm that faces environmental changes, Spekman and Stern (1979) have called attention to the participation of personnel from the various departments including quality assurance, production, R&D, and marketing. They argue that the participation of diverse departments in a purchase decision increases the functional expertise and purchasing-related responsibilities of the buying center. Johnston and Bonoma (1981) and Strauss (1962) have suggested that the buying-center participation (or involvement) be operationalized as the number of departments or functional areas of a firm for a specific purchase decision [in our case, purchase of new technologies]. In this stream of research, McCabe (1987) used the number of different departmental authorities in a purchase decision to examine the scope of the buying center. Following this operational definition recommended by previous studies, we incorporate three items from the studies by Johnston and Bonoma (1981) and McCabe (1987) to represent the scope of the participation of the buying center: (1) the number of different departments participating in the buying center, (2) various sources of information from different departments, and (3) extensive participation of personnel of different backgrounds of expertise. Support from supplying firm Leonard-Barton and Kraus (1985) have argued that to increase the implementation of purchased technologies, providing timely and tactful training program to the user firm will be an important aspect of the technology-supplier’s support. Kim and Srivastava (1998) have suggested that the supplier’s support for technological product markets take the form of customer training, installation/design, and technical maintenance. Later, Meyers et al. (1999) have recommended that the supplier focus on such factors as using targeted communication, keeping the buyer informed, getting frequent feedback, and offering value-added services to maintain a profitable relationship with the buying firm. To measure the supplier’s support in the current framework, we combined the scales from these three studies and incorporated five items: customer training, after-sales and maintenance services, user-supplier communication regarding technologies, and information sharing. These items were also confirmed in the pre-test based on the input from company senior managers. Utilization of new technology A well-accepted definition of the utilization of technology, that it is “the extent to which a technology is digested or absorbed into a firm,” is found in Mankin et al. (1984). This concept has been widely used in

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studies on technology and innovation, such as those by Kimberly (1979) and Zmud and Apple (1992). For an operational definition of the utilization of technology, Leonard-Barton and Deschamps (1988) and Zaltman et al. (1973) have suggested that the focus be on the extent to which the members of an organization are making use of the technology. Also, Mankin et al. (1984) and Tolbert and Zucker (1983) recommended drawing on the bureaucratization of a new technology within the organization. These operational definitions of the utilization of technology have been used in various studies on technology and innovation management, including those by Marshall and Vredenburg (1992) and Swanson and Ramiller (1997). For the current study, we adopted four items based on Leonard-Barton and Deschamps (1988) and Tolbert and Zucker (1983) to measure the extent to which a new technology has been utilized within the buying firm.

Measurement model, scale-reliability, and convergent and discriminant validity We used LISREL 8 (Jöreskog and Sörbom, 1993) for the measurement model. The goodness-of fit index (GFI) and the comparative fit index (CFI) are 0.96 and 0.98, respectively, which exceeds the 0.90 standard for model fit (McDonald and Marsh 1990). The root mean square error of approximation (RMSEA) is 0.04, which is less than 0.05, representing a good fit (Brown and Cudeck 1993). Altogether, these indices demonstrate a good model fit with the data (χ2 =41.32; p>0.10). Table 1 presents the resulting latent factor correlations, the construct reliability based on composite reliability, and the variance extracted for each construct. The composite reliability value for each construct exceeds 0.7, providing scale-reliability (Kohli et al. 1998; Nunnally 1978). Discriminant validity is obtained, as all pairwise latent-trait correlations of constructs are significantly different from one (Anderson and Gerbing 1988). In

Table 1, we report that the square root of the average variance extracted for each construct is greater than the latent factor correlation between a pair of constructs, providing evidence for discriminant validity. All chi-square difference test results demonstrate a significant increase in chi-square values from the non-constrained model to a constrained model that assumes the unit correlation for a specific pair of constructs. This result supports the existence of discriminant validity (Anderson and Gerbing 1988). In the Appendix, all of the factor loadings from the latent constructs to their corresponding measurement items are statistically significant (i.e., t-values > 2.0; minimum tvalue of the factor loadings is 6.75), providing evidence of convergent validity. Model estimation results We estimated our structural model using LISREL 8, and estimated structural paths are reported in Table 2. The goodness-of-fit index (GFI) and the root mean square error of approximation (RMSEA) are 0.95 and 0.042, respectively, showing a good fit of the model to the data. In addition, the comparative fit index (CFI) is 0.98, which exceeds the recommended cut-off of 0.90 (McDonald and Marsh 1990), also representing a very good fit. Taken collectively, these indices indicate a good model with a low chi-square value (χ2 =44.46; p>0.10). Buyer’s perception of environmental turbulence Hypotheses 1 and 2 deal with the impact of the environmental dynamics of the buying firm on the proactive purchase of new technology (H1) and the structure of the buying center (H2). As we expected, the relationship between the buying firm’s perceived environmental turbulence and the timing of the purchase of new technology is positive and significant (γ=0.23; p<0.01, a higher value of estimate means an earlier purchase—see “Measurement”). In addition, the relationship between the former and the scope of the buying-center participation also proves to be positive and

Table 1 Latent factor correlations, reliability estimates, and variance extracted

Level of utilization of new technology (X1) Scope of buying-center participation (X2) Support from supplier (X3) Environmental turbulence as perceived by buyer (X4) Environmental turbulence as perceived by supplier (X5) Proactive purchase of new technology (X6)

X1

X2

0.75a 0.31* 0.27 * 0.79* 0.17* 0.09

0.85 0.04 0.16* 0.16* 0.14

X3

0.71 0.19* 0.37* 0.11

*p<0.05 Diagonal elements in bold represent the square roots of the average variance extracted.

a

X4

0.76 0.17* 0.27*

X5

0.69 0.21*

X6

Composite Reliability

–

0.84 0.89 0.84 0.84 0.79 –

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Table 2 Estimation results using the structural equation model Path from

Path to

Hypothesis

Standardized structural coefficient

Environmental turbulence as perceived by buyer Environmental turbulence as perceived by buyer Environmental turbulence as perceived by supplier Proactive purchase of new technology Scope of buying-center participation Support from supplier

Proactive purchase of new technology Scope of buying-center participation Support from supplier Level of utilization of new technology Level of utilization of new technology Level of utilization of new technology

H1 H2 H3 H4 H5 H6

0.23* 0.13* 0.43* 0.06 0.27* 0.25*

*p<0.05

significant (γ=0.13; p<0.05). Therefore, we note that both Hypotheses 1 and 2 are supported. Supplier’s perception of environmental turbulence Hypothesis 3 pertains to the relationship between perceived environmental turbulence and the level of after-sales customer support the supplying firms might be inclined to provide/perceive the need to provide. With a positive and significant relationship between the two variables (γ=0.43; p<0.01), we note that Hypothesis 3 is supported. Buyer’s proactive purchase, buying center participation, and utilization of new technology Hypotheses 4 and 5 posit the impact of the timing and the context in which a buying firm makes the decision to purchase a new technology on its utilization. As in Table 2, we note that the scope of the buying-center participation has a positive impact on the utilization of the new technology (β=0.26; p<0.01) but that the timing of the purchase of a new technology does not have a significant impact on its utilization (β=0.07; not significant). Based on these results, we find that Hypothesis 5 is supported and Hypothesis 4 is not supported. Supplier’s support for the utilization of new technology Hypothesis 6 concerns the supplier’s role in the utilization of a new technology. A robust positive relationship between the supplier’s efforts and the buying firm’s utilization of the new technology as shown in Table 2 (β=0.25; p<0.01) supports Hypothesis 6.

technology prior to competitors has no significant impact on technology utilization. One possible reason for this result is that certain organizational attitudes toward technology may retard the purchase of technology but enhance the use of technology. For example, a cost-sensitive (or strongly value-oriented) company is usually conservative (or relatively late) in making purchase-decision of a new technology. But, once the new technology is purchased, this value-oriented firm may try to maximize the economic and operational benefits from the technology, which will bring about the high-level utilization of the technology. Another possible explanation is that the purchase of a crossfunctional technology like CRM does not always guarantee its good utilization. For example, the purchase-decision group and the user group of CRM may have different perspectives in utilizing this technology and such intraorganizational and political issues might cause an insignificant relationship between proactive purchase and utilization of technology. Contributions First, we show that the high-level post-purchase utilization of a new technology is an outcome of the supplier’s as well as the buyer’s efforts to adapt to their respective business environments. Consistent with the literature on contingency theory in the business context, this adaptive strategy is represented by high-quality vendor services from the supplier and by proactive efforts for the timely purchase of new technologies by the user. Our study incorporates the efforts of both the buying and supplying firms. Second, we test our framework using data collected from both buyers and suppliers.

Discussion Limitations and future research Discussion of empirical findings As hypothesized, a dynamic environment increases the strategic and structural adaptive efforts of the buying firm. Also, the supplier’s perception of environmental turbulence stimulates more strategic responses from the supplier to adapt to such turbulence. However, the purchase of new

Here, we do not study the moderating effect of the buying firm’s level of technological sophistication. For example, support from the supplier to utilize a new technology will be more effective for customer companies with a low technological level than for those with a high technological level (e.g., high-tech product manufacturers). In our study,

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we imply that the supplier has already incorporated this fact into its adaptive efforts (this is also reflected in the measurement of the supplier’s support). Second, we use a single-item measure for the firm’s proactive purchase of new technology and do not perform any validation tests for the capabilities of the respondents to this questionnaire item. We assume that our key informants responsible for the tasks like strategic planning, database management, or purchasing have reasonable knowledge on this issue. Third, our research results were obtained from the CRM system. To some extent, CRM technology falls in the same category as enterprise-level technologies. It may be regarded as a certain type of business technology that crosses functions and has implications for utilization that affect multiple units in the firm. Therefore, the purchase and utilization of this type of technologies may involve

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complex political issues that could differentiate it from the case of other technologies used in a single department. Finally, our empirical analysis is based on a sample of manufacturing industries. Although we expect that our study results could also be applicable to other types of technologies (e.g., process technologies) and different industries (e.g., service industries), comprehensive tests of our model’s external validity remain to be conducted. We leave this task for future research. Acknowledgement The research support from the Hong Kong Polytechnic University’s General Research Grant (G-U003) for this study is gratefully acknowledged.

Appendix Table 3

Table 3 Scale items Constructs

Items

Environmental turbulence 1 (perceived by buying firm)a

Our firm’s business environment is as follows: 1. Growth opportunities in our product market are unpredictable 2. We face rapid changes in production/service technologies 3. Rates of change in industrial innovation for products, services, or processes are very high. 4. Rates of change in R&D investment for our industry are very high. Our firm’s business environment is as follows: 1. Growth opportunities in our product market are unpredictable. 2. We face rapid changes in production/service technologies. 3. Rates of change in industrial innovation for products, services, or processes are very high. 4. Rates of change in R&D investment for our industry are very high. For decisions on purchasing a technology, our buying task group: 1. Includes many different departments of this firm. 2. Has various sources of information from many departments in making supplier selection decisions. 3. Encourages extensive participation from employees of various backgrounds in making supplier selection decisions. The supplier of our current CRM system: 1. Continuously provides updated training in the adopted system. 2. Continuously provides good after-sales service for the adopted system. 3. Continuously provides good maintenance service for the adopted system. 4. Keeps good communication with us regarding the adopted system. 5. Always shares information with us regarding the adopted system. Our current CRM system: 1. Has been used (directly/indirectly) by many employees of our company. 2. Has been widely recognized among our employees. 3. Has been incorporated into the formal bureaucratic procedures of the company. 4. Has been accepted as one of the procedural requirements in the firm’s reporting system.

Environmental turbulence (perceived by supplying firm)b

Scope of buying-center participation (buying firm)a

Support from supplying firm (buying firm)a

Level of utilization of new technology (buying firm)a

a b

This construct was measured based on the responses from the buying firm. This construct was measured based on the responses from the supplying firm.

Standardized factor loadings

tvalue

0.73 0.69 0.81

12.65 16.27 14.92

0.80

15.30

0.69 0.72 0.77

13.69 13.28 15.40

0.59

12.19

0.82 0.90

14.83 16.25

0.85

16.01

0.60 0.77 0.82

9.63 9.96 10.54

0.64 0.71

7.03 8.85

0.77 0.85 0.73

15.77 15.98 12.99

0.65

12.33

268

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