Over the last two decades, firms have operated in increasingly accelerated ‘high-velocity’ dynamic markets, which require them to become agile. During the same time frame, firms have increasingly deployed complex enterprise systems - large-scale packaged software innovations that integrate and automate enterprise-wide organizational processes. While supporting efficiency, literature is divided on whether such innovations promote or hinder organizational agility. Relatively little is known about the effects of enterprise systems on organizational agility along the dimensions of organizational impact, organizational processes and organizational knowledge. These dimensions form the basis for the research in this dissertation: 1) What is the organizational impact of enterprise systems on agility i.e. do enterprise systems promote or hinder agility? 2) What are the organizational processes by which organizations reconcile with enterprise systems’ changing business needs driven by organizational agility? 3) What are the effects of organizational knowledge and competencies on the impact of enterprise systems on organizational agility?
To address these research questions the dissertation adopts a mixed methods approach. Part 1 proposes a theoretical framework based on innovation assimilation and dynamic capabilities and utilizes a quantitative approach to empirically validate the framework, by measuring the impact of enterprise systems on organizational agility, the effects of systems agility on organizational agility, as well as how systems agility influences enterprise systems’ impact on organizational agility. Part 2 employs a qualitative approach to examine a) how organizations reconcile with enterprise systems’ changing business needs driven by agility, as well as b) the outcomes of such reconciliation processes. Part 3 uses a quantitative approach to more deeply delve into the critical role of two organizational competencies - business competence in IT (BCIT) and IT competence in business (ITCB) - as antecedents to systems agility, as well as their moderating effect on the impact of enterprise systems on organizational agility.
The findings validate a) higher assimilation levels of enterprise systems positively influence organizational agility; b) systems agility acts as a powerful and critical enabler by amplifying the positive impact of enterprise systems assimilation on organization agility, in addition to having a strong direct effect. The paradox of enterprise systems promoting as well as hindering organizational agility can be explained by not controlling for assimilation levels or levels of systems agility. The reconciliation processes between changing business needs and enterprise systems indicates that in addition to economic and competitive forces the system itself is paradoxically a driver of change. The resultant cross-boundary teaming processes between business and IT in response to the changes can be a source of complexity and systemic risk. Finally, systems agility fully mediates the positive influence of ITCB on organizational agility and partially mediates the positive influence of BCIT on organizational agility. In addition, ITCB has a negative moderating effect on the influence of enterprise systems’ assimilation on organizational agility.
In addition to supporting the view that organizations can achieve dexterity in both efficiency and agility through enterprise systems, the findings also promote an overall multi-level enterprise innovation view in which enterprise systems function as core system innovations which enable the rapid replication of local process innovations, resulting in increased overall organizational agility.