integrating the content and process of strategic mis planning with competitive strategy

RESEARCH DIRECTIONS

Integrating the Content and Process of Strategic MIS Planning with Competitive Strategy* Sidhartha R. Das Department of Decision Sciences and MIS, George Mason University, Fairfii, VA 22030

Shaker A. Zahra Department of Management, George Mason University, Fairfii, VA 22030

Merrill E. Warkentin Department of Decision Sciences and MIS, George Mason University, Fairfii, VA 22030

ABSTRACT This paper presents a framework that links strategic MIS planning and business strategy and relates

it to competitive advantage and company performance. To achieve this objective, the paper first delineates the dimensions of strategic MIS planning, focusing on both content and process issues. The notion of fit within dimensions, between sets of dimensions (process and content), and between MIS planning and competitive strategy is also introduced. Next, employing the Miles-Snow typology of business strategy, the paper posits normative differences in the dimensions of strategic MIS planning along different business (or competitive) strategies. The implications of our study for both decision makers and scholars are discussed. Propositions that tie competitive strategy, strategic MIS planning, and company financial performance are then presented. The paper concludes by providing direction for future research.

Subject Areas: Information Management, Management Information Systems, and Strategy and Policy.

INTRODUCTION

Integrating strategic management information systems (MIS) planning with competitive strategy has been receiving increasing attention in the literature [8] [20] [43] [54] [93] [113]. Strategic MIS planning refers to the activities associated with setting objectives for MIS, operationalizing these objectives, developing a long-term plan for achieving them, and implementing this MIS plan [31] [77]. A competitive (or business) strategy is the approach a firm follows in pursuing its goals in a given market [83]. Coordinating MIS planning with competitive strategy enables a firm to seize opportunities in its markets, position itself effectively vis- a-vis its rivals, make efficient use of resources, and access information pertinent to making strategic decisions [112]. These factors can give a company advantage over its competitors, thereby leading to superior financial performance. This is supported by an A. T. Kearney study which reported that companies with integrated business and MIS strategic plans outperformed those without such integration by a factor of six to one [5].

*This research was supported in part by a grant from the Centennial Development Corporation. The authors wish to thank Professor Albert L. Lederer for his careful reading and helpful comments on this paper.

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954 Decision Sciences [Vol. 22

The important role of MIS in creating competitive advantage has highlighted a need for achieving fit between MIS and competitive strategies [32] [39] [63] [71] [105]. This fit is best achieved through strategic MIS planning that complements and augments the thrust of a company’s competitive strategy [54] [91]. Even though some progress has been made in this direction, the literature still lacks an integrative model that articulates the appropriate fit between strategic MIS planning and competitive strategy to achieve superior company performance. Such a model is essential for constructing theory and conducting empirical research. It can also help to clarify the domain and dimensions of strategic MIS planning, assist researchers in defining the importance of different dimensions, illustrate the influence of these dimensions on company performance, and rectify a situation where there is selective attention on some MIS planning variables while other pertinent dimensions are ignored.

OBJECTIVE

This paper proposes a framework that clarifies the links between strategic MIS planning and competitive strategy. To achieve this objective, the paper fmt delineates the dimensions of strategic MIS planning, focusing on both content and process issues. The implications of fit within these dimensions and between strategic MIS planning and competitive strategy in pursuit of competitive advantage and company performance are then discussed. Next, building on a generic typology of competitive (business) strategy, the paper posits hypothesized normative differences in these dimensions along different competitive strategies. These hypothesized differences are inductively derived from the nature of competitive strategy. Propositions that tie competitive strategy, strategic MIS planning, and company financial performance are also presented. The paper concludes by discussing the implications of the framework for decision makers and by providing direction for future research within the context of the framework.

A Model of Strategic MIS Planning and Competitive Strategy Links

Figure 1 displays a model of the links between strategic MIS planning, competitive strategy, and company financial performance. The model adopts a strategic choice approach [95]. Accordingly, it depicts the fm’s external environment as a major influence on its competitive strategy [85]. Also, because each competitive strategy has certain requirements for success (e.g., skills, capabilities, and resources), it requires careful selection of strategic MIS planning dimensions and processes. These choices form a coherent gestalt that matches the needs of successful competitive strategy and implementation. In addition, both the external environment and competitive strategy affect company fmancial performance (as shown in Figure 1) [83] [86].

The external environment also determines the type of MIS needed and the relative emphasis placed on different aspects of these systems. A study of 24 MIS executives of all ranks reported that the impact of the external environment (e.g., government regulation, competitors’ moves, and business conditions) on MIS planning was of major concern for these executives. Thus, Figure 1 shows that the effect of the external environment on MIS planning can be either direct or indirect (via the competitive strategy).

19911 Das, Zahra and Warkentin 955

External Environment

Figure 1: Linkages between extemal environment, competitive strategy, strategic MIS planning and financial performance.

Financial +

Competitive Strategy Performance *

Figure 1 also suggests that strategic MIS planning influences company financial performance directly (e.g., by reducing the cost of information processing, resulting in improved margins [5 l]), or indirectly through its fit (consistency) with competitive strategy. Achieving fit between MIS planning and strategy would create synergy through the coordination of different functions, leading to competitive advantage and, ultimately, superior performance [4].

An important premise that underlies Figure 1 is that achieving a sustainable competitive advantage requires consideration of both content and process aspects of strategic MIS planning. Exclusive attention to either component would produce, at best, a limited and short-term advantage. Hence, both content and process variables need to be clarified, as is done in the following sections.

STRATEGIC MIS PLANNING: CONCEPT AND FOCUS

This paper focuses on strategic planning for MIS at the business (or strategic business unit (SBU)) level. At this level, the strategic focus is on the selection of competitive tools to favorably position a f m in its markets and ensure superior performance. To achieve this, an SBU needs a distinct competitive strategy that takes into account the characteristics of its extemal environment and competitors, as well as its capabilities and goals [83]. Strategic MIS planning is required to align MIS with this competitive strategy to enhance company performance.

Two streams of research in the MIS and strategic management literature have emphasized the integration of MIS planning and competitive strategy, as contrasted in Table 1. The fmt surmises about the potential role of MIS in achieving a defensible competitive position through functional applications of MIS in distribution, market research, market intelligence, and production/operations management [86] [87]. Typically, this research seeks to align MIS and organizational goals by identifying functions and computer-based applications where MIS can assist a company in executing its business plans [65].


Table 1: Research streams linking MIS with competitive strategy.

Avvroaches MIS Strategic Planning

Illustrative Studies Methodologies of Competitive Strategy MIS Literature King [54] Ives & Learmonth [47]

MIS Implications for the Phases

Rockart [92] McFarlan [76] McFarlan [75] Martin [73] Clemons [2 11 Wetherbe & Davis [ 1091 Carlson et al. [ 181

Wiseman [ 1 121

Johnston & Carrico [49]

Strategy Literature Parsons [84] Porter [86] Porter & Millar [87] Lotange, Scott-Morton &

Ghoshal[68]

Students of this functional approach to MIS have offered useful planning methodologies, including IBM’s business systems planning methodology [ 151, strategy set transformation [54], critical success factors [92], business information characterization study [53], portfolio management [75], information engineering [73], ends/means analysis [109], and technology driven MIS planning [18]. Most of these methodologies have been comprehensively reviewed by Bowman, Davis, and Wetherbe [13] and Lederer and Sethi [65].

The second stream of research examines the potential use of MIS in different phases of strategy conception, development, selection, and implementation [68]. Examples include the customer resource life cycle approach [46], value chain analysis [86] [93], and the use of MIS to build barriers to entry, change the basis of competition, generate new products, build in switching costs, and alter the balance of power in supplier relationships [21] [76].

Together, the above two research streams have provided insights into the potential strategic uses of MIS. Nevertheless, there are three key shortcomings:

The two research streams do not delineate pertinent dimensions of -MIS planning. Rather, there are multiple and often conflicting conceptualizations of what strategic MIS planning entails, without precise guidelines for their use. These conceptualizations need synthesis to ensure their coherence and to clarify their links. Previous conceptualizations do not universally incorporate both the content and process aspects of strategic MIS planning. Also, the variables identified in the literature are not related in a coherent manner, and they portray an unclear picture of what strategic MIS planning entails. Past research does not answer the following fundamental questions: What does compatibility between MIS and competitive strategy mean for executives? How can it be achieved? Under what conditions does this compatibility enhance performance?

This paper addresses some of the above shortcomings by identifying pertinent content and process dimensions of strategic MIS planning, clarifying relationships among these dimensions, and providing a preliminary framework that integrates strategic MIS planning with competitive strategy.

19911 Dm, Zahra and Warkentin 957

STRATEGIC MIS PLANNING: CONTENT AND PROCESS ISSUES

In conducting strategic MIS planning, executives select specific company goals, decide on the appropriate competitive tools (e.g., pricing), deploy necessary information resources, integrate different MIS functions to ensure economy of operations, and identify computer-based applications that will assist the organization in realizing its goals [21] [42] [55] 1651 [66]. Consequently, strategic MIS planning encompasses both content and process dimensions. The following sections discuss these dimensions and their potential interdependence.

Content Dimensions

A strategy’s content specifies its basic components and orientation [34]. It denotes the “what” aspect of a firm’s possible choices and actions.

There has been a proliferation of published research on the content of MIS planning in recent years. Note, for example, the 73 theoretical and empirical studies displayed in Table 2. While not an exhaustive list, these studies cover two decades of research efforts and reflect different theoretical orientations and analytical approaches. They include integrative reviews, theoretical frameworks, scholarly analyses, and empirical investigations. Our objective is to bring coherence into this large body of literature by integrating existing MIS planning variables in a unified framework.

The 73 studies (Table 2) have been subjected to formal content analysis to identify significant components of the content of MIS planning. In conducting content analysis, the useful guidelines established by North, Holsti, Zaninovich, and Zinnes [82] have been strictly followed. The analysis has identified the following nine content categories:

1. The distinctive competence emphasized in strategic MIS planning. This is the area in which MIS excel (i.e., what MIS do best). This category includes variables such as cost of information, information differentiation for different applications, and specialized information for specific market niches.

2. The dominant information processing technology used by the firm. 3. The level of computerization of the MIS function. 4. The sources from which the fm obtains its information systems (IS)

5. The contribution of the MIS department to systems design and develop-

6. The medium by which the MIS function contributes to systems design and

7. The technical processes through which MIS are managed and controlled. 8. The organizational structure of the MIS unit. 9. The administrative policies that are used to motivate and manage employees

Table 2 also indicates which studies have emphasized each of the above nine categories.

The nine categories outlined above are further synthesized to provide four major dimensions. Our objective is to be parsimonious; by incorporating a large number of variables into four major dimensions, we also identify the major building blocks of strategic MIS planning. This is done inductively by combining related categories to minimize intra-dimensional variance (ensuring coherence) and to

technology.

ment.

development.

in the MIS department.


Table 2: Literature support for the content dimensions of strategic MIS planning.

Strateeic MIS Plannine Dimensions Systems

Distinctive Information Design and MIS Competence Technology Development Infrastructure

Literature SUDDO~~ 1 2 3 4 5 6 7 8 9

Ahituv, Neunann & Hadass [ 11 Alavi [2] Applegate, Cash & Mills (31 Beehler [6] Benjamin et al. [7] Benjamin et al. [8] Benjamin & Scott-Morton [9] Birkhahn [ 111 Boynton & Zmud [12] Camillus & Lederer [ 171 Carlson, Gardner & Ruth [18] Cash & Konsynski [ 191 Cash, McFarlan & McKenney [20] Clemons [2 I ] Cron & Sob1 [22] Dansker et al. [25] DeJamett [7] Dixon & John [28] Donovan [29] Durr [30] Ein-Dor & Segev [3 11 Ein-Dor & Segev [32] Emery [33] Fredrickson [35] Godiwalla et al. [36] Goodman [37] Gremillion & Pyburn [38] Gupta & Raghunathan [39] Hackathom & Karimi [40] Hoffman [45] Ives & Olson [48] Ives & Learmonth [46] Ives & Learmonth [47] Johnston & Carrico [49] Johnston & Vitale [50] Kendall & Kendall [52] King [54] Kraushaar & Shirland [56] Kriebel [57] Lederer & Mendelow [6 11 Lederer & Mendelow [62] Lederer & Mendelow [63] Lederer & Sethi [66] Leifer [67] Lucas [69] Lucas [70] Mansour & Watson [72] McFarlan [76] Miles et al. [79]

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X

X X

X

X X

X

x x X

X

X

X X

X

X

x x x X

X

x x X

X

X

X

X

X X

X

X

x x X

x x X

X X

X

X

x x x X

X

X X

19911 Das, Zohra and Warkentin 959

X

X

X

Table 2: (continued).

Strategic MIS Planning Dimensions Systems

Distinctive Information Design and MIS Competence Technology Development Infrastructure

Literature Support 1 2 3 4 5 6 7 8 9 Nolan [81] X

Parsons [84] X

Porter [86] X

Porter & Millar [87] X

Quindlen [90] Rockart [92] Rockart & Scott-Morton [93] Scheier [94] Selig [97] Senn [98] Seymour [99] Srinivasan & Kaiser [ 1031 Sumner [ 1041

Teixeiro & Steiner [lo61 Weill & Olson [I081 Wetherbe & Davis [lo91 X

Wietzel & Graen [110] Wilkinson [ 11 11 Wiseman & MacMillan [113] x Young [ 1141 x x Zmud & Cox [ 1 171 b u d . Boynton & Jacobs X

p r b ~ ~ 9 1

Tavakolian [lo51 x x x

X

X

X

X

X

x x x x x

X

X X

x x

x x X

X

X

11181 1. Distinctive Competence 2. Type of Information Technology 3. Level of Computerization 4. Sources of Technology 5. MIS Contribution to Systems Design 6. Medium of Contribution 7. Technical 8. Organizational 9. Administrative

maximize the dissimilarity among dimensions (reducing overlap and sharpening their theoretical meaning). The four major content dimensions of strategic MIS planning that are obtained by this process are titled: distinctive competence, information systems (IS) technology, systems design and development, and MIS infrastructure. Table 3 presents a brief definition of these dimensions, with supporting references. (We recognize that other researchers may relate the nine content categories into different dimensions.)

As shown in Table 3, each of these four dimensions embodies several of the nine categories listed above. Each dimension can contribute to the development of a company’s competitive advantage and performance in a distinct way. An examination


of Table 3 also suggests that the four content dimensions (and their nine components) have not been universally endorsed by researchers-implying that some may be more important than others. For example, a study of 80 MIS managers uncov- ered five factors of varying importance, as judged by the magnitude of factor eigenvalues [66]. The efficacy of individual content dimensions may also vary according to how firms use them to create competitive advantage in the marketplace.

Though the four content dimensions of MIS planning may vary in intrinsic importance or potential efficacy, they should be mutually supportive to achieve superior financial performance. For example, the elements of infrastructure need to reflect the demands of the technological core [23], which is typically chosen based on a fm’s distinctive competence. Strategic MIS planning, then, must aim to ensure consistency and integration among the four content dimensions to ensure superior company performance. Figure 2 shows the four content dimensions and their interrelationships. It also shows that choices along the content dimensions are guided by a firm’s competitive strategy. Though each dimension is discussed separately in the following sections, the interrelationships between the dimensions should not be overlooked.

Distinctive Competence. MIS distinctive competence represents both the apex and the starting point of strategic MIS planning. It embodies the major ingredients a firm emphasizes in designing and operating its MIS for creating value in products and services [26]. This competence dominates the goals and operations of the MIS function, undergirds other dimensions of strategic MIS planning, and mirrors the specific requirements of competitive strategy.

Building a distinctive competence requires assessing a fm’s resources and making appropriate financial commitments to MIS [83] [86] [102]. This enables a firm to identify and develop desired MIS capabilities that can serve as the corner- stone of the strategic MIS plan. Typical methods to achieve such a competence include low cost, product differentiation through actual or perceived uniqueness, and a focus on specialized market niches [86] [87]. Since the primary product of the MIS is information, distinctive competence can be achieved through low cost information processing, flexibility in providing different types of information for a variety of applications, and information specialization focusing on specific market needs [4].

Empirical studies have documented the viability of the above forms of distinctive competence. For example, interviews with senior and MIS managers in 20 firms support companies’ emphasis on cost of information as a source of advantage [62]. In another survey of 80 companies, Lederer and Sethi [66] employed factor analysis to identify the critical dimensions of strategic information systems planning. Cost emerged as a significant factor. Other studies have documented the effects of flexibility in information processing and the use of specialized information in obtaining a competitive advantage [46] [76]. Firms can emphasize one or a combination of these options in their MIS, depending on the competitive strategy.

The choice of a distinctive competence for MIS depends on a firm’s external environment [24] and competitive strategy [86]. In the banking industry, for instance, the labor-intensity of the business and high labor costs invited the application of computerized information systems for low-cost information processing. In the in- surance industry, only companies with flexibly designed information systems could

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Table 3: Dimensions and components of strategic MIS planning: Definitions and literature support.

Definition and Components Illustrative Citations Content Dimensions Distinctive competence

Information systems technology

Systems design and development

Infrastructure

The major ingredients emphasized by a f m in designing and operating its MIS and add value to its products and services principal components are cost of information processing, flexibility to provide different classes of information, and the ability to provide specialized information

The dominant information technology used by the f i in its information systems Components are type of technology, level of computerization, and the sources of technology

The functions associated with MIS design and development Components include the relative contribution to design by the MIS staff, and the medium of contribution

The internal systems through which information resources are managed Components: technical, administrative, and organizational

Clemons [21] Porter and Millar [87] Porter [86] McFarlan [76] Cash, McFarlan and McKenney [20]

Applegate, Cash and Quinn Mills [3] Ives and Learmonth [47] Benjamin, Rockart and Scott-Morton

Rockart and Scott-Morton [93] McFarlan [76] Parsons [84]

P I

Kendall and Kendall[52] Kraushaar and Shirland [56] Alavi [2] Gremillion and Pybum [38]

Leifer [67] Benjamin and Scott-Morton [Q] Zmud, Boynton and Jacobs [118] Young [114] Zmud and Cox [ 1 171

Process Dimensions Formality The extent of structure in the planning Fredrickson [35]

process

scope The comprehensiveness of the planning Lederer and Sethi [66] effort

Participation The extent to which MIS executives are included in strategic MIS planning

Lederer and Mendelow [63] Calhoun and Lederer [16]

Influence The ability to ensure that results are Daft [23] achieved

Coordination A systematic effort to integrate MIS Neo [80] planning dimensions Lederer and Mendelow [63]

962 Decision Sciences [Voi. 22

produce the information required to conceive of and support the variety of new products and applications needed in the 1980s and to deploy them quickly enough to gain a competitive edge. In the overnight shipping industry, Federal Express installed the COSMOS electronic information system that enabled it to add information-related services unique to its specialized market (i.e., overnight delivery of documents and large packages, and international services). The differences in MIS competencies in the above firms are largely due to the different competitive strategies employed by them.

To evolve into a market-based competitive advantage, an MIS competence must be novel, enduring, and large [26]. Novelty means that the competence is new to the fm’s market or niche; this novelty can be translated into new products that enhance a user’s utility function. To be enduring, the competence should be difficult to imitate or duplicate. This durability can be assured from its novelty through proprietary technology, knowledge, skills, or resources [26]. A competence should also be large or significant enough to be commercially viable. Novelty, endurance, and magnitude of MIS distinctive competence need to emerge from and comple- ment a firm’s competitive strategy.

Information System Technology. As defined in Table 3, this dimension refers to the dominant computer-based technology (hardware, software, communications, etc.) that a firm uses in its information systems [108]. The results of a survey of executives from 80 f m s indicate that IS technology and related areas (e.g., factory automation, telecommunications, AI, and software) are currently among the major issues for IS management [14]. This finding is consistent with a survey of 80 f m s which identified hardware and database technology as being among the important dimensions of IS planning [66].

IS technology is important because it can change “the way a fm competes in the industry” [46, p. 1193). As input, output, processing, and storage technologies advance at an ever increasing rate, the challenge has been to effectively integrate and apply them to managerial tasks. Software and certain hardware technologies exhibit a wide range of variability and effectiveness. Organizations that adopt the latest technology do not necessarily have an inherent advantage over competitors [58]. The implications for decision makers are that IS technology choices need to be related to other strategic MIS planning dimensions and ultimately to competitive strategy to yield a significant competitive advantage [93].

A review of the 73 studies in Table 2 suggests that IS technology has three principal interrelated components: type of technology, level of computerization, and sources of technology. Each is discussed in turn.

Type of technology refers to the dominant information processing technology used by a firm [84]. A study of six companies concluded that firms vary in the type of IS technology they use [108]. Thus, a technology used to process large volumes of data (e.g., transaction processing systems) differs from that used to support managerial decision making (e.g., executive information systems and decision support systems) [17]. Also, some companies rely heavily on mainframes while others use more decentralized forms of IS technology (e.g., micros linked in networks) for their MIS. Therefore, because of the significant investment involved in and the advantages/disadvantages associated with each technology [ 1061, the choice of IS technology (e.g., centralized vs. decentralized) needs to be based upon the strategy of the firm. Further, as technology changes, strategic MIS planning becomes essential to ensure system compatibility and integration [ 191.


Level of computerization represents the capital intensity of the computer technology employed throughout the fm. It refers to the ratio of operations carried out by personnel with the assistance of various computer technologies to the operations carried out by personnel without such support [22] [108]. Firms with high levels of computerization in their information systems have changed traditional labor to capital relationships, thereby creating new opportunities for the strategic use of computer intensive information technology [9].

Sources of technology refers to corporate preferences about the origin of IS technologies. A review of past research (summarized in Table 2) suggests that technology sources fall into two primary categories: internal and external [27] [70]. Internal sources include advances by a firm and modifications made to its existing technologies through in-house research and development (R&D). Conversely, external sources of information technologies include purchase or licensing agreements [lo]. IS technologies can also be acquired from external sources such as customers, vendors, strategic alliances, university research groups, or via corporate mergers and acquisitions.

The source of technology affects the other content dimensions of strategic MIS planning. Companies may employ proprietary (intemal) technology to create mobility barriers, achieve cost savings, enhance product differentiation (by providing information support for different applications), and force competing firms to invest heavily in R&D [86]. Also, as reported in a study of 22 companies, an increase in in-house development of application software and maintenance by users leads to their improved understanding of IS [ 1041. This can lead to better financial performance.

The acquisition of IS technology from external sources requires companies to examine the compatibility of the new technology with their existing ones, its effect on systems design efforts, the speed with which the acquired technology can be incorporated within the firm, and the prospects of organizational resistance to the technology [60] [72]. For example, a study of 98 MIS staff and user personnel has shown that in MIS projects, the use of packaged software developed outside the firm leads to a lower degree of involvement in the project, indicating resistance to the new technology [ 1031.

The above observations indicate that internal and external sources of IS technology have their advantages and disadvantages. The selection of either option needs to be made based on an appreciation of a firm’s competitive strategy and other dimensions of M I S planning.

Systems Design and Development. This dimension covers the functions and techniques associated with MIS design and development, such as prototyping, initial testing, design improvement, application development tools, and workbench processes [2] [38] [52] [56] [60] [64]. A survey of 80 MIS executives identified software development as an important issue for future planning and use of MIS

There are different types of approaches to systems design and development. Shomenta, Kamp, Hanson, and Simpson [lo01 and Sumner [lo41 identified three such approaches: traditional development (by the IS department for mainframes), user development (by users for mainframes), and microcomputer development (by users for microcomputers). An empirical study by Sumner [ 1041 reported that MIS executives prefer traditional development approaches for large-scale, complex applications that are organization-wide in scope, require extensive documentation and

~ 4 1 .


well-defined outputs, and generate data used by multiple departments. User and microcomputer development approaches are preferred at the departmental and per- sonal system level for small-scale, unstructured, and unscheduled applications.

Two points emerge from the above studies and those listed in Table 2. First, MIS design is a multifunctional activity. As a result, there is a need for a clear distinction between the extent of the contribution of the MIS function and the contribution of other user areas that are responsible for information systems development. As several groups or units contribute to the development of MIS, the relative contribution of the MIS staff (e.g., its formal power) will vary according to strategic type.

Second, the medium (not only the intensity) of contribution of the MIS staff may differ from one firm to another, depending on competitive strategy and organizational design preferences. For instance, IS design and development activities may be centralized, with the MIS department formally developing software to meet user requirements. In other cases, MIS personnel may be attached to user departments to provide support for end-user systems and applications development [ 1041.

Consistent with the above discussion, Table 3 indicates that there are two components of the systems design and development dimension-ontribution and medium.

MIS Infrastructure. This last dimension refers to the internal systems through which information resources are controlled and managed. As suggested in Figure 2, MIS infrastructure has three interrelated components: technical, organizational, and administrative. These components have received extensive coverage in previous empirical and theoretical research (as displayed in Table 2), albeit without adequate emphasis on their connectedness or links to other planning components.

Technical. This component embodies the information systems architecture and formalized procedures that are used by the firm in guiding and controlling its MIS. It encompasses (1) system operating characteristics (e.g., mode of operation, interfaces between system elements, protocols, and monitoring procedures) [69] [72] [114], (2) information content (e.g.. input and output characteristics of information) [ l l ] [33] [69], and (3) the degree of integration in system architecture (e.g., the proportion of data in shared databases and the number of applications using common files) [6] [9] [33] [57] [I 181. These areas must be coordinated for the technical component to effectively support competitive strategy. A study of the accounting control systems of 76 firms using data from questionnaires and interviews has found differences in firms’ control systems according to their different business strategies [loll .

Organizational. This component represents managerial choices about the size, formal structure, reporting relationships, support groups, and coordination mechanisms within MIS [67] [114]. It translates MIS priorities and goals into action plans that operationalize the strategy. The different aspects of the organizational component need to support one another to minimize confusion and eliminate waste of resources. They should also support the needs of the technical component discussed above. Further, the organizational component needs to be compatible with the thrust of competitive strategy to help a firm reach its goals [74]. This last point is supported by a recent empirical study. Tavakolian [lo51 reported that the IS structure is strongly related to the competitive strategy. Analyzing questionnaire data


from 52 firms, the study reported that an organization with a conservative strategy possesses a more centralized information systems function than an organization with an aggressive strategy.

Administrative. This f m l component of MIS infrastructure comprises managerial policies and actions that influence and govern employee behavior in the MIS area [63] [117]. It includes managerial philosophies and policies on employee selection and training, employee motivation, wage determination systems, job design, and supervisory practices. The administrative component helps focus employee! attention on MIS goals, promote timely implementation of MIS plans, reduce confusion, eliminate waste, and improve employee skills, thereby creating advantage. The importance of this component is supported by a survey of 80 firms [66]. Using factor analysis, the study identified implementation of administrative policies as an important element of strategic information systems planning. Em- pirical research has also focused on specific aspects of the administrative component. For instance, a study of 178 firms investigating the effects of IS steering committees reported that these administrative committees have a major impact on strategic MIS planning [39]. These empirical results indicate that attention to the administrative component of MIS infrastructure is important for the success of strategic MIS planning.

Overall, the literature on the content of strategic MIS planning points to four key interrelated dimensions (Figure 2), each encompassing several primary components, as indicated in Tables 2 and 3. While the four dimensions vary in their relative merit and potential contribution, the absence of any dimension would dilute the potential contribution of other dimensions, thereby handicapping company performance.

Process Dimensions

While attention to the content aspects of MIS planning is very important, this alone may not ensure the desired outcome of linking MIS to competitive strategy. Rather, for this integration to succeed, MIS planning processes should also be considered. Process variables describe the characteristics of the approaches a firm follows in developing and implementing its strategic MIS plan.

The MIS literature suggests that the process of strategic MIS planning has five dimensions: formality, scope, participation, influence, and coordination. These proposed dimensions are presented in Figure 2. Though sometimes labelled differently in the literature, the importance of these process dimensions has been supported by several empirical studies. For instance, Lederer and Sethi [65] surveyed 80 fms to identify planning process factors. Important process variables identified include sophistication (formality) of planning, participation of IS managers in business planning, scope of the planning process, and the influence of MIS executives with senior management. Another empirical study reported the results of interviews with twenty IS managers to identify the process by which MIS and business plans are aligned [63]. Coordination and participation were two of the major variables identified. Finally, a two-stage survey of thirty-six executives (eighteen matched pairs of senior and IS managers) identified participation of MIS managers in strategy formulation as being useful in linking MIS and strategic business planning [16]. Other empirical studies also supported the presence of the above process variables [391 [801.


Distinctive Competence

(1 1

c

Figure 2: Interrelationships between the four content dimensions of strategic MIS planning.

4

Competitive Strategy

System Design and

Development

Information Technology

(3) (2) - Infrastructure

(4)

s

Table 3 provides a proposed formal definition of the five strategic MIS planning process variables. Formality indicates the degree of structure employed in the process of planning [35] [65] [66] [77]. Scope refers to the comprehensiveness of planning efforts and the breadth of planning activities; are they focused (narrow in scope) or broad in their coverage [35] [65]? Participation (involvement) specifies the extent to which MIS managers are included in the strategic decision-making process [16] [59] [63] [65]. A highly participatory process takes advantage of the MIS managers’ expertise and proximity to the market. Znfluence is the ability of a person (or unit) to exercise formal or informal power to ensure that certain results are achieved [23]. Empirical studies have documented increased MIS influence in firms where MIS executives report directly to the president or vice-president of the company [65]. Evidence of such influence would include the visibility of MIS goals in a company’s mission, the ability of MIS managers to shape the strategic agenda that senior executives consider and follow, and a capacity to secure resources for the MIS department. Finally, coordination denotes the degree to which the various MIS planning dimensions are consistent, compatible, and integrated. A highly coordinated process would entail a systematic effort to tie together dimensions of strategic MIS planning to reap their synergistic benefits and align them with the business strategy to ensure its successful implementation [63] [80].

Process variables determine the quality of a strategic MIS plan [35]. If the process is poorly structured (low formality) or narrow in scope, it deprives MIS managers of active participation and involvement in mapping the strategic focus of their function. When the process is poorly coordinated (low integration), the resulting strategy may be deficient because some issues may be overlooked. Lack of attention to these processes may undermine the ability of MIS planners to generate a competitive advantage.


STRATEGIC MIS PLANNING WITHIN DIFFERENT STRATEGIC TYPES

Having distilled and presented content and process dimensions of strategic MIS planning, the discussion now shifts to considering normative links between business strategies and these dimensions. The objective is to show how fms of different strategic types may utilize MIS to achieve superior performance. Clearly, there are several possible ways in which such normative links can be drawn. The discussion in the following sections presents one viable perspective. Other researchers may espouse different approaches. Regardless of the approach taken, a starting point is to precisely define what is meant by a fit (or link) between strategic MIS planning and competitive strategy.

Types of Fit

Theoretically, there are potentially different links within the context of MIS planning. The first aims to create effective matching among the dimensions of MIS planning activities. As illustrated in Figure 3, this requires consistency of choices within the content (Fl) and process (F2) dimensions, and between these two sets of dimensions (F3). Achieving fit depicted in F1 and F2 requires that the components of each dimension (e.g., infrastructure) be mutually supportive and that the dimensions within each set (process and content) be consistent. Further, a good fit should be achieved between the process and content variables (represented by F3 in Figure 3), meaning that content and process choices should be in alignment. That is, the process generates and facilitates the content of strategic MIS planning.

Another fit that should be developed is that between each of the dimensions of MIS planning (content and process) and competitive strategy (represented by F4 and F5 in Figure 3). Strategic MIS planning needs to take into account the goals and mandates of competitive strategy to yield competitive advantage. Venkatraman [ 1071 observed that this type of fit requires that content and process variables need to vary from one fm to another, reflecting the demands of different competitive strategies. These variations form a holistic gestalt that fosters competitive advantage in the marketplace. For this gestalt to develop, however, the interaction of content and process variables (i.e., F3) should be harmonized in a manner that results in consistency with competitive strategy, as depicted in F6 (Figure 3).

A Competitive Strategy Typology

In framing the discussion of the links between strategic MIS planning and business strategy (F4 through F6 in Figure 3), the Miles-Snow [78] typology offers an attractive approach. The efficacy of this typology for linking MIS dimensions with competitive strategy was suggested by Miles and Snow [78], and later recognized by Camillus and Lederer [17]. Also, two empirical studies recently tested , associations between the Miles-Snow types and particular components of MIS planning. Simons [loll examined the differences in accounting control system attributes for firms which follow different business strategies (as classified by the Miles-Snow typology). Tavakolian [lo51 examined the linkage between MIS structure and the competitive strategies of the Miles-Snow strategic types. These two studies showed that it is appropriate to use the Miles-Snow classification as a basis for linking MIS planning and competitive strategy. In addition to its documented

968 Decision Sciences

Figure 3: Types of fit in strategic MIS planning.

I - - , T

[Vol. 22

c . DklinclhreCompetence

Competitive - Informah Systems F4

E - ~ y y s t e m s ~ ~ a n d I F , Strategy N oovolopnont T - MIS Inhastructure

or

I Analyzers q- I

. Formality 71 - Participation F5 1 Prospectors Or

. lnlluence

. Coordlnatlon

relevance to MIS planning, there is an extensive body of empirical research that supports the utility of the Miles-Snow typology as a reliable classification of competitive strategy (for comprehensive reviews, see [96] and [ 1161). Finally, we would like to reiterate that considering strategic MIS planning from a Miles-Snow typology perspective can provide only one basis for conducting integrative research in this area [44]. Other researchers may propose or use a different framework for linking MIS with competitive strategy.

The Miles-Snow typology (hereafter the typology) identifies three potentially effective organizational strategic types: defenders, prospectors, and analyzers. Defend- ers operate in a narrow and stable business domain, which they protect by using competitive pricing, cost-efficient technology, and strict internal controls. A defender’s strategy permits specialization in products and markets, thereby allowing a firm to achieve efficiency and an excellent reputation in certain markets [96]. In addition, the defender strategy enhances a company’s ability to assess market needs, and it simplifies internal decision-making processes and planning activities [78], thus leading to efficiencies and speedy decision making by qualified experts.

Prospectors seek to achieve a favorable market position within a broad and dynamic business domain, which they maintain by using flexible technologies and control systems. This flexibility enables prospectors to control their environments and sustain high levels of profitability. A prospector strategy provides opportunities for growth in new lucrative markets and allows these firms to utilize their financial and technological resources effectively. Further, prospectors are usually catalysts for change in their industries [78], which gives them advantages in establishing themselves as marketing or technological leaders.

Following either a defender or prospector strategy has risks. Defenders may overlook new business opportunities that lie outside their familiar domain. Despite the simplicity of their internal processes and structure, some defenders may be slow in their response to emerging environmental forces because of their commitment to a traditional business concept.


The prospector strategy also has several potential disadvantages. First, market pioneership does not always translate into a competitive advantage [83]. Thus, prospectors invest heavily in developing markets or niches which they may not be able to retain. Second, Miles and Snow noted that “because of the need for flexibility in all its operations, the Prospector seldom attains the efficiency necessary to reap maximum economic benefits from any of its chosen markets” [78, p. 581. Third, the focus on expansion as a means of achieving growth may dilute some synergy that may exist among products or markets.

Defenders and prospectors represent opposite ends of a continuum of business strategies, while analyzers lie between these two extremes. Analyzers have a hybrid domain with both stable and dynamic components. This duality in their domain is reflected in every facet of their organization and decision-making styles, requiring managers to approach the stable and dynamic elements of their domain differently. They typically adopt defender tactics within the spheres of their domain that are characterized by stability, and they tend to adopt prospector tactics in the areas characterized by dynamism. Finally, Miles and Snow identified a fourth organizational type called reactors, who represent a form of strategic failure because of their internal inconsistencies and the lack of a conscious strategy [96].

The typology also highlights the importance of administrative mechanisms necessary to ensure effective adaptation to the environment [ 1161. Most prominent of these mechanisms is the use of MIS to gather relevant operational and strategic data. Consequently, the typology has briefly outlined the desirable types of information systems for the three strategies. For defenders, the administrative challenge is “to maintain strict control of the organization in order to ensure efficiency” [79, p. 5521. This requires the use of centralized information systems to facilitate control. Prospectors should “facilitate and coordinate numerous and diverse operations” [79, p. 5541 through the use of decentralized information systems that allow flexibility in communications. Analyzers, who represent an intermediate position between defenders and prospectors, must “differentiate the organization’s structure and processes to accommodate both stable and dynamic areas of operations” [79, p. 5561. These companies typically emphasize moderately centralized information systems.

The above broad propositions do not fully capture the complexity of the link between a f m ’ s MIS planning and competitive strategy, especially in view of the theoretical and empirical advances over the past decade. Still, the typology offers a basis for inductively defining viable links that may lead to improved financial performance. Consequently, the following section presents hypothesized variations in the content and process dimensions of strategic MIS planning according to the Miles-Snow typology.

The following discussion warrants three caveats. First, the reactor strategic type is not examined because these firms lack a coherent business strategy [88]. The omission of this group is also consistent with past research in this area [ 1151 [ 1161. Second, in the absence of theory, the normative propositions presented here are derived inductively and are preliminary in nature. They offer a basis for future empirical research to test the proposed relationships. Refinements and modifications are essential to accumulate credible empirical evidence. The proposed normative links represent only one perspective; others may be equally viable and should be recognized using both theoretical and empirical methods.


Third, Miles and Snow [78] and others (e.g., Segev [96]) noted that defenders and prospectors represent polar positions with regard to strategic choices, while analyzers fall between these two extreme positions. Consistent with the typology and subsequent research [41], this discussion examines defenders and prospectors in more depth than analyzers. Analyzers generally follow prospector strategies in their new lines of business and defender strategies in their traditional, core business.

Table 4 summarizes hypothesized differences in the content and process of strategic MIS planning according to strategy type. These differences are discussed below.

Defenders

Distinctive Competence. Empirical research indicates that the competitive strategy of defenders typically exhibits a distinctive competence based on low cost [41] [96]. Hence, it is expected that defenders’ strategic MIS planning will focus on achieving low cost derived from specialization, efficient planning, and econo- mies of scale in information processing.

Information Systems Technology. This dimension has three components, presented below.

1. Type. To build and maintain their low-cost distinctive competence, defenders are hypothesized to use centralized systems (e.g., mainframe computers) to ensure operational control and enhance specialization in information processing and distribution [ 1051.

2. Level of Computerization. Defenders are expected to use computer-based information systems (CBIS) and databases throughout the firm. Defenders’ information processing tasks are usually routine, and time-sharing will be common to ensure efficiency in operations.

3. Sources of Technology. Defenders are expected to favor information technologies and equipment that are produced internally (though some may use off-the-shelf technologies, i.e., external). This presents a major challenge for these fms which usually seek state-of-the-art technologies to reduce costs. Because of their proclivity toward internal sources, defenders may overlook new market developments in information technology. To remedy this problem, some defenders may be forced to intensify their internal R&D. However, given the unique nature of information technology, they may also form limited strategic alliances (e.g., joint ventures or long-term con- tractual agreements) with external sources (e.g., other companies or research consortia) for their technology. To be successful, these agreements need to guarantee system compatibility with the specific operational and strategic information needs of the firm.

Systems Design and Development. Defenders’ predicted choices for both the contribution to systems design and development and the medium through which this contribution is made are highlighted in Table 4 and summarized below.

1. Contribution. Typically, defenders are expected to create a formal group that specializes in and exerts considerable power over systems design and development. Given the centrality of this function to defenders’ emphasis on costs and efficiency, the MIS department must be granted substantial power to authorize or veto proposed modifications of the information system. The contribution of other departments will be relatively low; they will

19911 Das, Zahra and Warkentin 97 1

Table 4: Linking the dimensions of strategic MIS planning with Miles-Snow strategic types.

Strategic Types Dimensions Defender Analyzer Prospector Strategy Content Distinctive competence

Information systems technology

5 P e Computerization level S O U r ~ of technology

Systems design and development

Contribution by MIS

Medium of contribution group

Infrastructure Technical (e.g.. degree

Organizational Administrative

Philosophy

of integration)

Policies (e.g., manager selection)

Strategy Process Formality

Level 5 p e

scope

Participation Influence Coordination

Breadth of activities

Lowest cost

Centralized High Primarily internal

High

Formally by MIS

High

Functional

Hierarchical Formal Based on technical expertise

Highly formal Top-down

Narrow High High

Cost and/or differentiation

Distributed Moderate Mixed

Average

Hybrid

Moderate

Hybrid

Mixed

Combination

Moderate Top-down

In between High Medium

Uniqueness Differentiation Flexibility

Decentralized Relatively low Primarily external

Modest

Via cross functional teams

L O W

Product-type

Individualistic Flexible Based on interpersonal skills, Flexibility

Informal, flexible Bottom-up

Broad High LOW

Means of coordination Formal (primarily) Formal and informal Formal and informal

usually submit their needs for new systems and applications for review and action by the MIS department.

2. Medium. In defender organizations, most design contributions are expected to be formally channelled through a centralized systems design and development unit. This unit will conduct formal needs analysis for user departments, review their requests, and make final decisions on the design of the system.

Infrastructure. As previously noted, MIS infrastructure has technical, organ-

1. Technical. Defenders are expected to emphasize extensive integration of their MIS to control costs and achieve consistency in output. Integration

izational, and administrative components. Each is discussed below.


may take several forms, including consolidation of formerly distinct transaction processes, integration of multiple forms of data representation and knowledge, and the merging of user groups through formal communication systems. Pursuant to this orientation, centralized database administration will prevail [ 1051, with formalized control over the collection, entry, maintenance, testing, and processing of corporate data. Such centralization may require a large proportion of data in shared databases, a large number of functions served by each application, and a large number of applications using common files. Centralized software teams may design and write programs that will be available only for use by data processing staff.

2. Organizational. As in other departments, defenders are expected to develop a functional structural form for its MIS operations. This structure is generally compatible with the predictability of defenders’ information requirements and their emphasis on efficiency through specialization. It provides clear lines of communication, establishes lines of authority, and creates accountability. Also, defenders may standardize their MIS functions and use formalized rules and standard procedures for effective control of MIS activities.

3. Administrative. In terms of managerial philosophy, the defenders’ MIS organization is expected to follow traditional theories of management [78], where executives rely heavily on formal authority, top-down decision making, unity of command, specialization, formal communication, and strict controls [23]. Traditional management theories will also be expected to guide the selection of MIS managers. Therefore, these professionals will be chosen primarily on the basis of their technical competence. Consistent with the hierarchical orientation of the firm, selection of MIS personnel will also be primarily through promotion from within the company.

In addition, driven to reduce its operational costs, the defender is predicted to designate a chief information officer (CIO) to develop a strategic information policy and lead data-processing operations. The MIS department will manage hardware and software budgets, design strategic applications, purchase equipment, develop and write programs, train new users, and supervise the computer systems.

Within the MIS function, defenders are expected to use personnel in narrowly defined tasks, who will simply follow the firm’s standard operating procedures. In pursuit of specialization, tasks will be broken down to minimize the need for extensive personnel development and to enhance uniformity of action. Compensa- tion will be tied to rank and seniority. Overall, in deciding how to meet user needs, defenders’ CIOs are predicted to emphasize cost control rather than provide cus- tomized applications.

Process Variables. The five process components of strategic MIS planning for defenders are summarized in Table 4. In conducting their MIS strategic planning, defenders are expected to follow a highly formalized, top-down approach to achieve consistency with the firm’s mission. This prediction emerges from Miles and Snow’s [78] field work, which indicated that defenders stress a top-down approach to planning. Accordingly, these companies may determine formal objectives and then develop supporting operating procedures to ensure compliance with the goals of specialization and cost reduction.

Defenders’ planning activities are expected to be narrow in scope, focusing primarily on activities along the value chain that may reduce cost or improve profit

19911 Das, Znhra and Warkentin 973

margins. In terms of participation and influence, two forces concurrently shape defenders’ MIS planning processes. The need to go through official channels per- meates the defender’s formal hierarchy, promoting extensive formal participation by the MIS staff. This involvement is expected to greatly influence MIS planning.

Finally, with regard to coordination, the defender’s MIS staff is expected to follow a top-down, formal approach to ensure that fit exists within and across planning dimensions and, ultimately, with competitive strategy. MIS planners are predicted to rely heavily on formal authority to achieve coherence in planning efforts. For instance, MIS planners are expected to use formal committees or task forces to ensure integration among different MIS planning activities, coordinate investment in hardware and software, and implement MIS strategy.

Prospectors

Distinctive Competence. Prospectors’ distinctive competence is usually derived from product differentiation and uniqueness [41]. Therefore, their MIS is expected to stress uniqueness and innovation in handling the information needs of varied and dynamic markets. The MIS are also expected to emphasize flexibility and versatility in information acquisition and processing, and in reduction of response time required to adjust to changes in the company’s definition of its markets. Prospectors may choose to pursue other ways to develop a defensible competitive advantage, including emphasis on high quality and low costs [96]. The breadth of their domain enables prospectors to pursue multiple competencies si- multaneously. These competencies define the unique capabilities and resources essential for effective MIS.

Information Systems Technology. The predicted characteristics of prospectors in this dimension are outlined below.

1. Type. To serve their broad and varied domain, prospectors are expected to emphasize decentralized systems (e.g., local area networks) that use multiple technologies. Each technology is expected to correspond to the demands of a patticular segment served by the company. These peer networks communicate through bridges or gateways [30] and allow a greater degree of freedom in communication. Such an arrangement provides flexibility in information processing, thereby creating a competitive advantage for prospectors.

2. Level of Computerization. The diversity and multiplicity of prospectors’ products and markets is expected to make it difficult for these companies to computerize every operation. For example, data processing and end-user computing may be highly computer intensive, but information support for high-level decision making may not be explicitly supported by CBIS. Con- sequently, prospectors’ information systems are expected to be less computer-intensive than those of defenders.

3. Sources of Technology. The diversity of information needs of prospectors is expected to preclude the exclusive use of internal sources to meet their IS technology needs. Therefore, prospectors are expected to utilize IS technologies that are obtained from multiple sources, both internal and external. Because of their continuing engagement in new businesses, prospectors may emphasize external sources over internal sources in acquiring information technology.

Systems Design and Development. This dimension comprises two components, as discussed below.


1. Contribution. For systems design and development purposes, prospectors are expected to seek input from numerous functions, pursuing a broad participatory process to accommodate diverse needs. As a result, several functions are predicted to directly participate in systems design and development (e.g., R&D, marketing, manufacturing, and customer relations). Overall, due to this extensive involvement of many functional areas in systems design, prospectors’ MIS units may not dominate systems design activities as they do in defender organizations.

2. Medium. With their emphasis on uniqueness and innovation, prospectors are expected to seek input from organizational units in direct contact with customers to design systems that respond to changing market needs. To ensure their contribution, some prospectors may use cross-functional teams where designers and end-users from various functional areas collaborate to create new designs. Others may allow MIS personnel to work directly with users in various departments and provide assistance in developing systems and software for various applications.

Infrastructure. Prospectors’ predicted choices in this dimension are summarized below.

1. Technical. To ensure quick response to changing markets and customer needs, prospectors are expected to exhibit more flexibility with a lower degree of integration throughout their MIS than defenders. Their databases will be decentralized, with a capability to handle a wide variety of information needs. End-user computing will be prevalent in prospector firms. This may result in a large number of independent programs tailored for different applications.

2. Organizational. Prospectors are expected to have organic structures em- phasizing project, product, or matrix structures which are more flexible and less hierarchical than functional forms [78]. Organic structures facilitate improved communications and encourage cross-functional participation [23]. Some firms may adopt experimental organizational forms such as the cluster organization. In cluster organizations, groups of people who may be physically dispersed but linked by information and communication systems work together on specific business problems and disband when the job is completed [3]. These organizational forms are flexible and are par- ticularly well suited to some prospectors who need extensive decentralization to compete in dynamic business environments.

3. Administrative. The management philosophy of the prospector’s MIS function will follow the principles of organizational humanism. These principles stress participative management, flexible work organization, and recogni- tion of individual needs [78].

As indicated earlier, managerial philosophies manifest themselves in policies governing the MIS function. While formal procedures and technical competence are expected to prevail in defenders’ MIS policies, prospectors will tend to place a premium on individual growth, excellence in interpersonal skills, initiative, and creativity. Accordingly, prospectors are expected to explore different job enrichment and design techniques, unique approaches to improve the quality of working life, and new methods of employee training and development. For instance, to improve job design, prospectors are expected to experiment with different approaches that integrate the social and technical aspects of the job, such as job enrichment


practices or the use of quality circles. Regardless of the technique used, prospectors* interest in their employees will likely compel them to explore the latest principles of job design to integrate employee and company goals.

In selecting MIS executives, prospectors are predicted to emphasize several criteria: ability to interface with other functions, ability to motivate employees, and overall competence. These criteria differ from defenders’ emphasis on seniority and job related training. Key MIS managers may be hired from outside the organization as well as promoted from within.

The widespread decentralization typical of prospectors* systems, applications, and decision making are expected to lead to many isolated applications, locally developed software, and incompatible technologies. Further, the prevalence of end- user computing is expected to mitigate the need for tight controls by the MIS manager. Therefore, prospectors’ CIOs may function as network managers. These managers oversee a firm’s computer resources by relinquishing control over them, focusing instead on the networks that connect them [29]. Accordingly, the technical staffs of various user departments will tend to be responsible for virtually every aspect of their respective information systems. Network managers are expected to be responsible for the linkages between these systems to promote the sharing of information. They will need to implement, connectivity at the physical, systems, and applications level to create and maintain these critical linkages. In practice, network management will mean evaluating hardware technologies with as much emphasis on telecommunications capabilities as on processing performance, developing interfaces between workstations of different power and with differing archi- tectures, implementing connectivity standards throughout the organization, and setting organizational and technological ground rules to guide self-directed computer users [29].

Prospectors’ managers are expected to be better trained and more technically sophisticated than those of defenders. This will be necessary to cope with the varying demands and the rapid pace of change in their external environment. Also, managers will have more autonomy in their work, with fewer rigid policies from a less visible headquarters staff. Flexible compensation packages are expected to allow prospectors to treat individual managers as unique contributors and to reward them based on their particular skills. Due to the dynamism in a prospector’s business environment, a variety of application software is expected to exist in these f i i . The CIO’s role will focus on coordinating them, discouraging features that interfere with the firm’s broad MIS goals, and maximizing network connectivity.

Process Variables. Unlike defenders, prospectors are expected to favor informal, bottom-up approaches in their strategic MIS planning. Planning may be flexible and interactive rather than sequential, and may require several iterations to ensure effective links between the variables involved.

Planning activities in prospector organizations are predicted to be wide-rang- ing in scope, delving into the behavioral, structural, technological, and financial variables of the MIS function. But prospectors may need to be comprehensive and flexible at the same time. In comparison to defenders, they may meet this challenge by using a less formal strategy formulation process, while examining more dimensions. While MIS managers will tend to be heavily involved in shaping MIS strategy, their relative level of influence is predicted to be low, as it will be countered by that of managers from other functions. Further, to maximize benefits to the f m from the MIS function, both formal and informal means may be used


to achieve coordination of MIS goals and capabilities with the needs of different organizational units.

Analyzers

As indicated earlier, analyzers represent an intermediate case between defenders and prospectors [96]. These organizations face a relatively stable environment in some of their operations and a relatively dynamic environment in others. Their strategic MIS planning is predicted to reflect this condition, as indicated in Table 4. Analyzers are expected to make choices typical of defenders in their traditional and stable lines of business, while adopting a strategy typical of prospectors in their newer and dynamic business endeavors. This may sometimes result in hybrid or mixed strategies along some dimensions of strategic MIS planning.

Summary

Table 4 summarizes how Miles-Snow’s three viable strategic types-defenders, analyzers, and prospectors-are predicted to vary in the key content and process dimensions of their MIS planning. These normative variations are inductively derived from the spirit of the typology. In the following section, we focus on the implications of these hypothesized linkages between MIS planning and competitive strategy for future theoretical and empirical research.

IMPLICATIONS AND PROPOSITIONS

This paper provides a preliminary framework for linking the content and process dimensions of strategic MIS planning with competitive strategy in order to achieve successful company performance. The proposed framework has several advantages. First, it recognizes both the content and process of strategic MIS planning as crucial antecedents of competitive advantage. This hypothesis is summarized in this study’s first theoretical proposition (Pl):

PI: The content and process of strategic MIS planning are a source of competitive advantage and, ultimately, superior company performance.

Second, the proposed framework depicts a comprehensive but parsimonious view of the content of strategic MIS planning. These variables have been the subject of considerable interest in the literature (as shown in Table 2), resulting in many classifications (e.g., [4], [46]). The current framework synthesizes these variables at the competitive (business) strategy level. This synthesis integrates related variables into coherent dimensions, thereby setting the stage for future empirical studies to support, modify, or augment these dimensions. It also serves as a starting point for directing future empirical studies in this area.

Third, focusing on the business strategy level of analysis is useful for both scholars and decision makers. It compels them to think about strategic MIS issues in broader terms than the detailed tactical decisions often emphasized in previous research. That is, some prior studies have stressed department-level decisions (e.g., how to obtain low cost) rather than the concerns of competitive strategy (e.g., how the company will develop a distinctive competence based on low cost). Though tactical, department-level decisions are important, formulating effective MIS plans


requires attention to strategic issues; effective tactics flow from a well-conceived strategy [83].

Fourth, this paper highlights the need for fit between competitive strategy and strategic MIS planning as an antecedent of superior financial performance, as depicted in Figure 3. This requires coordination of the content and process dimensions within the MIS planning sphere, as well as coordination between the spheres of strategic MIS planning and competitive strategy. As indicated earlier, these different types of fit are crucial to company performance. This leads to a second proposition:

P2: Fit between competitive strategy and strategic MIS planning is positively associated with company financial performance.

To reap the benefits of integrating MIS plans and competitive strategy, internal consistency within the content and process sets is necessary to promote the development of capabilities requisite for building an advantage. When this internal consistency exists, the dimensions support one another, thereby providing multiple bases for creating a competitive advantage that can lead to superior company financial performance. For example, a modern, technologically sophisticated MLS cannot succeed without the appropriate administrative and organizational infrastructure. Without these linkages, valuable financial, technological, and human resources will be wasted. Hence,

P3: The fit (internal consistency) among the dimensions of a firm’s strategic MIS planning within a particular competitive strategy is positively associated with company financial performance.

Fifth, the foregoing discussion suggests that both the content and process of MIS planning need to match the requirements of different competitive strategies. Predicted variations in a firm’s strategic MIS planning content and processes within each competitive strategy have been presented in Table 4. These overall profiles represent coherent, internally consistent configurations (gestalts). Deviations from these profiles would waste resources and handicap implementation of MIS plans. Thus,

P4: For each of the defender, analyzer, and prospector strategic types, failure to match the proposed theoretical profiles of content and process variables (shown in Table 4) will be associated with diminished financial performance.

Implications for Decision Makers

implications for decision makers, as follows. The above four propositions and the preceding discussion have noteworthy

1. Decision makers must understand the competitive arena in which their companies operate and, comspondhgly, choose a viable strategy. As Figure 1 suggests, the external environment shapes strategic choices. It is this competitive strategy that should guide a f m ’ s strategic MIS planning.


2. Decision makers must delineate the desired distinctive competence for MIS. This competence augments the strategy and helps determine the organizational capabilities to be cultivated and the associated resource requirements. The distinctive competence should be communicated to MIS staff and other relevant groups to foster Understanding of MIS needs and responsibilities. Such communication also builds commitment to the distinctive competence.

3. Executives should distinguish between content and process variables. Under- standing content variables equips executives with the ability to emphasize the appropriate ingredients of strategic MIS planning in pursuit of better performance. It is also important to recognize that the process of strategic MIS planning is as important as its content. An understanding of the planning process and implementation procedures provides executives with insight into the strengths and weaknesses of various facets of MIS planning processes. Decision makers need to articulate their preferences of the five process areas examined in this paper: formality, scope, participation, influence, and coordination.

4. Decision makers must recognize and cultivate the interrelationships among the content and process dimensions of MIS planning. They need to ensure the compatibility of the components within each dimension and between the content and process dimensions to facilitate the achievement of an overall fit between MIS planning and competitive strategy. These different types of fit create synergy and are theorized to be associated with company financial performance (P3). To achieve these various fits, decision makers should carefully and thoughtfully design the components and subcompo- nents of strategic MIS planning.

5. There is a need to recognize the dynamic nature of the relationships involved in strategic MIS planning. Because the environment, strategy, MIS planning, and performance variables are dynamic, they must be continually monitored and revised when necessary.

RESEARCH DIRECTIONS

As previously indicated, strategic MIS planning and its links to competitive strategy and financial performance have been the subject of considerable interest in the literature. Still, much theoretical and empirical work remains to develop definitive guidelines for the effective integration of these variables in pursuit of superior company performance. The topic offers many opportunities for future research on the issues that emerge from the current paper.

1. As an initial step, tests of the construct validity of the content and process dimensions of strategic MIS planning are required to enhance confidence in the proposed conceptualization. Data collection procedures may target MIS executives through interviews, field studies, or mail surveys. Data may also be gathered from leading scholars in this area to form a basis for synthesizing current thinking on the topic. For example, a list of dimensions deemed important for strategic MIS planning by both leading scholars and MIS specialists can be generated. This approach has successfully been employed in the strategy literature, especially at the early stages of examining complex constructs (e.g., Hambrick [41]).


In addition to collecting data from scholars and MIS executives, con- firmatory factor analysis or LISREL may be used to establish the validity of the dimensions of strategic MIS planning in Figure 2. Such empirical efforts will also help clarify the relationships among these dimensions; are they conflicting, or mutually supportive as proposed here?

2. Empirical studies are also needed to determine the relative importance of the different dimensions of strategic MIS planning. Relevant research questions are: What is the relative importance of different strategic MIS planning dimensions? Does this importance vary across industries, firms, and decision makers? Do trade-offs exist among these dimensions? How do MIS executives resolve problems associated with potential trade-offs within and between dimensions? What criteria and decision processes do MIS managers employ in this regard? Are these criteria stable across industries, companies, and decision makers?

3. Upon confirmation of the content and process dimensions of strategic MIS planning, empirical research may proceed to test the hypothesized links between competitive strategy, strategic MIS planning, competitive advantage, and financial performance. Path analysis and LISREL may provide appropriate empirical means for examining and refining these relationships.

In examining the proposed model, scholars need to investigate the potential lags inherent in the relationships among the variables in Figures 1 and 2. For instance, because benefits from MIS distinctive competence may not be realized for some time, future studies need to identify these lags and determine their typical length. This will facilitate the development of guidelines for strategy selection to maximize the MIS contribution to a firm’s financial performance.

4. The causal chain implied in Figure 1 also deserves examination. Will this chain be supported by empirical analysis? Does this chain vary over time? Does it differ from one industry to another, or from one phase of the company life cycle to the next? By using LISREL or path analysis, scholars may examine these issues and refine the proposed framework.

5. As future empirical research accumulates, the relative effect of the environment and competitive strategy on the content and process of MIS planning can be decomposed. This will enable researchers to delineate the conditions under which changes in the external environment, strategy, or both, would necessitate realignment of strategic MIS planning variables to ensure effective company performance.

6. Scholars may test the implications of fit-both as internal consistency (P3) and as a deviation from a profile (P4)-for company financial performance. What is the relative effect of these two types of fit? Does their relative importance vary from one situation to another? If so, how? Venkatraman [lo71 discussed and proposed specific empirical procedures for testing each type of fit.

CONCLUSION

The 1970s witnessed the emergence of strategic planning systems as a credible means of positioning companies in their markets. In the 1980s, scholars demon- strated the importance of linking MIS to a firm’s competitive strategy. In the 199Os,

[Vol. 22 980 Decision Sciences

theoretical and empirical studies will be necessary to assess and reap the benefits of integrating MIS planning and business strategy in creating competitive advantage and ensuring superior financial performance. This paper offers a practical framework for future research in this endeavor. [Received: August 4, 1989. Ac- cepted: November 15, 1990.1

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Sidhartha R. Das is Assistant Professor of Decision Sciences at George Mason University. He received his Ph.D. in business administration from the University of Houston. Dr. Das’ research interests are primarily in four areas: strategic implications of MIS. manufacturing strategy, production planning


and control in automated manufacturing systems, and management of service operations. His research has appeared in journals such as Decision Sciences, International Journal of Flexible Manufacturing Systems, Production and Inventory Management, and in several conference proceedings. Dr. Das is a member of the Decision Sciences Institute, TIMS, IIE and APICS.

Shaker A. Zahra is Associate Professor of Strategic Management at George Mason University. He is the author (or coauthor) of two books and over 120 journal articles and professional papers. His research has appeared in Strategic Management Journal, Journal of Management, Journal of Manage- ment Studies, Academy of Management Executive, Journal of Business Venturing, Long Range Planning, and others. Dr. Zahra serves on the editorial board of five journals. Currently, he is conducting a multi-industry, multi-country study of the implications of competitive strategy and innovation for company performance.

Memll E. Warkentin holds a Ph.D. in management information systems and is Assistant Professor of Decision Sciences and MIS at George Mason University. His teaching and research focus is in information resource management, expert systems, and knowledge engineering with particular emphasis on knowledge acquisition techniques. Dr. Warkentin is a member of the Decision Sciences Institute, TIMS, ACM, AAAI, IAKE, and IRMA.

integrating the content and process of strategic mis planning with competitive strategy

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