Information technology infrastructure, organizational process redesign, and business value: An empirical analysis

a r t i c l e i n f o We extend current research examining synergies between information technology, process redesign, and firm performance in three ways: analyze a firm's entire IT and BPR portfolio, examine production and market value performance implications, and conduct analysis using a unique dataset of 228 firms between 1996 and 1999. We find a contingent association between IT, process redesign, and performance. The interaction of IT and BPR portfolios is positively associated with firm productivity and market value. However, we find mixed evidence of a difference in these impacts across different types of BPR. Insights for business investment in IT and process redesign are discussed. Business process redesign (BPR) is an approach to improving organizational performance that focuses on business processes and their efficiency [30,46,47]. The concept has evolved from its reengineer-ing roots into today's process-based approach to organizational change (e.g., quality management, human resource management, and customer relationship management) [3,18,64]. The promise of substantial financial gain has motivated numerous firms across a wide range of industries to adopt major process change initiatives [20,69,71], with some achieving significant benefits [7,69]. However, documented rates of redesign failure are also high, with some estimates as large as 70% [47]. Collectively, the conflicting evidence of both BPR success and failure has led to a " paradox of BPR outcomes, " warranting further investigation to assist managers in their evaluation of process change opportunities [43]. The variability in BPR success is rooted in many factors, including the challenge of implementing information technology to support process redesign. Information technology is often a central component of BPR and at times is promoted as a key motivator for the change itself [46,47]. Continued innovation in IT and its capabilities implies that IT's role in process redesign is not likely to diminish. Case-based research illustrates specific challenges to successful process change and how to overcome them. However, it remains unclear whether IT-enabled process change, examined across large numbers of organizations, is a rational investment for firms. In addition, there is a deficiency in knowledge concerning the interplay between business process redesign, information technology, and organizational performance at the program-level (i.e., across all projects in a firm). In this paper, we contribute to the literature by analyzing the interplay between process redesign, information technology, and organizational performance. At any given time, a single organization may have many process redesign efforts underway. Cigna, for …