Effect of Business Intelligence and IT Infrastructure Flexibility on Organizational Agility

There is a growing use of business intelligence (BI) for better management decisions in different industries. However, empirical studies on BI are still scarce in academic research. This research investigates BI from an organizational agility perspective. Organizational agility is the ability to sense and respond to market opportunities and threats with speed. Drawing on systems theory and literature on organizational agility, business intelligence, and IT infrastructure flexibility, we hypothesize that BI use and IT infrastructure flexibility are two major antecedents to organizational agility. We developed a research model to examine the effect of BI use and IT infrastructure flexibility on organizational agility. Survey data were collected and used to assess the model. The results support the hypothesis that BI and IT infrastructure flexibility are two significant antecedents of organizational agility. This research is a pioneering work that empirically investigates the significance of BI in business context. Track 16: Knowledge Management and Business Intelligence 2 Thirty Third International Conference on Information Systems, Orlando 2012 Introduction There is a growing use of business intelligence (BI) for better management decisions in different industries. However, empirical studies on BI are still scarce in academic research. Idea entrepreneurs (such as consultants, gurus, journalists, and vendors) have made substantial efforts to promote its use. Organizations have spent millions, if not billions, of dollars and sometimes made significant organizational structure changes to implement BI. While BI is popular in industries and practices, BI research in academic is still in its early stage. Existing BI studies focus on defining the field and terminologies, case studies on BI best practices in leading companies (Wixom and Watson 2010), identifying critical success factors (Yeoh and Koronios 2010), and developing maturity models (Lahrmann et al. 2011). Empirical studies on the significance of BI are clearly lacking. The fundamental question of whether or not BI has important or critical business values is left unanswered in academic. This question is especially pertinent when prior research shows inconsistent results of BI impacts on business performances. To study the significance of BI, we need a theoretical lens to build theories that connect BI with business values and empirically test them. After reviewing the IS and strategic management literature, we found organizational agility perspective is a promising lens to study the significance of BI. Agility is an organizational trait (Christopher and Towill 2002) and is an organization’s ability to sense and respond to market opportunities and threats in a timely manner (Sambamurthy et al. 2003; Overby et al. 2006; and Watson and Wixom 2007). Organizational agility has been studied in the IS discipline for many years (El Sawy and Pavlou 2008; Fink and Neumann 2007; Gallagher and Worrell 2007; Hobbs 2010; Lee and Xia 2010; Lyytinen and Rose 2006; Sambamurthy et al. 2003; Seo et al. 2010; Tallon and Pinsonneault 2011; Tiwana and Konsynski 2010; Zaheer and Zaheer 1997; Zaheer and Zaheer 1997). There is an established positive link between organizational agility and firm performance in the IS literature (Benaroch 2002; Sambamurthy et al. 2003; Fichman 2004; Benaroch et al. 2006). Organizational agility provides a logical connection to connect BI with an organization’s competitive advantage. Systems theory states that systems are composite things and possess properties (Von Bertalanffy 1968; Ackoff 1971; Checkland 1981). System properties can be properties of individual system components or properties of interacting relationships among system components. The latter properties are called emergent properties (Nevo and Wade 2010). Organizations are complex social systems. Organizational agility is one of the emergent properties. The sources of emergent properties come from both the components and their relationships (Holland 1998; Jackson 2000). Organizational agility is the ability to sense and respond to market opportunities and threats. Therefore, there are two source components that can help improve organizational agility: (1) the component that can help sense and detect market opportunities and threats in a timely manner, and (2) the component that can help act on or respond to market opportunities and threats in a timely manner. Prior literature shows that business intelligence (BI) can help sense market opportunities and threats (Elbashir et al. 2011; Mithas et al. 2011; Trkman et al. 2010; Wixom and Watson 2010); and flexible IT infrastructure can help respond to market opportunities and threats by facilitating the integration and reconfiguration of existing resources to develop new capabilities (Bharadwaj 2000; Bhatt and Grover 2005; Byrd and Turner 2001; Tiwana and Konsynski 2010). Therefore, business intelligence and IT infrastructure flexibility are two enabling components that can help improve organizational agility. Drawing on systems theory, dynamic capabilities framework, and literature on organizational agility, business intelligence, and IT infrastructure flexibility, we hypothesize that BI use and IT infrastructure flexibility are two antecedents of organization’s agility. We developed a research model to examine the effects of BI use and IT infrastructure flexibility on organizational agility. The research model is based on theories in the IS and strategic management fields. It examines the relationships between business intelligence, IT infrastructure flexibility, and organizational agility.