IS integration and knowledge sharing in multi-unit firms: the winner's curse

Abstract

Knowledge sharing across business units (BUs) is paramount for enterprises that aim to exploit latent cross-BU synergies. This paper examines how information systems (ISs) integration and two forms of cross-BU knowledge complementarities (workflow interdependence and BU relatedness) affect an important dimension of a firm's absorptive capacity – cross-BU knowledge sharing. The analysis, performed on survey data from 75 enterprises, supports all of our hypotheses. First, we hypothesized that cross-BU workflow serves as a conduit for knowledge transfer as participants continually engage in spontaneous adaptations. Second, IS application integration and cross-BU relatedness should both directly contribute to knowledge sharing. Third, IS application integration should positively moderate the impacts of cross-BU relatedness. Finally, and most interestingly, we hypothesized a redistribution of the effects of IS integration by which it becomes a key contributor to knowledge sharing, but also causes a reduction in the impact of workflow interdependence. Thus, while the seamlessness of high IS application integration has obvious benefits, it paradoxically also reduces the occasions for cross-BU workflow adaptations, which is a key mechanism for knowledge transfer. That is the phenomenon we call the ‘winner's curse’.

Keywords:

• IS integration
• multi-unit firms
• knowledge sharing
• business unit interdependence
• workflow interdependence
• absorptive capacity

This paper is based on the first author's dissertation, which won the runner-up award in the ICIS 2003 Best Doctoral Dissertation Competition.

This paper is based on the first author's dissertation, which won the runner-up award in the ICIS 2003 Best Doctoral Dissertation Competition.

Acknowledgements

We would like to acknowledge generous and helpful suggestions from Huseyin Tanriverdi, Arun Rai, V. Sambamurthy, Ann Majchrzak, and Bernie Jaworski. We also thank the Institute for the Study of Business Markets at Penn State for access to survey respondents. We are grateful to three anonymous referees for their constructive comments. All errors are ours.

Additional information

Notes on contributors

Nilesh Saraf

About the authors

Nilesh Saraf is an Associate Professor of Business Administration at the Beedie School of Business, Simon Fraser University. He investigates firm-level diffusion of enterprise information technologies and their organizational impacts. His interest also lies in understanding strategic behaviour of IT product and service vendors, IT standards formation, and open source software development. His research has won the Emerald Management Reviews Citations of Excellence Awards for 2011, as well as the runner-up award for the best ACM-SIGMIS Doctoral Dissertation award in 2004. His research is being funded by multiple grants from the Social Sciences and Humanities Research Council of Canada. He is a quantitative empirical researcher and has published his work in MIS Quarterly and Information Systems Research. He received his Ph.D. from the Marshall School of Business, University of Southern California.

Chris Schlueter Langdon

Christoph Schlueter-Langdon was formerly an Assistant Professor of IS at the Marshall School of Business, University of Southern California in Los Angeles, and is currently a Consultant. His research is focused on IS capabilities and their implications for business strategy. He serves on the editorial boards of the Journal of Database Management and Information Systems and E-Business Management, and he is the founding Co-Chair of the Special Interest Group on ‘Agent-Based IS’ of the Association for Information Systems (http://www.agentbasedis.org).

Omar El Sawy

Omar El Sawy is a Professor of Information Systems at the Marshall School of Business, University of Southern California, and specializes in IT-enabled business strategy in turbulent environments and business models for digital platforms. He is the author of over 100 papers, serves on several editorial boards, and is a six-time winner of the Society for Information Management's Annual Paper Award. He served as Director of Research for Marshall's Institute for Communications Technology Management. Before joining University of Southern California, he worked as an Engineer at NCR Corporation, and as Manager of computer services at Stanford University. He served as an Advisor to the United Nations Development Programme in Egypt, and was a Fulbright Scholar in Finland. His research has appeared in a wide variety of journals including MIS Quarterly, MISQ Executive, Information Systems Research and CAIS.