Complementarity and contextuality in the adoption of information systems

Abstract

To understand the impact of Information Systems (ISs) on actual performance, we employed 616 Korean firms to estimate the complementarities among such systems and to uncover the contextual factors influencing them. In particular, we introduced various contextual variables and analysed their effects on the complementarities of firms. Our results indicate that Information Technology (IT) stock serves as an important contextual factor for enhancing the complementarity between the adoption of Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM). Furthermore, although IT stock has a strong positive direct and indirect IS-mediated impact on the performance of firms, other IT-related variables such as IT organization and the use of firewalls generally have a positive influence only when they are combined with the adoption of ISs.

Keywords:

• information systems
• performance of firms
• complementarity
• contextuality

JEL Classification:

• C35
• D21
• M21
• O33

Notes

¹Because only the selectivity correction variable for CRM (SC2) is significant, we estimate the model with a selectivity correction term only for CRM (SC1 = SC3 = 0). In this model, the CRM selectivity term (SC2) continues to be significant (at the 5% significance level), and the overall estimation results are almost the same as the general DMF model. From this, the main interpretation and conclusion will be made on the basis of the results of the DMF model.