Information Technology (IT) Appropriateness: The Contingency Theory of “Fit” and it Implementation in Small and Medium Enterprises

Abstract

There is little doubt that advanced information and communication technologies (IT) are changing the way businesses operate and conduct commerce. As the advent of a more secure Internet and new transmission standards makes it easier and cheaper for businesses to conduct inter-organizational commerce, it is incumbent upon SME managers to assess whether implementing new technologies such as Electronic Data Interchange (EDI) over the Internet, XML or web-based e-commerce is the “right thing to do” for their organizations. The key question implicit in this decision is addressed in this paper: “Under what conditions should businesses consider themselves likely candidates for (new) IT implementation?” Using the structural contingency theory of “fit” as a foundation for this research, this paper reports the development of the notion of “IT appropriateness” and its determinants. This is followed by an analysis of the relationship between IT appropriateness factors and accrued benefits from IT implementation. Data collected from a survey of small businesses revealed that there are four critical factors that must be assessed by businesses to determine if they are likely candidates for IT (for this study, the particular technology in question was EDI) implementation. These factors are the internal/external business & technological environment, organizational readiness and trading partner support, financial impact and workflow productivity. The resulting factors are conceptually consistent with the notions established in the systems perspective to the structural contingency theory of fit. The results of this exploratory study demonstrate that IT appropriateness is a robust and valid construct and is a good mechanism for understanding the factors of organization-technology fit that impact organizational performance in terms.