Effects of Institutional Pressures on Information Technology Investments: An Empirical Investigation

Adoption of Cloud Computing by South African Firms

“…Specifically, by confirming hypothesis 1, we show that organisations are modeling their response to cloud computing on other organisations they perceived to be legitimate and successful [18,19]. If there are enough similar organisations that behave in a certain manner then functioning in that manner becomes important to confer legitimacy and avoid being identified as less innovative [20].…”

“…Institutional theory thus moves beyond the simple economic or rationale perspective on organisational behaviours and instead accounts for the influence of the social context of the organisation [17]. The motivation to conform is driven by the need to acquire legitimacy, without which organisations may struggle to secure status, resources and other forms of support [18,19]. Dimaggioand and Powell [18] propose three pressures through which conformity occurs: mimetic, coercive and normative.…”

“…When technologies are poorly understood or when there is uncertainty regarding returns from an initiative, organisations will model their response to these technologies on other organisations they perceived to be legitimate and successful [18,19]. If there are enough similar organisations that function and behave in a certain manner to the extent that functioning in that manner becomes a legitimate way to function, then others will likely follow so as to avoid being identified as being less innovative or unresponsive [20].…”

Enterprise Architects Should Follow the Money

“…These are factors that come from outside the organization and are used to steer and influence decisions. Ravichandran et al, in one of the primary studies, conclude that IT investment decision-making is a complex budgeting process influenced by, amongst others, external factors like what suppliers and customers do as well as institutional shareholders and competitors [14]. In another study Ravichandran et al indicate that industry clockspeed and industry information intensity are considered two environmental factors that drive the firm's IT investment strategy [15].…”

“…Shim et al state that the IT decision-maker's risk propensity was identified to have significant direct and indirect effects on IT platform migration decisions [27]. Ravichandran et al indicate that also gut feel and intuition play a role when making IT decisions [14]. According to Preston et al leadership skills are important especially when making strategic IT decisions [25].…”