Role of Information Technology in
Managing Organizational Change and Organizational Interdependence

2. Environmental Change, IT and Organizational Structure

Researchers (Bakos and Treacy, 1986; Cash and Konsynski, 1985; Kling, 1980; Kriebel and Moore, 1982) have studied the impact of information technology at different levels of the organization. Huber (1981, 1988), using organization theory, formulated hypotheses for empirical testing which reflect the impacts of IT on the decision behavior and design of organizations. Bakos (1987) notes that most of the early studies considered IT as the dependent variable for analyzing its adoption by organizations. As reported by him, the results of several empirical studies (Attwell & Rule, 1984; Carter, 1984; Robey, 1981) that attempted to analyze IT's impact on organizations have proved inconclusive.

The increasing global interdependencies and the accelerating pace of change demand more flexible and adaptive organizations (Malone and Crowston, 1991). Malone and Smith (1984) have defined organizational flexibility in terms of "vulnerability" and "adaptability." Effective implementation of IT would decrease vulnerability by reducing the cost of expected failures and enhance adaptability by reducing the cost of adjustment. Rockart and Short (1989) attribute the everincreasing need for managing interdependence to competitive pressures that included globalization, time-based competition, increased market risk, and a greater emphasis on customer service and cost reduction. Bennis (1974: 22) notes that "the organization's response to the environment will continue to be the crucial determinant for its effectiveness." Since postindustrial organizations will be faced with increasing environmental complexity and turbulence, organizations' needs to process information and make decisions will be substantially increased (Huber, 1984). The capabilities and flexibilities of computer-communication systems make them increasingly relevant to organizations by being able to respond to any specific information or communication requirement (Holt, 1992: 40).

IT as a Solution to Environmental Change: The cost of IT has plunged since the 1960s resulting in enormous investments in IT applications that have stimulated increasingly complex organizational change (Benjamin and Levinson, 1993). Benjamin and Blunt (1992) anticipate that technology cost-performance improvements will sustain this trend over the next decade. Presently, IT amounts to nearly one-half of US firms' annual capital expenditures and increasingly affects how firms organize, do business, and compete (Keen, 1991).

IT may be considered as comprising of five basic components - computers, communications technology, work stations, robotics, and computer chips (Morton, 1988). In this article, "IT" is considered to be synonymous with the definition of "advanced information technologies" provided by Huber (1990):

"(a) devices that transmit, manipulate, analyze, or exploit information;
(b) in which a digital computer processes information integral to the user's communication or decision task; and
(c) that have made their appearance since 1970 or exist in a form that aids in communication or decision tasks to a significantly greater degree than did pre-1971 forms."

IT is becoming all pervasive and is having impact on all industries -- in service as well as in manufacturing. It is affecting workers at all levels of organizations (Daft, 1992: 112-150, 283-314) -- from the executives to assembly hands and clerks. IT is increasingly becoming an integral component of all types of technologies -- craft, engineering, routine, and nonroutine (Daft, 1992). Drucker (1985) has very rightly defined organization as "a structure in which information serves as the axis and as the central structural support."

IT and New Organizational Structures of Interdependence: Benjamin and Levinson (1993) emphasized that for IT-based change to be effective, technology, business processes, and organization need to be adapted to each other. Comparing the present information revolution with the Industrial Revolution, Malone and Rockart (1993) indicated that the latest changes in IT would lead to the evolution of new technology-intensive organizational structures. They project that the advances in IT would result in dramatic decline in the costs of "coordination" which would lead to new, coordination-intensive business structures. Rockart and Short (1989) suggest that IT would enable the firms to respond to the "new and pressing competitive forces" by providing for "effective management of interdependence." Interorganizational relations, that are based upon trust and conditions of unstructured authority (Litwak and Hylton, 1962) would be created using newer types of coordination mechanisms. Malone and Crowston (1991) believe that in light of these new possibilities there is need to reassess our current theories of organizations, of markets, and of management.

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