Complementarities between IT and Organizational Structure: The Role of Corporate Exploration and Exploitation

Ferdinand Mahr and Tobias Kretschmer

Discussion Papers in Business Administration from University of Munich, Munich School of Management

Abstract: The decentralization of organizational decision authority has been shown to be complementary to Information Technology (IT) in prior research. We draw from the information processing view of organizations, the IT and de/centralization debate, and organizational learning theory to argue that IT payoffs can also be improved by greater centralization of decision authority, contingent on a firm’s corporate learning type. We argue that an exploratory learning type is best pursued with a decentralized organization design, while an exploitative learning type requires a centralized organization design. We hypothesize that under corporate exploration, IT payoffs are enhanced through greater decentralization, whereas under corporate exploitation, returns to IT are improved by greater centralization. Our study uses a novel multi‐source panel on the IT capital, the degree of de/centralization, and the performance of almost 260 German manufacturing firms. We estimate production functions to assess the contribution of combning IT with de/centralization to firmlevel productivity under different corporate learning types. Our results strongly support our hypotheses and hold up to a variety of robustness tests.

Keywords: information technology; decentralization and centralization; exploration and exploitation; firm performance; complementarities; Informationstechnologie; Dezentralisierung und Zentralisierung; Exploration und Exploitation; Unternehmenserfolg; Komplementaritäten (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://epub.ub.uni-muenchen.de/11507/1/Mahr_Kretschmer_2010_LMU.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lmu:msmdpa:11507

Access Statistics for this paper

More papers in Discussion Papers in Business Administration from University of Munich, Munich School of Management Ludwigstr. 28,80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Mareike Seifried ( this e-mail address is bad, please contact ).