Bob Travica
Indiana University
Library 011
Bloomington, IN 47405
812/855-3259
btravica@indiana.edu
ABSTRACT
Can information-communication technology enable new organizational designs, such as the
networked organization and the adhocracy? An exploratory study into the accounting industry
was undertaken in order to improve our understanding of this problem. On the basis of the
literature of new designs a non-traditional organization model was developed in which
information-communication technology was juxtaposed to a number of structural and cultural
dimensions. The model was tested on a set of offices in the accounting industry and corroborated
for the most part.
KEYWORDS
Information technology, communication technology, CSCW, collaboration, organizational design,
organic organization, technology impacts
1. Introduction
The problem of the relationship between information-communication technology and new
organizational designs has attracted a significant attention of researchers in recent years.
Information-communication technology (ICT), such as electronic mail (e-mail), electronic bulletin
boards, and groupware, have been studied from the point of their impacts on various
organizational dimensions and new organizational designs. A host of new organizational designs
that in various degrees put the stress on ICT have been proposed. Examples include the
adhocracy [30], the information/knowledge-based [16], and shamrock [19] and the network
organization [44]. A common denominator of the models is a criticism of the traditional
hierarchical or command-and-control organization's inefficiency and ineffectiveness in this time of
tremendous changes in organizational environments. The denial of the traditional organization is
complemented by conceptualizations of alternatives to its characteristics, such as less of hierarchy,
centralization and formalization, and more of teamwork and cooperation/collaboration.
Although roots of the modern thinking about the non-traditional organization date decades back [9] our understanding of why and how this organization comes to be is still partial. Some forces that take part in its creation are better understood than others. Specifically, a consensus exists regarding the impacts of organizational environment, while the role of organization strategy is subject to controversy; for example, Mintzberg and McHugh [31] demonstrated that strategy may decisively shape a new organization, whereas Baker's [4] study showed only limited impacts of strategy. However, the least understood remains the role of ICT in new organizational designs. Although normative research is not lacking [e.g., 8, 29, 32, 33, 46] empirical studies are still in short supply [e.g., 19, 35, 37, 42]. An exploratory study into the relationship between ICT and a new organizational design was undertaken in order to improve our understanding of the link between ICT and new designs. A design labelled with the 'non-traditional organization' was developed and tested on a sample of twelve local offices from five biggest accounting firms.
2. Previous Research
ICT and new designs of organizing have been investigated in various disciplines, separately more
often than in relation to each other. The accounting industry has not been viewed as a potential
domain of new designs. The study linked ICT, new designs and accounting industry on the basis
of literature briefly discussed below.
2.1 Information-Communication Technology
ICT was conceptualized by a number of researchers as electronic machines, devices, and their
applications that have both computing and communication capabilities. For example, Child [12]
defined ICT as technologies and applications which combine the data-processing and storage
powers of computers with the distance-transmission capabilities of telecommunications. Similarly,
Huber [21] defined 'advanced IT' as devices (a) that transmit, manipulate, analyze, or exploit
information, and (b) in which a digital computer processes information integral to the user's
communication or decision task. Exemplars of ICT are electronic mail (e-mail), conferencing
technologies, electronic bulletin boards, file transfer, collaboration technology (e.g., group
support systems), shared electronic databases, electronic data interchange, the fax, voice mail and
the telephone. The last three, although often being classified exclusively as communication
technologies, are enlisted here because they (1) are pervasive, and (2)
are increasingly acquiring
computing capabilities (e.g., v-mail systems rest on the computer, the fax can be
computer-mounted, while the telephone is getting part of integrated computer-telephone
systems).
The relationship between ICT and organization structure dimensions was investigated by Whisler [60] who found that a reduction of hierarchy layers was associated with the use of computers in the insurance industry. Similarly, Pool [39] argued that the telephone led to aberrations from hierarchical patterns in the old steel industry because it made possible for workmen to access executives. Next, smaller formalization was found to be related to the use of computer systems in manufacturing firms [38] and in various industries [63]. Centralization was also found to relate to ICT, although in a diversified fashion. The link between ICT and decentralization at the operational level was discovered in railroad management [14] and in city departments of human resources [23]. Overall decentralization was related to ICT in manufacturing [38], small newspaper organizations [10] and in a hospital [7]. However, it was also discovered that ICT related to increased centralization at the executive level in the insurance industry Whisler [6], large newspaper organizations [10], and railroad management [14]. Finally, ICT-related spatial dispersion was discovered in organizations of scientists [20, 24] and a software vendor [35].
Organizational culture refers to patterns of shared values and behaviors of organization members. Of interest for this review are those values and behaviors that have been researched in relation to ICT. Several studies in laboratory and organizational contexts found that e-mail and other ICT, due to the lack of social cues they imposed, could lead to relatively uninhibited behavior, social equalization, decision shifts and creation of new ideas [52, 49]. The relatively uninhibited behavior was sometimes interpreted as an undesirable aberration from social norms [25], while at other times it was deemed stimulating to organizational innovation [52, 53]. Inversely, the occurrence of uninhibited behavior was attributed to personal and group characteristics rather than to ICT itself [51]. Other findings were that ICT could help people to avoid conformism [50], express feelings more honestly [see 61] and create a community of spatially dispersed organization members when social communication bursts out in a bureaucratic organization [17] or when scientists utilize ICT on a regular basis [24]. In addition, significant cooperation in knowledge sharing was discovered in ICT-rich organizations [15,35]. Moreover, changes in accountability patterns were found among ICT users [18]. Finally, many studies found that communication via ICT is likely to cross spatial and department boundaries [20, 24, 35, 48, 53].
2.2 New Organizational Designs
Burns and Stalker's [9] 'organic organization' is a historical blueprint for new organizational
designs. Authors derived the organic design from their empirical studies of successful electronics
firms. The design is characterized by flexible tasks, a network-like pattern of control, authority
and communication, communicating of information and advice rather than instructions and
decisions, and commitment to a 'technological ethos' rather than loyalty and obedience.
Mintzberg's [30] adhocracy is another influential design. It is characterized by low formalization,
flatter hierarchy, vague roles, the reliance on team work and employee cooperation, and intensive
communication. Evidence on the adhocracy accrued from several studies, which also expanded
the model [3, 31, 35]. For example, Olson & Bly [35] proposed that the adhocracy required a
strong ICT support. The third design of interest is the networked organization. Rockart and Short
[44] propose the networked organization design at the nexus of which are informal human
networks enabled by ICT networks. These socio-technical networks can foster redesigning the
division of labor, and the development of a new culture characterized by sharing of goals,
expertise, decision making, recognition and reward, responsibility, accountability and trust (one of
critical dimensions). Morgan [32, 33] proposes the loosely-coupled organic network, which rests
on a founding/driving team and subcontracting. Baker [4] defines the networked organization as
that which is highly integrated across vertical, horizontal and geographical boundaries, and finds
that a small real estate firm he has studied fits his concept to a moderate extent.
2.3 Accounting Industry
In the search of new organizational designs one can follow leads from literature. For example,
rational choice/strategy of making a different organization [4, 31], turbulent environments [9],
industries in flux such as software engineering [19], organizations that rest on intensive social
networking [40, 41], and professional and high technology organization [30]. Another approach is
to draw a preliminary model of a new design, and then contrast it against organizations across
industries in order to identify a study population. The study reported here chose the latter
approach because one of its goals was to synthesize unsystematized literature of new designs into
a new model of the non-traditional organization.
A dozen of small organizations from manufacturing, insurance, engineering, data services, and accounting were investigated in terms of their hierarchy, departmentation, span of control, formalization, team work, management promotion policies, pace of organizational change, and the extent of ICT usage, its perceived importance, kinds of ICT uses and perceived effects of the uses. The extent of team work and ICT profile (inventory, perceived importance and effects, and kinds of uses)--both important in the literature of new designs--showed (unexpectedly!) that the accounting industry was a candidate for the full-fledged study rather than other industries.
The accounting industry houses three major practices - account auditing, tax preparation and planning, and consulting. The first one is the oldest and was responsible for starting the modern accounting industry in the U.S. in the l9th century. The tax business was a later entrant, which made accountants compete with law firms. The consulting practice started after WWII and have progressed from 'management advisory services' towards information systems consulting. In the provision of consulting services accountants compete with several industries. [54, 55] Interestingly, the industry has developed properties which mirror ideas from new organizational designs, such as, lower hierarchy and centralization, team work, client orientation, and advanced applications of information practices and technology. A tension between the professional and bureaucratic organization seems to constitute much of the industry's organizational dynamics[2]. One line of divison runs through practices, with consulting being more organically organized than auditing [58]. Stevens [55] argued that an increasing emphasis on consulting not only as practice but also as an orientation was underway. Also, Quinn [42] argued that one of biggest accounting firms resembled a 'spider web' organization with its flat structure, independent units, firm-wide communication and databases systems for sharing information and knowledge, teamwork, and the sharing of responsibilities.
It should be noted that the accounting industry provides a favorable context in which organization size can be controlled, while variation of the ICT usage across local offices is secured. Specifically, the basic organizing form in the industry, a local office, may not vary size-wise while it can have a considerable discretion in planning and conducting operations, deployment of ICT, marketing, and incentive systems and other management systems. In effect, a local office can be treated as a semi-independent entity that shares the size attribute with offices from other firms, while differing on the ICT usage from offices of the same firm.
3. Methodology
The study was to test a model of the non-traditional organization depicted in Figure 1. ICT was
conceptualized as the amount of usage of the telephone, the fax, voice mail, e-mail, shared
electronic databases, file transfer and electronic bulletin boards. Two measures were used for
assessing the ICT usage: (1) ITTRA - the number of transactions (any act of sending or receiving
data via the ICT mentioned) in a typical day; and (2) ITFRE - the frequency of using the ICT
mentioned. (For complete variable and measure definitions and sources please see Appendix.)
Non-traditional dimensions were based on the literature discussed above. Formalization,
centralization and hierarchy were expected to be lower and/or relate negatively to ICT (the same
intentions could have expressed by using a 'de-' prefix--decentralization, etc.).
In accordance with the study problem, the main relationship in the model is that between ICT and other dimensions postulated as dependent ones. It is captured in the following research question: Does ICT enable the non-traditional organization; if yes, to what extent? The enabling concept refers to Orlikowski's [36] concept whose implication is that ICT is just one of forces capable of creating the non-traditional organization. As the model shows, multiple forces can be at work that can influence both dependent dimensions and each other.
Data were collected via surveying professionals (independent and dependent variables) and interviewing partners (control variables) in 12 local offices from big accounting firms on the East Coast and in the Mid West. In order to obtain information for answering the research question, individual responses were aggregated onto the office level by the means of two new measures. One was the index of information-communication technology (ICT Index) that was computed as:
where j signifies a respondent, i signifies a local office, and ni is the number of respondents in a local office. The other aggregate measure was the non-traditional organization index (NTO Index) that was computed as:
where k signifies a dependent measure and Y is a dependent measure. After the indexes were computed, correlation analysis (zero-order) was run to obtain the product-moment correlation coefficient for the indexes.
4. Findings
The main finding pertaining to the research question is that the relationship between the ICT
Index and the NTO Index is r=0.62 p<0.03, the 38% of variance explained. (The Spearman rho
for indexes is 0.65, p<0.02.) Put another way: The higher the IT usage in an office, the more
developed the office's non-traditional characteristics. Table 1 depicts the distribution and
descriptive statistics of the indexes.
Table 1 The Distribution and Descriptive Statistics
Office | NTO | ICT | Office | NTO | ICT |
---|---|---|---|---|---|
Index | Index | Index | Index | ||
Office A | 59.89 | 59.44 | Office G | 59.82 | 58.49 |
Office B | 60.91 | 58.74 | Office H | 60.21 | 58.78 |
Office C | 60.20 | 58.97 | Office I | 59.02 | 58.72 |
Office D | 60.16 | 58.04 | Office J | 61.49 | 59.33 |
Office E | 58.93 | 58.70 | Office K | 61.26 | 60.24 |
Office F | 58.54 | 57.95 | Office L | 59.90 | 58.67 |
N | Mean | S.D. | Max | Min | Range | |
---|---|---|---|---|---|---|
NTO Index | 12 | 58.84 | 0.62 | 60.24 | 57.95 | 2.29 |
ICT Index | 12 | 60.02 | 0.91 | 61.49 | 58.54 | 2.95 |
Table 2 depicts descriptive statistics for dependent varibales across 12 offices (all estimates based on a 0-4 point scale, 0=minimum, 4=maximum), and provide a picture of a 'typical office' studied.
Table 2 'Typical Office' Studied
_________________________________________________
Mean | S.D | Hierarchy | 130 | 2.04 | 0.63 | Formalization | 131 | 2.81 | 0.62 | Centralization | 130 | 2.09 | 0.62 | Latent Spatial Dispersion | 131 | 2.46 | 0.72 | Knowledge Giving | 131 | 3.41 | 0.49 | Knowledge Getting | 131 | 2.66 | 0.72 | Accountability Sharing | 123 | 3.32 | 0.56 | Trust Sharing | 131 | 2.30 | 0.21 | Outbound Communication | 130 | 1.80 | 0.96 | Role Ambiguity | 131 | 1.16 | 0.60 | |
---|
Figure 2 depicts correlations of all variables. It suggest that the variable of ICT usage correlates with formalization, centralization (both correlations are inverse), outbound communication, and the sharing of trust. In addition, important variables appear to be outbound communication and accountability sharing, because they have multiple links to other variables. Most of the relationships were anticipated; however, some expected ones were not found.
5. Discussion
The finding on the positive and strong correlation between two index measures suggests that ICT
enables the non-traditional organization to a significant extent. Other forces that can make
impact--size, environment and strategy--did not vary significantly across offices studied. The ICT
enabling instantiates in its relationships with two structural and two cultural dimensions.
Specifically, ICT relates negatively to formalization and centralization, which confirms findings
from previous research [6, 38 and 10, 14, 23, 38, respectively]. The formalization finding may be
understood so that heavier ICT users find themselves more in novel tasks/situations that are not
prescribed by rules and regulations. The centralization finding may imply that heavier ICT users
feel like they have more discretion in their work because superiors have smaller say or influence in
professionals' work.
The study, however, did not confirm the negative relating of ICT and hierarchy that was reported by [60] and hypothesized by several authors [16, 21, 39, 62]. One way of explaining the finding is by putting the previous research in the historical perspective. If so, then the hypotheses cited can be seen as still new. On the hand, Whisler's study reflected the time of 1960's when the national cultural environment challenged hierarchy while computers were simultaneously taking over in business organizations. Computer thus could support/magnify the dehierarhization trend, and so conditions for ICT enabling were in place. Today, however, this impact of environment may be missing today. Another explanation for the hierarchy finding can be sought in peculiarities of the industry. Specifically, the average hierarchy in the sample studied is four levels management, which is in accord with previous accounting research [2]. Also, the hierarchy found is equivalent to hierarchy in some small organizations [38] or is smaller than hierarchy usually reported in structure research. However, the range of hierarchy scores is six (minimum=1, maximum=7), and they vary randomly from one respondent to another. This indetermination of perceived hierarchy might reflect the actual condition of the accounting professional that he is affected more by 'enacting hierarchy', the one that works upon him, than by the official one which practically is invariant.
The relationship between ICT and outbound communication, along with its implication that the former supports the latter, confirms findings from previous studies, although they investigated different populations [cf. 20, 24, 35]. The link between ICT and trust is a new finding and can be understood so that the ICT mediation in professionals' work does not diminish trust, which is important for collaborative culture to sustain.
Outbound communication has multiple correlates, thus appearing as a hub in the variable set. Interpreting the correlates, it seems that in more centralized contexts the room for team members communication with outsiders shrinks because they can/need to initiate less of interacting on their own. In addition, outbound communication may open up a team to its environment. Since a team of auditors, tax specialists or consultants is typically focused on its project, main communication develops among team members than with outsiders. External communicating bears costs that make it acceptable only when it satisfies a precious, work-related need. In effect, a team acts as a self-sufficient and a self-contained unit. This may lead to the team's winding up as a closed system, which could endanger collaborative culture. Trans-boundary communication in this context can serve as the vehicle for preventing these undesirable outcomes. It balances forces that may act in opposite directions--the centripetal force (team-based accountability) and the centrifugal force (getting knowledge from outsiders).
Findings also indicate that accountability sharing with its multiple correlates is another important variable. It was found that the burden of accountability was collaboratively carried by team members in situations of defining the scope of work, controlling team budget and organizing teamwork. As one respondent put it conspicuously: "Each member duties were delegated by the manager. However, after discussing what needed to be done, the team reassigned duties. The manager asked why. We explained and he agreed." The statement also tells something about exercising of control horizontally and upward.
Finally, the discovered relationships between variables of knowledge giving, knowledge getting and accountability sharing corroborate propositions from literature [see 44], and add information to the portrait of the typical professional studied: He is a dynamic professional that uses ICT more intensively, has more of discretion in his work, actively exchanges knowledge with colleagues, collaborates with team mates in carrying the burden of accountability, and is more trustful.
In overall, the study's findings suggest that the model of the non-traditional organization works at the sample studied to a satisfactory extent. However, a denser pattern of ICT and other correlates that the one found could be expected. The study employed a number of new measures that need revision; also, the previously tested measures of ICT usage failed meet expectations (the r between them is only 0.47, p<.0001). In addition, larger and more heterogenous samples need to be investigated in order to validate further the model.
APPENDIX
Variables and Measures
Variables making the research model along with appropriate measures are
defined below.
ICT Usage: The extent to which ICT is used [20]. Measures: ICT Usage by frequency
(ICTFRE): The frequency of usage within time periods [13].
ICT Usage by the transactions typically (ICTTRA): The number of transactions in a typical day
[1].
Formalization: The extent to which rules, procedures, instructions and communcations
are written [34]. Measure: same source.
Centralization: The extent to which control is concentrated [56]. Measure: control graph
modified [28].
Hierarchy: The number of management levels [59]. Measure: new two-item
question.
Knowldege Getting: The extent to which a professional gets knowledge from
colleagues [44]. Measure: new two-item scale.
Knowledge Giving: The extent to which a professional makes his
knowledge available to colleagues [44]. Measure: new three-item scale.
Trust Sharing: The extent of a team member's expectancy that statements of his
co-workers can be relied upon [45]. Measure: MacDonald and colleagues' [27 ] modification of
Rotter's [45] scale; slightly modified.
Accountability Sharing: The extent of a team member's condition of being ready to
justify his team's decisions to superiors [57]. Measure: new four-tem scale.
Outbound Communication: The extent to which a team member communicates across
his team's boundaries [20, 24]. Measure: new three-item scale.
Role Ambiguity: The extent to which necessary information is
lacking to an organizational
position [22]. Measure: The intensity of one's perception that necessary information is available
[43].
Size: The scale of an organization's operations. Measure: new one item question.
Environment: The extent to which forces out of organizational boundries affect an
organization [26]. Measure: a partner's assessment of local the office's clients and competitors;
new multi-item questions.
Strategy: The extent to which an organization's plans of
long-term goals affect the
organization [11]. Measure: a partner's descriptions of the local
office's business and ICT plans;
new multi-item closed- and open-ended questions.
Figure 2 Correlations between All Variables
________________________________________________
________________________________________________
Note: #=significant at the .05 or better level; *=significant
at a better than .1 level. correlations
are those with p values equal or smaller than .10. Labels: IT=IT Usage, FOR=Formalization,
LAD=Latent Spatial Dispersion, KGI=Knowledge Giving, ROL=Role Ambiguity,
ACC=Accountability Sharing, HIE=Hierarchy, CEN=Centralization, TCO=Trans-Boundary
Communication, ICO=Information Gathering Collaboration, KGE=Knowledge Getting,
TRU=Trust Sharing, and EXP=Expert Power.
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