Construct Operationalization

This study’s survey instrument was developed by identifying the appropriate measurement based on comprehensive literature review. Each construct is operationalized on a five-point Likert scale with some exception.

According to Miles & Snow (1978), Business strategy can be categorized into four typologies (reactor, defender, prospector, analyzer with/or without innovation).

The typology depends on firm’s exploitation and exploration (Burton et al., 1998). “refinement, efficiency, selection, and implication” is the area of exploitation, and “search, variation, risk taking, innovation” is the area of exploration (March 1991).

According to Peterson (2004), IT governance arrangement tends to go centralized if the firm’s business strategy is cost-focused.

To measure business strategy, this study adopted “exploitation”

as a measuring instrument for cost-focused business strategy.

This instrument is developed by Burton et al. (1998). Table 9 shows the measuring instrument items for “Exploitation”.

Table 9. Exploitation (Burton et al, 1998)

E1 What is the organization’s degree of process innovation

E2 What are its prices compared to the competition

E3 What is its quality in terms of its standardization and reliability

E4 What is the number of products that the organization have compared to its competitors

E5 What extent are the barriers to entry in its industry

“Business governance decentralization” measures organization’s locus of business governance. To measure it, this study adopted measuring instrument from Burton et al. (1998).

Table 10. Business governance decentralization (Burton et al., 1998)

BIZG1 To what extent are subunit decisions and actions directed by corporate headquarters or another sole authority (reverse coded)

BIZG2 To what degree does the top management leave control of operational decisions to manager or other in charge of those operations

BIZG3 How much discretion do subunit managers have in establishing their budget

BIZG4 How much discretion do subunit managers have in determining how his or her unit will be evaluated BIZG5 How much discretion do subunit managers have over

how work exceptions are to be handled

Environment instability should measure organizations’

environment instability caused by the competition and other environment contingency variable (for example, government

policy and oil prices).

To measure this, this study adopted measuring instrument from Porter (1979) that measures competition environment (see Table 11). The other instrument is adopted from Burton et al. (1998) for measures other contingency environment factors (See Table 12).

Table 11. Environment instability [Competition] (Porter, 1979) COMP1 How many other companies exist in same industry COMP2 How fast your industry growth speed

COMP3 To what extents are fixed cost, inventory cost high COMP4 To what extents your product differentiation is low

and easy to find another buyer

COMP5 To what extent are able to increase produce capacity COMP6 To what extents other competitors have different

strategy

COMP7 To what extents are possible to get better result when strategy is better

COMP8 To what extents are Exit barrier

Table 12. Environment instability [Contingency]

(Burton et. al, 1998)

ENV1 What is overall interdependency among factors which your organization’s gets impact

ENV2 What is overall Unpredictability among factors which your organization’s gets impact

To measure “Information Intensity”, this study adopted instruments from Burton et al. (1998). This instrument measures uniqueness of the information, data availability for decision makers, and usefulness of the data.

Table 13. information intensity (Burton et. al, 1998)

IA1 Are most of the organization’s work tasks unique (mark at low), or the task repeated in large volume (mark at high)?

IA2 Does execution of work tasks relay on having large amount of data available to the worker or decision maker responsible for the task

IA3 To what extent are there common types of data that can be captured and made useful for many transactions and tasks

“Business competency” covers organizational, business and management related competency (Cash et al., 2004). To measure this, this study adopted questionnaires from several different studies.

Table 14. Business competency

BIZCOM1 How well do the employees know about the company’s organizational structure? (Lee et al., 1995)

BIZCOM2 How well do the employees know about the

organizational strategy and culture? (Stokes Jr, 1991) BIZCOM3 How well do the employees know about the business

environment (Lee et al., 1995)

BIZCOM4 How well do the employees know about the ethics (business ethics) (Leitheiser, 1992)

BIZCOM5 How well do the employees know about the environmental constraints (Zmud, 1983)

BIZCOM6 How well do the employees know about the project management (Todd et al., 1995)

“IT Principle”, “IT Architecture”, “IT Infrastructure”, “Business application need”, “IT Investment” are all adopted from Weill et al (2004). Only IT decision area did not use 5 point Likert scale.

Three check box areas provided for each IT Decision area.

This checkbox are designed to check current decision maker (“C-Level executives”, “Corp. IT and/or BU IT”, “BU leaders or Core process owners”) of the IT decisions. The Checkboxes allowed multiple checking. The way of coding for this checkboxes is showed on Table 8.

Table 15. IT governance decision area checkboxes C-Level executives Corp. IT and/or BU

IT

BU leaders or Core process owners

“Learning and development” adopted from Hurley and Hult (1998). It represents organization’s learning-oriented culture. It also defined as “the degree to which learning and development are encouraged in the organization.” (Hurley and Hult, 1998).

Many researchers agreed that the organizational emphasis on this culture, it induces new ideas (Thompson, 1965, Marquis, 1969, Katz and Tushman, 1981, Damanpour, 1991, Hurley, 1995), increase capacity to absorb the new ideas (Dewar and Dutton, 1986, Damanpour, 1991), Promote creativity, opportunity monitoring and problem solving (McGinnis and Ackelsberg, 1983, King and Anderson, 1990, Senge, 2004).

Table 16. Learning and development (Hurley and Hult, 1998) EDUC1 Does your organization provides opportunities for

individual development other than formal training (e.g. job rotation)

EDUC2 Does your organization encourages manager to attend formal developmental activities such as traing, professional seminars, symposia, etc

EDUC3 There are people at your organization who provide guidance and counsel regarding one’s career

EDUC4 Career management is a shared responsibility of both employee and the manager

“Power sharing” is adopted from Hurley and Hult (1998). Power sharing is defined as the “degree of sharing of information, resources, and influence across levels and areas of the organization” (Hurley and Hult, 1998)

When power sharing is promoted, it also promotes information resource sharing (Thompson, 1965, Kanter, 1983, Van de Ven,

1986), and reduce some inhibitors of innovation which is related to politic, status, turf (Thompson, 1965).

However, the following questionnaire statement asks about power sharing inhibitors except the first question. Therefore POWR1 is reverse coded and the construct is renamed as

“Power no-sharing”

Table 17. Power no-sharing (Hurley and Hult, 1998)

POWR1 People are willing to share their power there is an atmosphere of working together (reverse coded) POWR2 We talk about teamwork and sharing, but people

quietly hold on to their power and authority

POWR3 Authority is highly centralized; only a handful at the top have it

“Support and collaboration” adopted from Hurley and Hult (1998).

It can be defined as “the degree to which people in the group actively support and help one another in their work”

Table 18. Support and collaboration (Hurley and Hult, 1998) SUP1 People throughout your organization are supportive

and helpful

SUP2 There is a willingness to accept responsibility for failure

SUP3 There is a willingness to collaborate across organizational units within your organization

“Participative decision-making scale” is adopted from Hurley and Hult (1998). It is defined as “degree of openness and involvement in decision making”. When Participative decision making scale increases, it promotes related personnel commitment and involvement towards innovation (Thompson, 1965, Damanpour, 1991), information flow and communication activity (Kanter, 1983).

Table 19. Participative decision-making Scale (Hurley and Hult, 1998)

PART1 Decision making is delegated to the lowest possible level of authority

PART2 Individuals involved in implementing decisions have a say in making the decisions

PART3 Decisions are made on the basis of research, data, and technical criteria, as opposed to political concern PART4 Decisions are based on open discussion and debate

of facts

PART5 Once a decision is made, management communicates the results and rationale to employees

The measuring instruments of “Absorptive capacity” is adopted from Lane et al. (2001). This study adopted two absorptive capability area measures from the study. The target measure contexts are organization’s “ability to understand foreign knowledge” and organization’s “ability to assimilate foreign parent’s knowledge”.

“Ability to understand foreign knowledge” is measured in the context of trust and culture compatibility. “Ability to assimilate foreign parent’s knowledge” is measured in the context of firm’s

“flexibility, creative and reward performance” (Lane et al., 2001)

Table 20. Absorptive capacity (Lane et al., 2001) ABS1 The degree of having trust with foreign partners ABS2 The degree of cultural difference with foreign

partners

ABS3 The degree of cultural misunderstandings with foreign partners

ABS4 The degree of organization’s flexibility

ABS5 The degree of organization’s adapting to change ABS6 The degree of organization’s creativeness ABS7 The degree of reward program performance