The Multidimensional Business Value of Information Systems Interoperability

The Multidimensional Business Value of Information Systems Interoperability

Euripidis Loukis (University of Aegean, Greece), Yannis Charalabidis (University of Aegean, Greece) and Vasiliki Diamantopoulou (University of Aegean, Greece)
DOI: 10.4018/978-1-4666-5142-5.ch004
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Abstract

The creation of complete scientific foundations in the IS interoperability domain necessitates not only the development of mature and widely applicable interoperability architectures, methods, and standards, but also the systematic investigation of the business value they generate. This chapter initially analyses the theoretical foundations of the multi-dimensional business value of IS interoperability and then reviews the quite limited empirical literature on it. Next, it presents an empirical study of the business value generated by the adoption of three main types of IS interoperability standards: industry-specific, proprietary, and XML-horizontal ones. It is based on a large dataset from 14065 European firms (from 25 countries and 10 sectors) collected through the e-Business Watch Survey of the European Commission. It is concluded that all three types of IS interoperability standards increase considerably the positive impact of firm’s ICT infrastructure on two important performance dimensions: business processes performance and innovation. However, the effects of these three types of standards differ significantly: the adoption of industry-specific IS interoperability standards has the highest positive impacts, while proprietary and XML-horizontal ones have similar lower impacts. Furthermore, it is concluded that the industry-specific and the proprietary interoperability standards also have positive impacts even at the level of firm’s financial performance.
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Introduction

The creation of complete scientific foundations in the information systems (IS) interoperability domain necessitates not only the development of mature and widely applicable interoperability architectures, methods and standards, but also the systematic investigation of the business value they generate (Legner & Lebreton, 2007; Lampathaki et al., 2012; Jardim-Goncalves et al., 2012). Since big investments are made for the development of various interoperability technologies, and then for their implementation at firm level, it is necessary to study the resulting business benefits and value. This is going to be quite useful for providing guidance to the technological IS interoperability research, in order to focus on the most valuable directions, and also to the individual firms for making more informed decisions concerning their IS interoperability related investments, taking into account not only technical, but also business value factors as well. Furthermore, it will assist firms in maximizing the value they derive from these investments.

IS interoperability, defined by IEEE as the ‘ability of two or more systems or components to exchange information and to use the information that has been exchanged’ (IEEE, 1990), has been regarded for long time as highly beneficial. In this direction there has been theoretical literature analyzing the business value of IS interoperability, however there is limited empirical literature on it, as explained in more detail later in the following section. Only a very small number of empirical studies have been conducted concerning the business value of IS interoperability, and all of them are based on small datasets. Therefore more empirical research is required concerning all the dimensions of the business value that IS interoperability generates, in order to assess their importance and magnitude in ‘real life’ and also identify ways of increasing them.

This chapter initially analyses the theoretical foundations of the multi-dimensional business value of IS interoperability, based on a review of relevant theoretical literature, and also of literature in the area of business networks, and then reviews the limited empirical literature in this area. Next it presents an empirical study of the effects of adopting three different types of IS interoperability standards on:

  • 1.

    The impact of firm’s information and communication technologies (ICT) infrastructure on two important performance dimensions: business processes performance and innovation, and

  • 2.

    On firm’s financial performance.

It is based on a large dataset collected from 14065 European firms (from 25 countries and 10 sectors) through the e-Business Watch Survey of the European Commission. In particular, this empirical study is focusing on three main types of IS interoperability standards (Nurmilaakso, 2008a, 2008b; Lampathaki et al., 2009):

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