Growth Crisis Mitigation through ICT

Jacob, Stephan

Growth Crisis Mitigation through ICT

A cross-sectoral trend analysis of small firms conducted in the eastern part of Germany

von Stephan Jacob (Autor:in)

BWL - Unternehmensforschung, Operations Research

Zusammenfassung

Inhaltsangabe:Abstract:
A small set of companies were examined in detail to examine whether or not evidence could be found that ICT mitigates company growth inhibiting factors. The set of growth inhibiting factors that were examined were first classified and structured within the Threshold to Growth Model (TGM) by the Rationalisierungs Kurratorium der Deutschen Wirtschaft (RKW). This model and its implications have been used throughout this research to base the analysis on a well-researched basis.
The complexity of the research subject has necessitated the discussion of the underlying theories in great detail. These discussions nonetheless were far too extensive to be included in this dissertation but are presented to the interested reader within the appendices of the research study. The author will reference appropriate sections when necessary and only present the essence of the theories and models involved within the text itself.
The empirical analysis of the study showed a significant correlation between the application of ICT and ability of companies to identify and react to threats to their continuous growths. The analysis also uncovered that in many aspects of company management ICT is not yet sufficiently implemented. It is also striking that in the areas where ICT is not sufficiently implemented the threats to growth are more severe. The analysis of the secondary resources has shown that the main benefit of ITC to businesses is information.
Information and Communication Technology (ICT) has become an integral part of our society. Many, if not all aspects of our daily lives have been affected. Whether one looks at business or leisure activities - everywhere ICT plays a role to a larger or smaller extent. No other aspect of our lives however has become so dependent on ICT as the business world. There are examples ranging from cash flow forecasting systems that integrate not only planning processes (as e.g. headcounts) but also operative tasks like information interchange between different plants and headquarters around the globe. As the use of ICT is required for multiple daily operations, companies could not operate without it nowadays. Even if a production process does not necessarily require ICT, most companies will still use ICT to accomplish their administrative tasks and make data available. If businesses depend on fast information exchange (like investment banks), it would not be possible to distribute all the information needed […]

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Inhaltsverzeichnis

ID 9567

Jacob, Stephan: Growth Crisis Mitigation through ICT -

A cross-sectoral trend analysis of small firms conducted in the eastern part of Germany

Druck Diplomica GmbH, Hamburg, 2006

Zugl.: Unitec Auckland New Zealand, MA-Thesis / Master, 2005

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UNITEC

INSTITUTE OF TECHNOLOGY

ABSTRACT

Growth crisis mitigation through ICT: A cross-sectorial trend analysis of

small firms conducted in the eastern part of Germany.

by Stephan Jacob

A small set of companies were examined in detail to examine whether or not evidence

could be found that ICT mitigates company growth inhibiting factors. The set of growth

inhibiting factors that were examined were first classified and structured within the

Threshold to Growth Model (TGM) by the "Rationalisierungs Kurratorium der

Deutschen Wirtschaft" (RKW). This model and its implications have been used

throughout this research to base the analysis on a well-researched basis.

The complexity of the research subject has necessitated the discussion of the underlying

theories in great detail. These discussions nonetheless were far too extensive to be

included in this dissertation but are presented to the interested reader within the

appendices of the research study. The author will reference appropriate sections when

necessary and only present the essence of the theories and models involved within the

text itself.

The empirical analysis of the study showed a significant correlation between the

application of ICT and ability of companies to identify and react to threats to their

continuous growths. The analysis also uncovered that in many aspects of company

management ICT is not yet sufficiently implemented. It is also striking that in the areas

where ICT is not sufficiently implemented the threats to growth are more severe. The

analysis of the secondary resources has shown that the main benefit of ITC to

businesses is information

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ABLE OF CONTENTS

Introduction to the Research Project...1

1.1

Significance of the Project ...2

1.1.1

The Significance of ICT for Society and the Business World ...2

1.1.2

The Significance of Growth for Companies ...4

1.2 Research

Objective...5

1.2.1 Influences

Company

Growth ...6

1.2.2 ICT

Application ...7

1.3 Research

Questions ...8

1.3.1

ICT Support-Possibilities for Businesses...8

1.3.2 Effectiveness

ICT Application...11

1.4 Research

Procedure...12

The Research Framework ...13

2.1

Initial Literature Review ...13

2.2

Information and Communication Technology...18

2.2.1

Defining Information and Communication Technology...18

2.2.2

Concepts of ICT Application ...20

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2.2.3

Importance of ICT for Businesses...22

2.3 Company

Growth...23

2.3.1

Defining Company Growth...24

2.3.2 Measuring

Company

Growth...27

2.3.3

Discontinuities in Company Growth...36

2.3.3.1 Thresholds

Growth...36

2.3.3.2 Barriers

Growth ...40

2.3.3.3 Growth

Crises ...40

2.3.4

The Dilemma of Growth Measurement and its Implications...42

2.3.5 Additional

Resources ...44

2.3.6 Synthesis ...48

3 Methodology ...50

3.1

Data Collection Procedure ...50

3.1.1 Methodology ...51

3.1.2 Sample

Selection...52

3.2 Data

Analysis ...53

3.2.1

Evaluation of Secondary Resources...53

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III

3.2.2 Survey ...54

3.2.3 Statistical

Analysis...56

4 Interviews...57

4.1

Structure of the Questionnaire ...57

4.2 Survey

Results...58

4.2.1 Food-Corporation...60

4.2.2 Architecture-Corporation ...63

4.2.3 Visual-Corporation...66

4.2.4 ERP-Corporation...69

4.2.5 Consultancy-Corporation ...71

Analysis and Discussion of the gathered Data...74

6 Conclusion ...82

6.1 Summary ...82

6.2

Shortcomings of the work ...82

6.3

Interesting additional Questions...83

Appendix A Mathemadical Feature Vector Analysis ...85

Appendix B Start-Up Companies...88

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Appendix C Effects of ICT on Businesses...97

Appendix D The Threshold to Growth Model...105

Appendix E Statistical Analyses ...131

Appendix F Questionnaires...133

Appendix G References ...137

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CKNOWLEDGMENTS

The author wishes to express sincere appreciation to Professors Howard Frederick and

Donald Joyce as well as Dr. Noel Bridgman for their assistance and patience in the

preparation of this manuscript. In addition, special thanks to Professor Kay Fielden for

her valuable insights on the project.

Thanks also to the members of the school council for their valuable input.

Stephan Jacob

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IST OF

IGURES

Figure 1 Dynamits & Stages in Company Development in imitation of (Wieselhuber,

1989) 39

Figure 2 Possible development of Revenues and Profit within a Growth Crisis

(Franke, 2000) p.9 ...41

Figure 3 Scatter-plot-diagram of the collected data...76

Figure 4 Scatter-plot-diagram of altered data. ...77

Figure 5 Scatter-plott-diagram with altered data ...78

Figure 6 Company Life Cycle in imitation of (Zehbold, 1996)...89

Figure 7 Company Life Cycle in imitation of (Nathusius, 2001a) ...90

Figure 8 Network of the Automotive - Industry (Scheer, 1993)...98

Figure 9 Vertical and Horizontal Company Growth after (Wiezorek & Wallinger,

1997) p.180 ...103

Figure 10 Thresholds to Company Growth;(Wieselhuber, 1989) p.20...108

Figure 11 Threshold severity over time (Wieselhuber, 1989) p.24 ...109

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VII

IST OF

ABLES

Table 1 Qualitative and Quantitative company Growth ...26

Table 2 Examples for Company Growth in imitation of (Wieselhuber, 1989) p.17...26

Table 3 Disharmonies within the aspects of company management ...37

Table 4 Examples for influential Factors of the internal and external business

evironment...38

Table 5 Selected Growth Crises models ...42

Table 6 TGM question structure ...57

Table 7 ICT question structure...58

Table 8 Results of the Food Corporation ...61

Table 9 The results of the Architecture Corporation ...64

Table 10 The results of the Visual-Corporation...67

Table 11 The results of the ERP-Corporation...69

Table 12 The results of the Consultancy-Corporation ...72

Table 13 Mean values of the collected data ...74

Table 14 Results of the correlation analysis ...75

Table 15 (Nathusius, 2001a) Key motivators for different start up `styles' ...93

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VIII

Table 16 Information Stages (Wieselhuber, 1989) ...108

Table 17 ICT Involvement Scale ...117

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BBREVIATIONS

ICT

Information and Communication Technology

RKW

Rationalisierungs- Kuratorium der deutschen Wirtschaft

TGM

Threshold to Growth Model

PC Personal

Computer

ROI

Return on Investment

CFS

Critical Success Factor

R&D

Research and Development

ERP

Enterprise Resource Planning

SME

Small and Medium Enterprises

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1 Introduction to the Research Project

Information and Communication Technology (ICT) has become an integral part of our

society. Many, if not all aspects of our daily lives have been affected. Whether one

looks at business or leisure activities - everywhere ICT plays a role to a larger or smaller

extent. No other aspect of our lives however has become so dependent on ICT as the

business world. There are examples ranging from cash flow forecasting systems that

integrate not only planning processes (as e.g. headcounts) but also operative tasks like

information interchange between different plants and headquarters around the globe. As

the use of ICT is required for multiple daily operations, companies could not operate

without it nowadays. Even if a production process does not necessarily require ICT,

most companies will still use ICT to accomplish their administrative tasks and make

data available. If businesses depend on fast information exchange (like investment

banks), it would not be possible to distribute all the information needed without ICT.

Company growth is of special interest for businesses. The term seems almost `magical',

for it promises lucrative profits for many individuals. Stock markets evaluate the growth

of companies all over the world. It is not only a benchmark in branches but also a

necessary requirement for survival. It seems that everything within the business world

has the obligation to grow. Many scientists view company growth as the primary goal of

companies.(Berens, 2005) With regard to entrepreneurship, growth even becomes the

essential factor. First, an idea has to grow into a company. Then, as a company the

newly found venture has to grow not only by numbers to fulfil the promise of lucrative

profits but also to survive in very turbulent markets. Especially in the beginning while

they still have the first mover's advantage, this is a crucial success factor.

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As ICT has such an important influence on daily business activities, it is possible that

ICT also influences the growth of businesses to a certain degree. To analyse this

hypothesis will be the basis for the present study. As the topic is too general to be

adequately reviewed within the setting of one dissertation, focal points have to be set.

Therefore the focus of the study has to be narrowed. Within the following two sections

the areas of interest will be deduced in more detail. Their importance will be shown in

general and in specific contexts with regard to the present study.

1.1 Significance of the Project

1.1.1 The Significance of ICT for Society and the Business World

ICT has increasingly gained importance in our daily lives since the 1970s. Whether

within our private or in our business environments, ICT is found everywhere (e-Mail,

Internet, databases). The tools given by ICT significantly influence the ways we

structure our lives and the tasks we need to perform. The speed of communication has

increased strongly since the invention of computers. For today's people, it is natural to

pick up the phone, turn on the mobile when abroad or use the computer in order to

communicate instantly around the globe and be available 24/7. One example is this

dissertation: it was written in Germany yet supervised in New Zealand. Without the use

of ICT that would maybe not have been impossible but it would have taken more than

two months to schedule all the necessary dates and deadlines.

The second strong impact ICT has had on our society is that it changed the ways we

access, produce and manipulate information. Information has become a common

commodity. It is possible to access information from anywhere on the planet.

International cooperation in business, scientific and private matters has been made

possible. Production and business-processes can be supervised optimally by efficient

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ICT systems as the demand of certain goods (e.g. in Australia) can be analysed within

minutes and the order can be fulfilled just in time. The right application of ICT in each

sector of the economy becomes therefore a critical success factor for companies to gain

a competitive advantage and to exploit the potential of a great variety of markets.

In the 70s, the introduction of the first ICT systems was also called the "Microelectronic

Revolution".(Gabriel, 1999) At that time, manufacturers mainly concentrated on

hardware. Mainframes, workstations and personal computers were developed and the

interrelation between all hardware components was researched.

Only in the last decade has this focus changed in favour of software development.

Standardised software interfaces have reduced the time needed for tutoring employees

in the usage of the software and therefore increased the acceptance and usage of

software products in companies.

Alongside the development of hardware and software, the possibilities of ICT

application in companies have also increased. About 20 years ago, ICT was used in

businesses to mainly take over accounting and storage management procedures and

supported not more than 2% of all business procedures. Nowadays ICT covers over

80% of all business procedures and supports almost every aspect in businesses.(Gabriel,

1999) This illustrates that ICT nowadays is an integral element of all business activities.

The Personal Computer (PC) became the symbol for this thriving technology and was

developed in gigantic leaps to ever smaller and faster versions enabling more powerful

methods to manipulate, store and distribute information. At the same time, those

processes became more efficient and less expensive. Through these developments ICT

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has become an interesting technology for business, as well as other areas of our society,

to increase productivity and save time.

Another development that can currently be observed: is the convergence of the

telecommunication, entertainment and information industries. Information of any kind

can now be accessed via the Internet. This fact makes the Internet and therefore ICT

very interesting to invest in for companies all over the world. Digital TV is only one

example for this remarkable development.

Summarising, the developments of ICT have reduced and partially eliminated the

distances between people and companies. Powerful networks connect people,

companies and even entire nations all over the world. ICT has changed the way we

communicate, cooperate and access information. Moreover, ICT has also enabled the

development of a higher level of telecommunication. However, applied technology does

not dominate these processes but rather triggers certain changes.

1.1.2 The Significance of Growth for Companies

Why does company growth create happiness? A businessperson thinks about growth

with a warm and sometimes euphoric feeling. It is not only based on the fact that a good

idea manifests in success but also that this success leads to personal growth and helps

others to grow personally and monetarily as well. On the level of a nation, company

growth could be compared to a growing national economy that not only promises

lucrative profits but is also the substance of survival for many people.

Nearly every company seems to focus on growth as many statements of company

officials demonstrate. (Funkhouser & Rothberg, 1989) Furthermore growth of an entire

company is a success measure. If growth has happened, the board of directors and the

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stakeholders of a company are satisfied with the management. However, this feeling

soon changes when the promising growth stagnates or the company even begins to

shrink. In that reverse case, most managers will have to look for another job (sometimes

even if they were not fully responsible for the shrinkage) or will have to come up with

"innovative" ideas.

Many scientists have tried to answer questions with regard to company growth.

· What is the optimal size for a company?

· How fast should a company grow?

· Why do companies have to grow?

Those are just a few examples of many unanswered or just partially answered questions.

To minimise the challenges that arise when researching company growth, this study will

focus on Start-Up companies and was limited to researching possibilities that might

nurture but not guarantee growth. It will be shown that Start-Up companies are

exceptionally well suited as a research object for company growth. The background of

theses restrictions will be described in the third chapter of this dissertation.

1.2 Research Objective

The foremost goal of this research project was to identify possibilities offered by ICT to

Start-Up companies to facilitate company growth. In order to discover these, two major

challenges had to be mastered.

First, the theoretical framework had to be established to analyse what company growth

was. Then, suitable theories that form the bodies of knowledge of company growth had

to be chosen in order to focus the research. The theories and concepts that can be found

in the bodies of knowledge were examined to gain a sound understanding of the

complexity, the richness and foremost the interrelations between those knowledge areas.

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After the theoretical part concerning the separate definitions was considered, the focus

was narrowed to the specific research questions. The required assumptions and

limitations regarding the frame of this study will be stated in the third chapter.

After the initial analysis of the subject was completed, it became apparent that the

described topic itself held various thresholds. The size of a company as just one

example seems to be not scientifically and generally determinable. Therefore the author

needed to find a way to approach the challenge of company growth measurement and

found it in the threshold to growth theory. Why this theory can be applied and why the

company growth is that difficult to examine will be discussed in great detail in the third

chapter of this dissertation.

1.2.1 Influences to Company Growth

In the literature, it is stated that company growth itself is difficult to determine. In fact,

Kurfess (1999)states that nowadays there exists no generally applicable scientific

measure for the size of a company. Although the scientific community concurs with the

statement that "company growth is a positive development of a company over time",

they cannot agree on the explicit measure of growth. (Lukan, 1970; Funkhouser &

Rothberg, 1989; Kurfess, 1999; Haberland, 1978). Some scientists argue that the size of

a company has always to be determined having regard to the specific task of a study and

recommend that a set of common measures of growth have to be chosen for each new

study or comparison of companies' sizes (Funkhouser & Rothberg, 1989; Haberland,

1978). Another section of the scientific community argues that company growth in

general should not be used in discussions. They state that researchers should restrict

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their studies to just aspects of company growth such as the growth of revenue or growth

of shareholder value instead of analysing company growth in general.

Those results are not satisfactory for this current study. Therefore another objective of

this study was, to find a way of approaching the seemingly immeasurable and complex

phenomenon of company growth itself that also offers a way of merging the findings

with possibilities of ICT application.

One theory that offers a possibility to approach this challenge is the feature vector

theory of Lucke (1967). This microeconomic theory explains a company's size with the

help of an ndimensional so called feature vector. The analysis of these vectors, which

will be discussed in chapter 2.3.4, hints at so called thresholds to growth as a vehicle to

analyse the influences to company growth.

The threshold to growth model of the RKW offers ways to identify and master

thresholds to growth and by that means influence company growth positively. In

addition to that, the influences to company growth are identified and structured. This

fact offers the possibility to match ICT application possibilities with the factors that

influence company growth.

The theoretical foundation as well as the methodological procedure for the present study

will be covered extensively in chapters two and three.

1.2.2 ICT Application

The search for possibilities of ICT support must be undertaken systematically. The

possibilities of ICT application must be matched with the demands of businesses.

Instead of creating a list of software programs and computer hardware (which would

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rapidly become outdated, as ICT develops at tremendous speeds), a more general

approach was followed.

The scientific community acknowledges three areas of ICT application:

· as a means of providing information,

· as a means of enabling communication and

· as a means of enabling innovation.

This structure will be used throughout the study. The author aims at breaking this very

broad structure down to features of software and hardware rather than to specific

products. This way the rapid development of hardware and software is taken into

account.

1.3 Research Questions

1.3.1 ICT Support-Possibilities for Businesses

Question 1: What possibilities does ICT offer to facilitate company growth in Start-Up

companies?

The impact of ICT on business from the prevailing

point of view of the scientific community is described in Appendix-C. However these

general analyses might not be suitable to answer the first research question stated above.

To systematically approach the question and of course the research topic a series of sub-

questions have to be identified. Those sets of questions will be used to systematically

approach the topic, to structure this research and to extract the appropriate information

from the general theory to answer the research question above.

The following questions need to be asked and answered:

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How or in what ways can ICT be applied?

With this question the application possibilities offered by ICT will be determined.

· What can my business do with ICT?

· How can this technology help me?

To answer these questions in a way that is general enough to suite the needs of this

research, concepts of ICT application had to be determined. These concepts of ICT

application formed the starting point to answer the next question:

How does ICT impact on business?

This question focuses on the results ICT usage provides. Subsequently, this question

had to be asked for business in general and Start-Up companies in particular. Mainly the

focus was on the areas of impact and on the magnitude of ICT impact as others have

already researched. After having determined the influences of ICT and the interrelation

of the different areas of impact the author shifted the focus towards company growth

and Start-ups.

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What is company growth?

The initial literature review has shown that the research community has not yet

explicitly defined company growth. A thorough understanding of company growth

becomes of central importance within the framework of this research study. Several

sections in this dissertation will therefore explore it and try to answer this question.

What factors influence company growth?

When it has been clarified what growth is, then the question of how growth can be

influenced must be answered. Only then will the next question be considered:

How can company growth be nurtured?

It is this thorough investigation of how company growth can be positively influenced

that will present possibilities of how to use ICT to nurture growth.

Where can ICT be applied to nurture company growth?

The researcher is convinced that ICT is suitable to be used to nurture company growth

by its adaptability. The process shown will lead this research process to determine the

application possibilities.

What is unique about Start-Up companies?

Suppose that company growth can only be identified with certainty in Start-Up

companies since by definition, within this study, only such time spans will be analysed

where we know growth has occurred. This uniqueness of Start-Up companies will be

explained within appendix B of this dissertation. This makes Start-Up companies the

ideal candidate to research company growth.

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When all these questions were answered the first research question was answered as

well and a catalogue of ICT possibilities to cultivate company growth will be presented.

1.3.2 Effectiveness of ICT Application

Question 2: Can the impact of ICT on company growth be empirically verified?

An empirical analysis was conducted in order to validate the findings of the hypotheses.

The sub-questions to be asked within this were:

Do companies use ICT to nurture company growth?

By linking the questions of the RKW with the ICT feature- tree, a relationship between

the usage of ICT and the occurrence of thresholds to growth was established. If

companies can successfully identify thresholds to growth and ICT is used in that

process, one could conclude that ICT plays its role in the process of threshold to growth

identification and mastering. Thus, to which degree ICT would influence company

growth. The relation between company growth and thresholds to growth will be

established and explicitly described within chapter two

To what degree does ICT impact on company growth?

After a certain number of answers have been accumulated, a statistical correlation

analysis of the data gathered was conducted. Through this analysis the identification of

the degree of impact ICT has on company growth was possible (i.e. whether or not the

ICT impact on threshold identification and its mastering is statistically significant). The

necessary conditions for such an analysis are described in chapter three.

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1.4 Research Procedure

After the motivation and general idea for the current research study have been described

in chapter one, the research concepts and reviewed literature will be discussed in

chapter two. Chapter three will focus on the research methodology and will describe

which concepts, theories and definitions were used to approach and examine the bodies

of knowledge. Major assumptions and limitations of this study as well as the empirical

context will also be described in chapter two. In chapter three, the author describes the

applied methodologies for the present study.

The results of the empirical analysis, which was undertaken by interviewing a small set

of StartUp's in Germany, will be presented in the chapter four. The questionnaire used,

as well as other supporting material, is included in the appendix F of this dissertation.

Chapter 5 contains the analysis of the collected data during which the author answers

the research questions stated above.

Chapter 6 wraps up the findings and sketches the shortcomings of this study as well as

suggesting some still open questions or possible additional questions.

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2 The Research Framework

With regard to the research objectives, there are two areas of interest, which have to be

examined:

ICT application and

Company Growth.

Furthermore:

Start-Up Companies and

the Start-Up Business Environment

have to be examined and explained in the context of this study. In addition to that, the

assumptions and limitations that frame this research will be presented.

2.1 Initial Literature Review

Information and Communication Technology (ICT) has changed many aspects of our

lives in the past few decades. Many aspects of the human society have been affected by

ICT. How ICT enhances and supports businesses is therefore a critical matter.

One of the most important success-factors for businesses is the rate of growth of a

company as described by Kurfess (1999) and other authors as well.

`Company growth is an essential component of long-term success. Therefore several

empirical and theoretical studies are concerned with answering questions in relation

with company growth' (translated from Kurfess, 1999).

From these general ideas two areas of interest present themselves, company growth and

ICT support to businesses. There areas are further explored in order to frame the

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proposed research and to gain an understanding of these areas of interest. Company

growth itself is a highly complex phenomenon. It is therefore not surprising that there

are many different approaches to describe, measure and explain company growth. One

group of scientists proclaims the possibilities of describing and identifying company

growth by the analysis of companies' numbers such as revenue, market share or return

on investment (ROI) (Glaum, Hommel, Tomaschewski, 2002). Although this seems

to be the dominating approach to analyse growth, another group of scientists questions

the validity of just using absolute numbers to identify growth. This group acknowledges

those numbers as growth indicators, yet stresses the fact that they should not be used as

the only measure to identify growth. Funkenhouser Rothenburger (1989) give

examples for all common measures of growth and show how those measures fail to

identify growth in specific cases.

Other approaches, like the TGM of the RKW as described by Wieselhuber (1989) and

the `9S Model' of rapid growth as described by Lindenau Helbig (2000), take the

idea further and propose strategies to facilitate company growth and to master the threat

of growth crises. The basic assumption of those approaches is that one can facilitate

growth of a company by supporting the growth of critical success factors (CSFs) of the

internal and external business environment of a company. For example, it is said that a

company has grown as a whole, if a CSF like its market share has grown and all other

CSFs that make up the internal and external business environment of a company have

remained the same. If however with regard to a specific company one CSF is growing

and another CSF is deteriorating, no exact statement about whether or not a company

has grown within a certain period of time can be made. This illustrates the dilemma of

measuring company growth. To mitigate this dilemma, the idea was established of

supporting the growth of as many as possible single environmental factors to establish a

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business environment to nurture company growth (Lücke, 1967). However it will not

guarantee growth.

Within the `threshold to growth' model of the RKW those CSFs of the internal and

external environment of a company are summarised and structured. CSFs are different

for each company and the specific market segment the company operates in,

nonetheless the CSFs can be sorted to one of the following categories:

Market Competition,

Organisational Structure,

Technology,

Capital Funding,

Human Resource Management,

General Management,

Innovation Potential and

Corporate Identity.

One goal of this research was the adaptation of this model specifically for Start-Up

companies. Furthermore the relation of possibilities suggested by these models will be

shown in order to support possibilities of ICT.

Scientists who contributed to the organisational theory state that there are phases of

continued company growth, which are interrupted by thresholds to growth and

discontinuities Wieselhuber (1989). Those thresholds to growth that occur during a

company's development were the central focus of this research project. To narrow the

focus of this research even more the `threshold to growth' phenomenon will be analysed

with regard to Start-Up companies.

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As Wieselhuber (1989, Albach, Bock, Warnke, 1985; Greiner, 1972) describes,

thresholds to company growth must constantly be examined relatively to the companies'

internal and external business environment. To be able to identify the internal and

external business environment a qualitative research approach was applied as suggested

by Cresswell(1994), Kumar(1999), Sekaran(2003) and Bortz Doring(2002)

Albach(1986) describes a possibility of identifying growth crises by analysing a

company's numbers. Nonetheless it is open to discussion whether his findings are

applicable to Start-Up ventures for he analysed medium sized industrial companies in

1986.

Furthermore Wieselhuber(1989) points out that if the threshold to growth has been

identified and suitable actions have been taken by a company's management, thresholds

to growth will not result in growth crises. The examination of just the company's

numbers will therefore not be suitable to identify effectively thresholds to growth. Since

a threshold to growth will only lead to a growth crisis, if appropriate actions were not

taken.

Also of special interest is which ways ICT can be applied to support businesses. Some

authors describe two concepts of ICT support, Information Management and

Communication Management (Scheuss, 2000). Other authors extend this understanding

of ICT support by the concept of Innovation Management (Schuh Fahrni, 2001).

Information Management or Knowledge Management is concerned with the

possibilities of storing, categorizing, extending and distributing information. The major

focus is on supplying information in an appropriate way and in adequate time to the

right person.

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Communication Management is a concept that describes ICT as a means of connecting

two or more parties making information exchange possible. How to connect two people

or parties in the best way is the central concern of this concept.

Innovation Management understands ICT as a key factor for innovation and

development. This concept understands ICT as the basis for new products, services and

business concepts. Such business concepts like online bookstores, products like online

banking or services like online tracking of postal articles around the globe would not be

possible without the use of ICT.

Moreover, within those concepts of ICT usage, researchers identified a variety of effects

ICT has on businesses (Majchrzak Gasser, 2000). Effects on employment,

organisational structure, international cooperation and competitiveness are described in

Appendix-E.

The impact of ICT on employment can be separated into quantitative and qualitative

aspects. With the continuous adoption of ICT, a slow change in the variety of tasks that

human personal are carrying out can be observed. For example, with the continuous

adoption of ICT increasingly more standardized, repetitive tasks, such as the printing of

serial letters or storage and categorization of information, are executed by ICT instead

of steno typists or office clerks respectively. In businesses, certain jobs like the one of

the steno typist are no longer needed because technology has completely taken over

their set of tasks. New jobs like the one of the IT administrator are developed as the

result of the quantitative employment effect of ICT. The qualitative employment effect

of ICT on the other hand is described as the improvement of the quality of a job because

employees like an office clerk need to accomplish less standardized repetitive tasks.

- -

Instead they can focus on the improvement of quality of their work results or even can

take over new tasks.

The effects of ICT on organisational structure and international cooperation are mostly

related to the concept of communication management. New emerging possibilities of

communication have offered companies the chance to develop new hierarchical

structures and controlling procedures. ICT mitigates the limitations of distances.

Employees may work at home or at any other location. The possibilities of

communicating worldwide also offers the possibility that companies located in different

continents can cooperate and offer their products and services worldwide. Furthermore

different departments of a company can be spread widely over the landscape or even be

located in different countries and still work together effectively.

ICT may also affect the competitiveness of a company. This effect can be viewed as the

result of the effect described above. The already named effects can enable a company to

gain a competitive advantage over other companies.

2.2 Information and Communication Technology

2.2.1 Defining Information and Communication Technology

The term ICT consists of three parts `information', `communication' and `technology'.

The term `technology' is often used within the current management literature; however,

no consistent definition is given. Translating the word literally from its Greek roots, it

means the procedure or craft to create commercial goods. However, nowadays the

definition seems to depend largely on its use within a study. For this study the definition

of technology found in management literature that also researches company growth like

the works of Zahn(1971); Porter(1992); Saad Roussel Tiby(1993)will be applied.

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URFESS

(1999)

summarises the ideas of Zahn(1971); Porter(1992); Saad et al.(1993)

and states; "Technology is the application of knowledge about scientific-technical

interdependencies to solve problems of application in the development of products and

procedures with the goal of satisfying customer demands."

The other two parts that specify the term ICT are `information' and `communication'.

These two aspects define the kind of technology and form the bases for ICT application

in society in general and in businesses particularly. The importance of `information' and

`communication' for businesses results from the fact that today's business and

management procedures are largely concerted with creating, manipulating and trading

information.(Bienert, 1998) Furthermore, information is transferred by technological

means of communication. The interconnection of both aspects hints at the meaning of

the term ICT.

ECHENBERG

, P

OMBERGER

LASCHEK

(2002)

define the terms even further, they

state:

`Information' is an action-defining knowledge about historic, current and future states

of reality and events in reality. `Communication' is the exchange of messages in form of

`data' between entities. An entity can be a person or a machine. They further define that

`information' and `data' are not identical. Data is the raw material to produce the

immaterial good `information'. (R

ECHENBERG ET AL

., 2002)

- -

ICT therefore is the applied scientific-technical knowledge about how to create, nurture

and exchange the immaterial good of information. This definition shows the three major

aspects of ICT application very clearly. ICT is used to:

· create and innovate,

· nurture and support, and

· ensure communication.

2.2.2 Concepts of ICT Application

NFORMATION

MANAGEMENT

with regard to ICT

is a concept, which strongly

emphasizes the importance of the knowledge base of a company as well as the

importance of how this knowledge is distributed within a company. Scheer (1993)

proclaims that the knowledge of a company resides within its products, applied

technology, work processes and employees. This knowledge has to be documented,

saved and logically extended, so that it can be used effectively. Scheer(1993) suggests a

detailed work process model to accomplish the tasks of documenting, saving and

extending a company's knowledge base. He argues that those models will help to

characterise and organise knowledge and make it easily accessible. Information

Management can also be described as a concept how an organization learns i.e. how an

organization plans, structures, controls and innovates its business processes, products

and services. (Nathusius, 2001a)

OMMUNICATION

MANAGEMENT

is the second possibility of defining and structuring

ICT application. Communication Management or connectivity stands for the access to

the virtual business environment. Within this new environment a company gains not

only access to new information but can explore the new possibilities of interaction with

other corporations also. The foremost benefit of connectivity is a fast and cost-efficient,

- -

internal and external communication. Information exchange is thereby simplified, which

leads to more efficient work processes and time savings. As a result the direct costs of

production are declining (Scheuss, 2000).

There exist three spheres where connectivity can be established;

NTRANET

is the internal information and communication network of a specific

company or any other specific entity. Normally, this network is not restricted to one

single location. Internet standards are used to transmit information and any other kind of

digital data. The Intranet is exclusively used to share and exchange internal, possibly

confidential data i.e. everything that is only of interest for the company itself. The

communication within a specific company or entity is the only and foremost purpose of

an Intranet.

XTRANET

extends the concepts of the Intranet by also including the stakeholders of a

specific company or entity such as suppliers and customers into the network. Again,

Internet technologies are applied to exchange information.

Extranets generally are designed to support and, to certain extent, represent a company's

value chain to enable a certain business model, certain business procedures and

necessary interactions between a company and its stakeholders. Those interactions are

made possible, are simplified and/or accelerated.

NTERNET

is the sphere that again extends the concepts of the extranet to the greatest

possible number of participants. The Internet is designed to enable the communication

or data exchange between all users that are connected to it. There does not have to be

any relation or intended potential interaction between those participants.

NTERNET

ECHNOLOGIES

- are a series of networking hardware and software that enable

two computers (machines) to exchange any kind of data. (Ascott, 1991)

NNOVATION

ANAGEMENT

is the concept of ICT application that strongly emphasizes

the creative new possibilities ICT can provide for products, services, business

procedures and business processes. ICT becomes the driver for new ideas and

innovations.

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Details

Seiten
Erscheinungsform: Originalausgabe
Erscheinungsjahr: 2005
ISBN (eBook): 9783832495671
ISBN (Paperback): 9783838695679
DOI: 10.3239/9783832495671
Dateigröße: 915 KB
Sprache: Englisch
Institution / Hochschule: UNITEC New Zealand – Computing and Information Technology, Institute of Technology
Erscheinungsdatum: 2006 (Mai)
Note: 1,3
Schlagworte: wachstumsschwellen unternehmenswachstum informationstechnologie kommunikationstechnologie unternehmensanalyse
Produktsicherheit: Diplom.de

Autor

Stephan Jacob (Autor:in)