Business Research

Analyzing Absorptive Capacity

Information technology (IT) is a continuously evolving field when it comes to the emergence and integration of new knowledge. IT departments within public organizations must adapt to these changes, while also facing challenges such as budgetary constraints, stakeholder demands and political influences.

These dynamics have led Cynthia K. Riemenschneider, associate professor of Information Systems, to analyze how CIOs and IT managers are responding to external challenges and new knowledge through researching the potential absorptive capacity of state government IT departments. Riemenschneider received a grant from the Blair Center of Southern Politics and Society in the Fulbright College of Arts and Sciences at the University of Arkansas to fund her research.

"Absorptive capacity refers to an organization's ability to recognize the value of new information, assimilate it, and use it to address organizational challenges associated with external change," she said. "This new information can be anything from processes to applications of technology to enterprise systems."

Riemenschneider and team members Myria Allen and Margaret Reid, University of Arkansas; and Deborah Armstrong, Florida State University; discuss their research and findings in a paper titled "Potential Absorptive Capacity of State IT Departments: A Comparison of Perceptions of CIOs and IT Managers," forthcoming in the Journal of Organizational Computing and Electronic Commerce.

Within the evolving IT industry, the role of IT departments has evolved as well to take more of a proactive role within organizations, as opposed to its outdated reactive function of solving technical malfunctions.

"IT departments, once seen largely in a technical support role, have assumed critical strategic planning functions for their respective levels of government," she said. "Public sector managers must consider a broad range of proactive changes that can improve organizational functioning."

Riemenschneider said her team worked two years in building a relationship with and gaining support from the National Association of State Chief Information Officers (NASCIO), an organization dedicated to supporting state CIOs and providing information on IT best practices and innovations. This backing allowed the research to launch on a national level. The team conducted a national survey to which 21 states employing a total of 27 CIOs and 102 IT managers responded.

"Few researchers have focused on absorptive capacity in public sector organizations," she said. "Furthermore, this research was interesting because we collected perspectives at different levels of an organization with information from CIOs and IT managers from different states."

Although absorptive capacity consists of four capabilities- acquisition, assimilation, transformation and exploitation-the team's paper focuses on the first two capabilities. Acquisition and assimilation of new knowledge compose what is known as an organization's potential absorptive capacity.

Within the capabilities of acquisition and assimilation, the team analyzes several component variables and how, or if, each variable influences the potential absorptive capacity of the state IT departments.

Riemenschneider and her colleagues look at variables of external environments (e.g., economy, industry dynamics, budgetary constraints, stakeholders) and factors of risk and proactiveness in "strategic posture," a firm's overall competitive orientation. An organization's culture also determines whether change related to new knowledge is accepted or resisted. And finally, the team analyzes if these variables have the same influence on CIOs and IT managers.

Using the findings and continuing their research, Riemenschneider and her team hope to aid state IT management in maximizing awareness of, identifying, and effectively integrating new knowledge and innovative technologies to improve operations.

Cindy Riemenschneider
Baylor University