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Introduction

The realization of advantage from the Internet and related e-business technology investment has long been a source of frustration for corporate executives. Impressive performance returns by companies such as Dell Computers, Cisco Systems and General Electric illustrate that returns can be achieved by linking the Internet and related e-business technologies to firm strategy. These companies have shown that successful management of their IT investments can generate returns as much as forty percent higher than those of their competitors (Ross & Weill, 2002). However, many executives view the Internet and related e-business technologies with intense frustration. They recollect investment in the great speculative bubble of the 1990s and excessive expenditure on year 2000 compliant systems (Keen, 2002). They recall high profile examples of botched enterprise resource planning (ERP) systems that have consistently run over time and budget and report that customer relationship management (CRM) initiatives were largely a flop (Reinartz & Chugh, 2002).

Unfortunately, it is not yet clear how firms should go about capturing the potential that exists in e-business, as few normative frameworks exist to guide practitioner investment. One area where consistent advances have been made is in structural contingency theory, where the contingency factor (i.e., environment structure) has enabled predictions to be made in a relatively unambiguous manner (Donaldson, 1995). Applied to an e-business setting, contingency theory argues that performance increases can be expected whenever information technology is applied in an appropriate and timely way, and in harmony with business, environmental and organizational conditions. Consider a typical scenario where an executive wants to make a strategic investment in information systems. The executive has two choices: (1) a system to support backend operations using ERP technology, and (2) a CRM support system. How does he/she prioritise between these competing investments? Contingency literature would argue that it depends upon the organization’s strategy and decision-making information requirements (Chandler, 1962; Child, 1972; Galbraith & Kazanjian, 1986). Manufacturing excellence strategies associated with companies like Carrefour or Ford Motor Company would get greater value from ERP systems. Customer intimacy strategies at companies like CitiBank or IBM Global Services would benefit most by customer feedback systems.


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