School of Business Information Technology and Logistics

PhD Research Proposal

Investigating the Relationship between Information Technology Capabilities and

Organizational Environment Performance in the Indonesian Telecommunication
Industry

PhD Student
Darius Antoni
School of Business IT and Logistics, RMIT University
Level 17, 239-251 Bourke St
Melbourne VIC 3000
Email: [email protected]
Phone: +61 3 9925 5619

Supervisor
Professor Hepu Deng
School of Business IT and Logistics, RMIT University,
Level 17, 239-251 Bourke St
Melbourne VIC 3000
Email: [email protected]
Phone: +61 3 9925 5823

Supervisor
Dr Ferry Jie
School of Business IT and Logistics, RMIT University,
Level 17, 239-251 Bourke St
Melbourne VIC 3000
Email: [email protected]
Phone: +61 3 9925 5812

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 Investigating the Relationship between Information Technology Capabilities
and Organizational Environment Performance in the Indonesian
Telecommunication Industry

1. Background

Organizations are increasingly concerned about the environmental performance of

their operations in today’s competitive environment. This is because effectively
improving the environmental performance of an organization can help the
organization to meet the environmental regulation and compliance standards,
improve organizational profitability, provide the organization with business
opportunities, and improve the competitive position of the organization in the
marketplace . As a result, organizations have been implementing specific policies
and strategies for improving their environment performance.

There are many approaches and techniques including the adoption of information
technology (IT) that an organization can use for improving their environmental
performance (Boudreau, Chen & Huber 2008; Mingay 2007; Speshock 2010; Tippins
& Sohi 2003; Tornatzky, Fleischer & Chakrabarti 1990; Xiaoxia, Hepu & Brian 2012).
Mingay , for example, shows that organizations can use IT to significantly reduce the
carbon dioxide from their business operations. Sayeed and Gill argue that
organizations can improve their environmental performance through effectively
managing their IT resources. Dao et al state that organizations can reduce their
energy consumption through using digitized documents and automating different
business activities. These studies show that IT is being developed and used as a
capability in an organization for improving their environment performance .

IT capability is the ability of an organization in effectively and efficiently utilizing its IT

resources for improving its organizational performance including its environmental
performance . It can be approached from different perspectives including IT
infrastructure, IT human resources, and IT management . Kettinger et al , for
example, argue that IT capability is the ability of an organization in using IT
infrastructure for achieving its competitive advantages. Lee, Trauth & Farwell (1995)
state that IT capability is the organizational ability for effectively managing their
organizational operations through an effective use of IT human resources in an
organization. Bharadwaj shows that IT capability is the organizational ability that is
created by the interaction between IT infrastructure, IT human resources, and IT
intangible assets in an organization for improving its organizational performance.
Tippins and Sohi argue that IT capability is the ability of an organization in using IT
resources for improving its performance. Jiao, Chang & Lu (2008) state that IT
capability determined by IT infrastructure, IT human resources and IT management
can be used for improving the organizational performance. In this study, IT capability
is referred to as the ability of an organization in utilizing its IT resources for
enhancing its performance including its environmental performance.
There is much research at investigating the role of IT for improving the organizational
environment performance (Adela, Marie-Claude & Richard 2008; Daly & Butler 2009;
Mann, Grant & Singh 2009; Sayeed & Gill 2008). Sayeed and Gill , for example,
explore the use of the “green” capability of the IT infrastructure in organizations for

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reducing their energy consumption and meeting environmental regulations. Adela,
Marie-Claude & Richard (2008) argue that the use of IT infrastructure in an
organization can facilitate environmentally friendly operations through informating,
automating, and transforming business operations. Molla examines the role of IT
including infrastructure, IT human resources and IT management in organizations for
improving their organizational environment performance. Daly and Butler states that
the design of IT infrastructure in an organization that is usually influenced by
regulative, normative and cultural-cognitive forces can affect the organizational
energy efficiency. Benitez-Amado, Perez-Arostegui & Tamayo-Torres (2010) argue
that utilizing IT human resources can improve the organizational environment
performance. These studies show that the use of IT in organizations as an
organizational capability can improve their environmental performance.

The telecommunication industry is one of the main industries in Indonesia. It

provides Indonesian people and the society with various IT related services including
internet and telephone services. The telecommunication industry has made a
significant contribution to the Indonesian economy, exemplified by its contribution to
the National Gross Domestic Product (GDP) at 30.41% in 2008 (Ministry of
Telecommunication and Informatics 2009). With the stimulating policy and strategy
from the Indonesian government, the telecommunication industry is being developed
rapidly. This can be demonstrated by the growth of telecommunication organizations
in Indonesia from one organization to thirteen organizations in 2008. Overall, the
Indonesia telecommunication industry is playing a significant role in the development
of the Indonesia economy.

With the rapid development of the telecommunication industry in Indonesia, there is

an increasing need for improving the environmental performance of the
telecommunication organizations (Ministry of Communication and Informatics 2010).
In fact, many Indonesian telecommunication organizations have started to use IT for
mitigating the impact of their business operations on the environment. For example,
PT Indosat Indonesia, one of the leading telecommunication organizations, has
implemented the “Green Office” strategy in an effort to reduce its energy
consumption through adequately using IT, such as video conferencing technologies
and mobile networks and devices (PT Indosat 2010). PT Telkom Indonesia.tbk
(TELKOM Indonesia) has adopted the green organization strategy for addressing the
environmental concern of its stakeholders (Dwi Utari 2010). While the Indonesian
telecommunication organizations have started to implement the strategy and policy
to improve their environmental performance, how effective these organizations
organize their IT for improving their environmental performance is not clear. To
address this issue, this study attempts to investigate the relationship between IT
capability and environmental performance in the Indonesian telecommunication
industry.

This proposal is organized as follows. Firstly, the research objectives and research
questions are presented. This is followed by a review of the related literature with
respect to (a) organizational environment performance, (b) IT capability, (c)
Indonesian telecommunication industry for justifying the need for the study.
Hypothesise are developed for investigating the relationship between IT capability
and organizational environment performance in the telecommunication industry in

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Indonesia. Finally, the research methodology to be adopted in this study is
described, and the timeline for conducting this research is detailed.

2. The Indonesian Telecommunication Industry

Indonesia is the fourth largest country in the world with the population of 260 million
which distribute in 3,667 islands, 33 provinces, 6 major religions, and more than 300
ethnic groups. The telecommunication industry in Indonesia gives a significant
contribution in connecting the Indonesian people together. It is playing a critical role
in the development of the Indonesian economy. Overall, the telecommunication
industry has contributed to the national GDP at 30.41% in 2008 (Ministry of
Telecommunication and Informatics 2009). It has a huge potential market in
Indonesia. This can be demonstrated by the number of customers of the
telecommunication industry that has reached more than 190 million subscribers in 13
telecommunication organizations. The telecommunication industry provides many
facilities to support various activities including government and business operations
being based on the telecommunication technology.

There are thirteen largest telecommunication companies in the telecommunication

industry (Ministry of Telecommunication and Informatics 2009). These companies
provide Indonesian people with societies with communications services. In the
beginning of the development of the IT industry in Indonesia, only few corporations
focused in providing Indonesian people with IT related services including internet
services. In the last 10 years, many telecommunication corporations started to
provide the telecommunication services as well as IT services. This is because the
developed infrastructure in the telecommunication industry makes IT services
accessible for their consumers. Table 4 shows the number of telecommunication
providers in Indonesia.

Table 4 An overview of telecommunication organizations

Category Provider Amount
Basic wired telephony service PT. Telekomunikasi Indonesia (Telkom) 3
PT. Indosat
PT. Batam Bintan Telekomunikasi (BBT)
fixed wireless telephony PT. Telekomunikasi Indonesia (Telkom) 4
PT. Indosat
PT. Bakrie Telecom
PT. Mobile-8
Mobile Wireless Telephony PT. Telekomunikasi Indonesia (Telkom) 8
PT. Indosat
PT. Excelkomindo
PT. Mobile-8
PT. Sampoerna Telekomunikasi Indonesia
PT. Bakrie Telecom
PT. Natrindo telepon seluler
PT. Hutchison CP Telecomunication
PT. Smart Telecom
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The Indonesian government through the Indonesia Ministry of Communication and
Informatics has passed a policy to encourage Indonesian organizations to use IT for
improving their environmental performance (Ministry of Communication and
Informatics 2010). Many telecommunication organizations have implemented this
policy in their business practices. For instance, PT. Indosat that is a state owned

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telecommunication company, has an e-procurement strategy to support the
procurement process in the organization (PT Indosat 2010). PT. Excelkomindo
employs e-mails as an alternative to replace billing statements for its customers in
cost saving as well as creating a cleaner, greener and sustainable environment (PT
XL Axiata Tbk 2010). PT. Bakrie Telecom has a “Green Office” strategy which
focuses on the use of IT for reducing paper usage, encouraging employees to
recycle paper, recycling paper and printer cartridges as well as focusing on saving
electricity. Telkom Indonesia, as one of the government-owned companies, has
implemented some programs and policies to support government programs in order
to improve its environmental performance (PT Telekomunikasi 2010). For instance,
TELKOM Indonesia provides the cloud computing services for their customers as
well as their business operations. The other program is “green building” that is used
as a solution in efficient use of resource and energy for improving environmental
performance. This building uses IT for automation operation of building, defining rule
and task on using energy building to realise efficient energy consumption.

While there is an increase in the use of IT capability for improving environmental

performance in Indonesian telecommunication industry, how effective the use of IT
for improving the environmental performance of these reorganizations are unclear. In
particular how and to what extent IT is used in the industry for improving
environmental performance have not been studied so far. This because there is no
much research that investigates the role of IT in improving the organizational
environment performance in the Indonesian telecommunication industry. To address
this issue, this study will attempt to investigate how IT capability is used for
improving the environmental performance in the Indonesian telecommunication
industry. To facilitate investigating the relationship between IT capability and the
organizational environment performance in the Indonesian telecommunication
industry, several research objectives and questions are formulated in the following.

2. Research Objectives

The aim of this study is to investigate the relationship between IT capability and
organizational environment performance in the Indonesian telecommunication
industry. Specifically this research aims to:
a. investigate how IT capability is being used in Indonesian
telecommunication organizations for improving their environmental
performance,
b. identify to what extent IT capability is used in Indonesian
telecommunication organizations for improving their environmental
performance, and
c. identify the critical factors for improving the organizational environment
performance in the Indonesian telecommunication industry through the
development of their IT capability.

3. Research Questions

To achieve the research objectives as above, the main research question in this
study is formulated as follows:

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How can IT capability be used for improving the organizational environment
performance in the Indonesian telecommunication industry?

To answer this question, several subsidiary questions are formulated as follows:

a. What IT capabilities have been used in the Indonesian telecommunication
industry for improving the environmental performance?
b. How can an organization deploy its IT capabilities for improving its
environmental performance in the Indonesian telecommunication industry?
c. What are the critical factors for improving the organizational environment
performance in the Indonesian telecommunication industry through the
development of their IT capability?

4. Related Literature

Organizational Environment Performance

There are many ways to measure the organizational environment performance. For
example, Elsayed and Paton argue that the organizational ennvironment
performance can be measured by the consumption of raw material and energy, the
waste produced and the impact of its business operations on the natural
environment. Olsthoorn et al state that the environmnetal peformance of an
organziation can be demonstrated by the initiatives and actions that an organization
takes for reducing the consumption of natural resources and the impact of its
operations on the natural environment. Singh et al state that the environmental
performance of an organization can be reflected by the natural resources consumed,
the waste produced, the proportion of the waste being treated, and the impact of its
operations on the environment. Daniel argues that the environmental performance
of an organization can be measured by quantifying the impact of its business
operations on the environmental in “natural” unit such as physical, chemical, or
biological through studying the impact of a given product over all stages of its life
cycle including resource extraction, energy use, production, distribution, use, and
ultimate disposal. In this study, the organizational environmental performance is
measured by (a) the ecological efficiency , (b) the ecological profile , and (c) the
ecological initiatives of an organization .

The ecological efficiency of an organization focuses on the overall environmental

performance of an organization through its consumption of resources and its impacts
on the environment . It is determined by the delivery of competitively priced goods
and services that satisfy human needs and bring quality of life while progressively
reducing the ecological impacts. The ecological efficiency of an organization is
reflected by the economical efficiency and the energy efficiency of the organization.
The economical efficiency of an organization is determined by the proportion of the
capital that an organization invests in environment protection as well as in complying
with the environment regulations set by the relevant government departments in
relation to the total investment that the organization has committed in a specific
period . The energy efficiency of an organization is related to the amount of CO 2
emission per million of sales revenue in a specified period .

The ecological profile of an organization is related to the environment friendly image

that the organization wants to project in the public on its overall commitment towards

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environmentally sustainable operations . With the increasing demand on
organizations for sustainable developments, organizations begin to adopt various
approaches for establishing and promoting themselves as environmentally
responsible citizens in the community. Generally, the ecological profile of an
organization is represented by (a) the organization’s environmental vision and
strategy, (b) the organization environment governance structure, and (c) the degree
of compliance with existing environmental standards and regulations. The
organization’s environment vision and strategy is a reflection of the commitment of
an organization to environmentallly sustainable operations . This is usually
determined by the desire of an organization for fulfilling its social responsibilities and
being a good citizen in the community. The organizational environment governance
structure is a indication of the role and the significance of environment protection
among the overall development of the organization. The degree of compliance with
existing environmental standards and regulations is a reflection of the organization to
provide information on the organization’s capability and efforts in managing matters
including training, legal requirements, resource allacation, documentation and
corrective actions in improving the environmental performance of the organization.

The ecological initiatives of an organization is about the extra effort that an

organization takes for improving its environmental performance in addition to
meeting the basic environmental compliance requirements . It is determined by the
level of spending that an organization has committed compared with the average
environmental spending of the industry, the development of environment awareness
programs in the organization, and the level of recognition of environmental
sustainability in the organization. The level of environment spending by an
organization is usually reflected by the total dollars saved arising from the
environmental initiatives and the amount of investment in various technologies for
improving the environmental performance of an organization. The development of
the environmental awareness program is generally reflected by the number of
employees with specific environmental tasks across the organization for improving
its environmental performance. The level of recognition of environmental
sustainability in an organization is reflected by the degree of its compliance to the
environmental regulations. Table 1 summarizes the discussion above.

Table 1 Summary of the environmental performance measurements

Environmental Indicatiors Authors
performance
measurments
Ecological efficiency  economical efficiency, Clarkson et al 2008,
 energy efficiency. Adela 2008, Daniel
1996.
Ecological profile  the organization’s environmental vision Van Passel et al
and strategy, 2007, Buysse and
 the organization environment Verbeke 2003,
governance structure, and Daniel 1996.
 the reflection of organization’s
capability and efforts in managing matters
including training, legal requirement,
resources allocation docummentation.
Ecological initiatives  the level of an organization’s spending Clarkson et al 2008.,
compared with the average environmental lsthoorn et al 2001.
spending of the industry,
 the development of environment

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 awareness programs in the organization,
and
 the level of recognition of
environmental sustainability in the
organization

Improving the organizational environment performance is critical for modern

organizations. This is because there are various pressures from different
stakeholders including government, customers, and competitors on these
organizations to improve their environmental performance (Li and Holbrook, 1999).
Daniel (1996), for example, shows that there are various pressures originated from
the demand on the organization to meet the environmental regulations and
standards, the maturity of the institutional environment in which an organization
operates, and the extent of the perceived legitimacy of the business operations on
organizations for improving their environmental performance. Zhu et al (2005) argue
that there is an increasing customer pressure on individual organizations for
supplying environmentally friendly products and services. As a result, organizations
have developed and implemented specific environmental strategies and policies, in
particular in relation to the adoption of IT, to improve the organizational
environmental performance as well as achieve their business objectives (Hoek,
1999, Sarkis, 2003).

IT Capability
IT has the capability to make the business sustainable . It has been playing an
important role for monitoring, evaluating, improving, and communicating the
environmental performance of an organization including providing information
baselines on inputs (energy, water, materials, etc.) and outputs (waste, emissions,
etc.) in an organization . There are various IT solutions that can be used for
improving the environmental performance of an organization. Video conferencing
and web services, for example, can be used for reducing travelling costs and energy
usage in an organization . It is therefore unsurprising that many organizations have
begun to develop specific strategies and policies for effectively using IT to improve
their environmental performance. This leads to the development of specific IT
capabilities in organizations for the pursuit of their environment performance.

IT capability is the ability of an organization in effectively and efficiently using its IT

resources for improving their organizational environment performance. It is
determined by IT infrastructure, IT human resource, and IT management as shown
in Table 2 . IT infrastructure is a set of shared IT resources that provide a foundation
to enable business applications. It consists of platform technologies (hardware and
operating systems), networks and telecommunication technologies, key data, and
core software applications . IT human resources are the human resources
associated with the use, exploitation, and leveraging of IT including managerial IT
resources and technical skills . IT management is defined as a process of alignment
to organize and allocate IT resources to support the business strategy in an
organization .

Table 2 Organizational IT capabilities

Capabilities Components Authors
IT sharing capability Broadbent and Weill 1997,

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IT infrastructure Duncan 1995
IT service capability Weill and Vitale 2002,
Broadbent and Weill 1997,
Duncan 1995
IT flexibility Broadbent and Weill 1997,
Duncan 1995, Byrd and Turner
2000, Allen and Boynton 1991
IT human resources Technical IT skill Capon and Glazer 1987,
Managerial IT skill Schneidermeyer 2011
Strategic and plan processes
IT Management Tactical processes Lutchen 2004, Luftman 2003
Operational processes

IT infrastructure is a set of shared IT resources that provide a foundation to enable

business applications in an organization . It is determined by IT sharing capability, IT
service capability and IT flexibility. IT sharing capability is the ability to connect
organizational resources that are located in different locations through networks and
telecommunication technologies . The service capability is the abilities to meet the
business demand of organizations which focuses on the efficiency of existing
business functions . IT flexibility refers to the ability of the IT infrastructure to enable
an organization to adapt to the changing environment through renewing and
redeploying the IT infrastructure to cope with future business and technological
uncertainties .

IT infrastructure is widely used for enhancing the organizational environment

performance. This is because the use of IT infrastructure in an organization can
effectively reduce the energy consumption and the CO 2 emission from its business
operations through sharing information inside and outside the organization .
Furthermore, an adequate use of IT infrastructure can reduce the operational cost in
an organization in order to improve its efficiency in business operations through the
use of data centres, the internet and cloud computing . IT infrastructure can
transform organizational business operations efficiently and effectively through
renewing and redeploying the IT resources .

There are many studies on investigating the role of IT infrastructure for improving the
organizational environment performance. Adela, Marie-Claude & Richard (2008)
explore the role of IT infrastructure in organizations in improving their environmental
performance. The institutional theory is adopted as lens for better understanding how
IT infrastructure can be used to improve the organizational environment
performance. The study shows that IT infrastructure can be leveraged to improve the
ecological efficiency through automating, informating, and transforming
organizational operations. This study, however, focuses only on the ecological
efficiency of an organization. Other environmental performance measurements
including the ecological initiatives and the ecological profile are ignored.

Molla, Cooper & Pittayachawan (2009) investigate the use of IT infrastructure for
enhancing the organizational environment performance. The resources based theory
is organizationd to explain how IT capability contributes to the environment
performance of an organization. The study shows that (a) the use of IT infrastructure
can improve the ecological efficiency of an organization by reducing the energy
consumption and optimising the energy efficiency through managing the service of IT

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infrastructure in the business operations, (b) the use of IT infrastructure can help an
organization to develop its ecological profile for enhancing its environmental
performance. The role of IT infrastrucutre in improving the environmental
performance of an organziation, however, has not been not discussed
comprehensively in this study. In particular, the use of IT infrastructure for improving
the ecological efficiency of an organization through information sharing and IT
resources redeployment in the organization has not been discussed.

Harmon and Auseklis study about how IT infrastructure can contribute to the
organizational environment performance. The study shows that IT infrastructure can
be organization for improving the ecological efficiency of an organization including
reducing the environmental impact, minimizing the use of hazardous materials, and
reducing the energy consumption. However, this study does not consider the use of
IT infrastructure for (a) improving the ecological efficiency by sharing information and
resources and (b) developing the ecological profile of an organization.

IT human resources are determined by the technical skills and the managerial skills
of the IT personnel available in an organization . The technical skill is the ability of IT
personnel in programming, system analysis and design, and competencies in
emerging technologies . The managerial skill is the ability to manage IT resources in
organizations. Through these skills, IT human resources can contribute to the
implementation of various IT related applications for effectively and efficiently
improving the organizational operations .

IT human resources can help organizations to improve the environmental

performance through their skills including managerial and technical skills . The
managerial skill of IT human resources can build a bridge between IT and business
strategies through allocating appropriate IT resources for improving the
organizational environmental performance . It can coordinate various activities with
the successful implementation of specific IT applications . The technical skill of IT
human resources can assist the organization to integrate IT and business processes
more effectively. It also can create communications among business units more
efficiently through developing effective applications .

There are many studies that investigate the role of IT human resources in improving
the organization environmental performance. Benitez-Amado et al examine the
relationship between IT human resources and the environmental performance in an
organization. The resources based theory is adopted for investigating how IT human
resources are utilized for improving the environment performance of an organization.
The study shows that IT human resources can support the business process of an
organization by managing and redesigning environmentally sustainable business
operations for reduce the consumption of material and energy in the organization.
However, the role of IT human resources in improving organizational environment
performance has not been discussed comprehensively in this study. In particular, the
role of IT human resources in supporting the organization’s environmental vision and
strategy has not been discussed.

Molla, Cooper & Pittayachawan (2009) develop a green IT readiness model for
investigating the relationship between IT human resources and the organizational
environment performance. Based on the resources based theory, this study shows

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that an effective use of IT human resources can reduce the energy consumption,
improve energy efficiency and further help the organization to develop its ecological
profile. This study, however, has not considered the role of IT human resources in
developing the ecological initiative that an organziation can take for improving its
environemntal performance.

Dao, Langella & Carbo (2011) examine the role of IT human resources for improving
the organizational environment performance. The triple-bottom line approach is used
for identifying the role of IT human resources in developing the organizational
capability for adequately addressing the organizational environment issues. The
resources based theory is organization for better understanding how an organization
can develop its IT capability to improve its environment performance. The study
shows that an integration of IT human resources, business operations and IT
resources can develop the environmental capability of an organization through
automating organizational information processing. However, this study does not
explore some potential environment issues including the role of IT human resources
in supporting an organization’s environmental strategy and policy and in developing
ecological initiatives to improve environmental performance.

IT management is determined by the strategic, tactical and operational processes for

aligning between the business strategy and the IT strategy in an organization . The
strategic process is related to achieve the objectives of an organization in long term
and the vision of IT functions and the business overall. The tactical process involves
all the activities that are required to achieve the goal of the strategic plan in an
organization. The operational process is the activity and action that should be
performed to maintain an organization’s performance level. An adequate use of IT
management in an organization can improve the organizational environment
performance.

Loos et al examine the role of IT management in contributing to sustainable

business processes in an organization. This study focuses on the design of IT
management in organizational business processes for improving the environmental
performance of an organization. The classical management lifecycle is organization
to identify how IT management facilitates changes in the business operations of an
organization to improve their environmental performance. The study shows that IT
management are able to assist the organization for developing ecological initiatives
through redesigning business processes. However, the study does not investigate
the role of IT management in (a) supporting the development of environment
awareness programs and (b) developing the ecological profile.

Jenkin, Webster & McShane (2011) develop a conceptual framework for

investigating the role of IT management in improving the environmental performance
of an organization. Both the internal factors (leadership, internal stakeholders,
structures, policies and financial) and the external factors (regulations, laws and
market pressures) are investigated for facilitating environmentally sustainable
business operations based on a comprehensive review of related literature. The
study shows that IT management can encourage business initiatives for reducing the
negative environmental impacts. However, this study does not explore the role of IT
management in developing ecological initiatives to improve the level of recognition of
environmental sustainability in the organization.

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Onetti et al investigate the management of IT resources in organizations for
improving the environmental performance of an organization. A qualitative
methodology including interviews and literature review is used for understanding how
IT resources are used for the management of the environmental impact of the IT
use. The study shows that IT management can be used for (a) promoting the
adoption of the ecological initiative and (b) improving the ecological efficiency of an
organization. However, the use of IT management for developing the ecological
profile of an organziation has not been discussed comprehensively in this study.

Table 3 summarizes the discussion above. In summary, numerous studies

investigate the relationship between the use of IT and the organizational
environment performance with the adoption of various theories including the
institutional theory, the resources based theory and the organizational motivation
theory. These studies show that IT can be developed as an organziation capability
for reducing the impact of the business operations on the environment through IT
infrastructure, IT human resources and IT management. There are, however, many
potentail issues to be further investigated in order to better understanding the use of
IT for improving the environmental performance of an organization.

Table 3 Summary of literature on IT capability and environmental performance

References IT Methodo Use of IT in Theory
capabilities -logy

IF HR MN C E EE EP EI
Adela et al X X X X Institutional Theory
Benitez-Amado et al X X X X Resources Based
Theory

Daly and Butler X X X Institutional Theory

Dao et al X X X X X Resources Based

Theory
Ijab et al X X X X The Green IS Lifecycle

Loos et al X X X Literature Review

Mann et al X X X The Quality
Management
Melville X X X X Literature review
Molla X X X X X X Organizational
Motivation Theory
Molla et al X X X X X X organizational
Motivation Theory
Molla et all X X X X X X X X Resources Based
Theory

Onetti et al X X X X X X X The Techno-Economic

Sayeed & Gill X X X X

Toffel and Horvath X X X X Policy Analysis

Watson et al X X X X -
Watson et al X X X X Energy Informatics

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Legend:

For IT capabilities, IF = IT infrastructures; H = IT Human Resources; M = IT management

For methodology, C = conceptual; E = empirical
For roles of IT, EE = Ecological efficiency; EP= Ecological profile; EI= Ecological initiatives

5. Hypothesis Development

This section presents a conceptual framework for investigating the relationship

between the IT capability and the organizational environment performance. The
framework consists of two components including organizational environment
performance and the IT capability. The proposed framework is shown in Figure 1.

To investigate the relationship between the IT capability and the organizational

environment performance, this research organizes the three environmental
performance measurements including ecological efficiency, ecological profiles, and
ecological initiatives. The ecological efficiency is determined by economic efficiency,
and the energy efficiency. The ecological profile is determined by the organization’s
environmental vision and strategy, the organization environment governance
structure, and the degree of the compliance with existing environment standards and
regulations. The ecological initiative is determined by the level of the organization’s
environment spending compared with the average environmental spending of the
industry, the development of environment awareness program in the organization,
and the level of recognition of environment sustainability in the organization.

IT capability is identified as a critical factor for improving the environmental

performance in organizations . In this study, IT capability is determined by IT
infrastructure, IT human resources and IT management. Each component of IT
capability has the ability to improve the environmental performance in organizations.
IT infrastructure provides several capabilities that offer eco-friendly options and
features that can complement the organization’s environmental performance
improvement . IT human resources have technical skills and managerial skills to
assist the organization to face business challenges and demands in order to improve
environmental performance . IT management is organization for aligning
organization strategies and IT strategies to allocate appropriate IT resources for
efficient business operations.

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Figure 1: A proposed Conceptual Framework

IT infrastructure is seen as a tool that offers eco-friendly capabilities including

sharing capability, service capability, and flexibility. The share capability refers to
“reach and range”. “Reach” refers to the locations that can be connected through the
infrastructure from local workstations and computers in one department to another
for reducing energy consumption and operational costs. “Range” determines the
level of functionality (i.e. information and transaction processing) that can be shared
automatically and seamlessly across each level of the reach to minimize human
intervention for efficient business operations. Based on the above argument, the
following hypothesis is proposed:

H1: The share capability of IT infrastructure can be leveraged to improve the

organizational environment performance.

The service capability of IT infrastructure is used for meeting the organization

business demands that focus on the efficiency of business activities . In this study, it
can be identified from the range of the services and various categories of IT services
in the business operations . The range of the services can be classified into three
layers including the entire organization, business units and the geographical area. It
depends on the standardization, the shared services across the whole organization
to provide uniform services for all business units by lower cost. Various categories of
IT services consist of application infrastructure, communication management, and
data management. An application infrastructure is a software program that resides
on a computer for helping an organization to meet their demands in business
operations. Communication management focuses on the technology that facilitates
digital communications within the organization. It includes the management of
hardware and software to facilitate communications among business units. Data
management refers to the way that an organization structures and handles its
information resources that may be sourced from internal or external databases.
Those activities can be leveraged by an organization for improving their
environmental performance through managing their business operations centrally
and providing unified services for all business units . The service capability is also

13
expected to provide the environmentally friendly services through creating simple
and familiar procedures that provide easy-to-use interfaces and integrates
information across physical systems. This discussion leads the following hypothesis:

H2: The service capability of IT infrastructure can be leveraged to improve the

organizational environment performance.

The flexibility of IT infrastructure refers to the ability of IT infrastructure to enable the

organization to adapt to the changing environment. In this study, IT infrastructure
flexibility is determined by the technical flexibility and the managerial flexibility . The
technical flexibility is the ability of IT infrastructure to integrate structure of the
software and hardware platform in organizational business operation. The
managerial flexibility is the ability of IT infrastructure that is related to refine or
reengineer business operations to adapt too many different changes in the direction
of organizational strategies. Both capabilities provide a platform to reduce
operational costs in implementing new hardware and software and developing
business operations . In order to improve the environmental performance of an
organization, the flexibility of IT infrastructure is expected to provide the ability to
transform business operations through allowing renew and redeploy IT resources
efficiently and effectively .

H3: The flexibility of IT infrastructure can be leveraged to improve of the

organizational environment performance.

IT human resources can be organized to assist organizations for improving their

environmental performance by their technical and managerial skills . The technical
skill refers to ability of IT personnel that will be employed to support business
operations efficiently and effectively in technical areas. This skill is determined by the
training, experience, relationships and insights of its IT personnel that can be
employed to integrate IT and businesses, develop system applications, communicate
with business units, and anticipate future business demands . In order to improve the
environmental performance, IT human resource can be employed to integrate IT and
business processes for efficient business operations. Thus, those reasons lead to
the following hypothesis:

H4: the technical skill of IT human resources can be leveraged to improve the
organizational environment performance

The managerial skills are the ability of IT personnel that will be employed for
effective and efficient business operations in an organization. IT human resources
require training, experience, and knowledge that can be employed to coordinate and
interact with business units, manage IT resources and understand business
operations for improving the efficiency of business activities . Jabbour and Santos ,
for example, state that human resources organization their managerial skills to
manage the business operations for improving the environmental performance
through developing new knowledge or new processes. Speshock argues that the
managerial skill can be used for understanding business needs, communicating with
business units, and identifying appropriate IT resources in order to improve the
organizational environment performance. While the technical skill of IT human
resources may suffice for helping the organization to improve their environmental

14
performance, the management skills are necessary to be deployed in a manner that
develop business operations efficiently and effectively. Based on the above
argument, the following hypothesis is proposed:

H5: the managerial skill of IT human resources can be leveraged to improve the
organizational environment performance

IT management is defined as an activity of organizing IT resources for supporting

business operations through establishing policies regarding the use of the IT
resources . it is determined by strategic, tactical, and operational process . The
strategic process is determined by setting goals and identifying appropriate action
steps. Setting goals refer to the goal of organization that will be used as a reference
for improving their environmental performance. When an organization has goals, the
next step is identification requirements, timeframe, cost, IT infrastructure, IT human
resources and possible constraints in order to achieve the goal of organization. This
discussion leads to following hypothesis:

H6: strategic process of IT management is positively related to improvement of the

organizational environment performance

The tactical process is critical activity in managing IT resources for improving

environmental performance in business operations . It helps organizations to allocate
and arrange their IT resources in appropriate spot . Speshock argues that tactical
process is needed to build a relationship between IT and business strategies through
allocating the appropriate IT resources for improving environmental performance.
Thus, the following hypothesis is proposed:

H7: tactical process of IT management is positively related to improvement of the

organizational environment performance

Operational process refers activities and actions which should be performed to

maintain an organization’s level of performance on business operations . It is
determined by leading and controlling. Leading involves building commitments and
encouraging work efforts that support goal. Controlling is a process of gathering and
interpreting performance feedback as a basis for constructive action and change,
such as monitoring performance, comparing results to goals, and taking corrective
action. In order to improve environmental performance, the activities that will be
employed as organizational procedures guiding the sourcing, use and disposal of the
IT technical infrastructure and the activities of the IT human resources . From the
above argument therefore leads to the following hypothesis:

H8: operational process of IT management is positively related to improvement of

the organizational environment performance

15
6. Research Methodology

The Institutional Theory

There are many theories that can be adopted as lens for investigating the role of IT
capability in improving the environmental performance in organizations. For
example, the Information System Theory including the Technology Acceptance
Model, the Unified Theory of Acceptance and Use of Technology, is adopted to
predict behaviour and cognition of user in using IT capability within organizations .
The Resources Based Theory is utilized for identifying the critical IT resources to
better understand the relationship between the organizational environment
performance and IT resources . The Organizational Motivation Theory is employed
to identify the driver and the use of IT capability to improve the organizational
environment performance .

The Institutional Theory is one of the theories that is concerned about the influences
that shape the organizational structures, schemas, rules, norms, routines and
ultimately, the behaviour of social actors in a specific setting . In this study, the
institutional theory will be employed in analysing the use of IT capability to improve
the environmental performance in organizations. The analysis will be guided by three
forces of the institutional theory which is regulative, normative and cultural-cognitive
institutional forces . Regulative forces will give a structure to shape organizational
responses, procedures and protocols for improving the environmental performance
in an organization. Normative forces will influence the role of IT capability in an
organization to act in a legitimate way in organizational business operations.
Cultural-cognitive institutional pressures can influence an organization to act alike
because of the governmental laws and regulations that they have to comply with.

A regulative force has a significant influence on the use of IT capability in improving

the organizational environment performance. Daly and Butler argue that the use of
IT infrastructure has been influenced by government regulations such as waste
electrical and electronic equipment. Furthermore, Daly and Butler (2009) state that
the environmental regulations can pressure IT human resources to act more
environmentally friendly in implementing IT. Butler and McGovern argue IT
management is influenced by the regulative force through IT policies, architecture
and technical standards. Thus, Regulative forces will be used as procedures and
guides by organizations in the use of IT capability for improving organizational
environment performance.

Normative forces have influenced the use of IT in an organization in a legitimate way

for improving its environmental performance . For example, ISO 14001 standards
influence organizational management processes for controlling and improving their
environmental performance and reducing the impact of their operations on the
environment . In this case, the role of IT can help organization to computerize ISO
14001 environmental system for allowing quicker and more flexible information
access . Therefore, the normative forces will influence the role of IT capability to act
in a legitimate way in organizational business operations .

16
Cultural-cognitive forces can encourage the organization to imitate in use of the IT
capability for improving their enviromental performance from another organization .
Daly and Butler argues that the organization will imitite the successful the use of IT
capability from the other organizations in terms of environmental responsibility
practices with regard to the operation of IT. For example, the prevalencve of the use
of IT capability in achieving ecological efficiency is driven by mimetic pressures .

Much research has adopted the Institutional theory as a lens to investigate the role
of IT in reducing the impact of organizational business activities on the environment .
For example, Orlikowski and Barley state that the institutional theory is used to
identify the influence of normative, and regulative, cultural-cognitive processes and
structures in the design and operation of IT based system. Adela et al argue that the
institutional theory is employed as a lens to better understand how IS can be
leveraged to achieve ecological sustainability including eco-efficiency, eco-equity
and eco-effectiveness. Daly and Butler state that the institutional theory is used to
develop the capability of IT to improve energy efficiencies, and reduce carbon
footprints. Tom argues that institutional theory is employed for helping organizations
to meet governement regulation and compliace standards through using IT
capability. Thus, institutional theory is an appropriate theoretical perspective to
investigate relationship IT and environmental performance in organizations.

Research design
There are three types of research methodologies including quantitative, qualitative
and a mixed-method methodology (Creswell, 2009). A quantitative methodology
places considerable reliance in numbers that represent opinions or concepts . A
qualitative methodology is normally employed as a guide to focus on facts of an
organization through an intense and/or prolonged contact with a “field” . A mixed
methodology tends to be based on a pragmatic ground by collecting and analysing
both quantitative and qualitative data in a single study (Creswell, 2009). This study
will use a mixed methodology in the research. According to Creswell & Clark , a
mixed method methodology is appropriate if a researcher wants to explore how
individuals describe a particular topic by starting with interviews and then using an
analysis of their interviews to develop a survey instrument that is administered later
to a sample from the population.

This study expects to obtain the evidence about the relationship between IT
capability and the organizational environment performance in the Indonesian
telecommunication industry. It is important to explore the current use of IT capability
through a selection of appropriate participants that will enable an in-depth insight into
the current situation. After ascertaining the current situation, this study will generalize
the findings into a broader population. Generalizability refers to the probability that
the results of the research findings apply to other subjects, other groups, other
settings and other conditions

Data collection
The data collection procedures in this study will involve three phases. The first phase
is to review the previous studies from journals, articles, conference proceedings,
books and other materials of relevance to the study. Regulations, government

17
reports and other related documentations are also examined to capture the current
situation of IT capability in improving environmental performance.

The second phase will be the interview session. This study will employ semi-
structured interview to obtain the views and opinions of participants related to the
use of IT capability in improving environmental performance. Interviewees will be
employed to identify current situation in the use of IT capability in telecommunication
industry for improving environmental performance in organisations. The interviews
will take 50 – 60 minutes and will be recorded. The interview transcripts will be sent
to participants for validation and clarification.

The third phase, the questionnaire will be employed. The data collected from the
interview will be used for supporting in developing questionnaire instruments. At the
beginning of this phase, pilot testing of instruments with a small numbers of
participants will be conducted. The purpose of the pilot test is to ensure that the
questionnaire is well-developed. Then, the questionnaire will be structured and
presented on a 5-point Likert scale facilitating to examine the relationship between
the role of IT capability and organizational environment performance. 5-point likert
scale is used to measure the perception of participants in using IT capability in
improving environmental performance in each organization, which later determines
the critical factors of IT capability for improving organizational environment
performance. Email will be utilized to distribute the questionnaire to the selected
participants in 15 organizations.

Sample selection
The Indonesian telecommunication industry consists of fifteen telecommunication
organisations as shown in table 4. In interview section, one chief information officer
or senior manager will be selected for interview from IT division of each
telecommunication organization. Interviewees will be selected based on the role in
their respective organization who involved in strategic planning process during
building and implementing the IT resources in organizations.

The questionnaire survey respondents will be selected from Indonesian

telecommunication organization. To determine the sample size for research using
regression analysis, the respondents are calculated by ratio of cases per
independent variable. In determining the sample size, Green suggested a sample
size formula which should be greater or equal 50+8m (m is defined as the number of
independent variables) for testing multiple correlation, and N= 104+m for testing
individual independent variables (Green 1991). In addition, the sample size can
affect the generalisability of the result by ratio of observations to independent
variables (Hair 1995). The desirable ratio should be between 15-20 observations for
each independent variable. With these guidelines above, the sample size of this
study is around 200 respondents. The distribution of questionnaire to the
organization will be identified based on ministry of telecommunication and
informatics of Indonesia. The are currently fifteen telecommunication organization in
Indonesia. The respondent will be selected by a clustering approach. Clustering is
based on market share of the telecommunication organization in providing
telecommunication to the people and society in Indonesia. It means that the
organization that has the biggest market shared will have the biggest portion in
contributing of questionnaire while the lowest market shared organizations will get

18
fewest portion of respondents. There are two hundred managers who will be asked
to complete the survey from all divisions or departments of telecommunication
organizations. The manager is a key participant in order to improve environmental
performance in organization (Bowen et al. 2001; Carter & Ellram 1998; Zhu, Sarkis &
Geng 2005).

Data Analysis
The data from interview sessions will be analysed using the NVivo software
package. Data will be coded for typical responses and emerging themes. Cross-
interview comparisons will then be conducted. The data analysis from surveys will
involve descriptive analysis to determine the general trends in the data. As well,
appropriate statistical tools will be used to explore potential relationships between IT
capability and organizational environment performance.

Table 5 Research Phases

No Phase Activities The number of Resources
respondents
1. Literature review Review the previous studies that  Journals
are related to IT capability in  Articles
improving organizational  conference
environment performance. - proceedings
 Books

2 Interview Interview will be conducted to  CIO

identify the current situation in  Senior IT
organizations that utilise IT 8 division manager
capabilities in organization to
improve environmental
performance.
3 Survey Survey will be conducted to  Managers of
identify the critical factors of the each division from
use of IT capability to improve 200 telecommunicatio
organizational environmental n organizations
performance
4 Data Analysis Data analysis will be conducted  Nvivo
to analyse the data that is - software
collected from interview and  Appropriate
survey. statistical tools

Ethical Consideration
Ethics approval from the RMIT Human Research Ethics Committee will be obtained
prior to conduct both pilot and main studies. Furthermore, it will ensure to maintain
required level of ethical standards throughout the study.

7. Research Timeline and Expected Contribution

Table 6 shows the proposed timeline for the entire research activities for 40 months
duration that was started from March 2010 to June 2014. The data collection will be

19
begun with the documents analysis and interview in July 2012 for 1 month and will
continue for another 2 months for survey after the documents analysis and interview
are completed. In term of publication, there are three publications including two
conferences and one journal, which are expected as product of the research. The
completion seminar is expected in February 2014. Submission of the thesis is
expected in June 2014.

20
Table 6 Proposed Research Timeline

Expected Contribution
This research is expected to contribute to both IS theory and practice through:
a. Developing conceptual framework of relationship between IT capability and
organizational environmental performance.
b. Understanding of the use of IT capability for improving organizational
environment performance.
c. Developing practical guidance on how organizations can develop, deploy and
use IS to support and enable their eco-sustainability strategies.

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