THE ADOPTION OF CLOUD COMPUTING SERVICES: THE MODERATING EFFECT OF ORGANIZATIONAL CULTURE

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1 Association for Information Systems AIS Electronic Library (AISeL) PACIS 2016 Proceedings Pacific Asia Conference on Information Systems (PACIS) Summer THE ADOPTION OF CLOUD COMPUTING SERVICES: THE MODERATING EFFECT OF ORGANIZATIONAL CULTURE Wei-Tsong Wang National Cheng Kung University, Chia-Feng Chang National Cheng Kung University, Follow this and additional works at: Recommended Citation Wang, Wei-Tsong and Chang, Chia-Feng, "THE ADOPTION OF CLOUD COMPUTING SERVICES: THE MODERATING EFFECT OF ORGANIZATIONAL CULTURE" (2016). PACIS 2016 Proceedings This material is brought to you by the Pacific Asia Conference on Information Systems (PACIS) at AIS Electronic Library (AISeL). It has been accepted for inclusion in PACIS 2016 Proceedings by an authorized administrator of AIS Electronic Library (AISeL). For more information, please contact

2 THE ADOPTION OF CLOUD COMPUTING SERVICES: THE MODERATING EFFECT OF ORGANIZATIONAL CULTURE Wei-Tsong Wang, Department of Industrial and Information Management, National Cheng Kung University, Tainan, Taiwan, R.O.C., Chia-Feng Chang, Institute of Information Management, National Cheng Kung University, Tainan, Taiwan, R.O.C., Abstract Potential benefits of using cloud computing services are remarkable. However, organizations still hesitate to use it because of the challenges of using such services, including service availability, data security and privacy, and system standard and data transferability. Additionally, organizational culture is recognized to have significant influence on organizations adoption of cloud computing services. Recent studies of cloud computing services mainly focus on its economic benefits, technical application, and performance. Nevertheless, very few studies have investigated it from the perspective of organizational culture. Consequently, this research adopts the Information System Success model as a theoretical basis to develop a theoretical model for investigating the impact of organizational culture on organizations intention of using cloud computing services. The research results are expected to shed lights on how the system quality, information quality, and service quality of cloud computing services may influence user satisfaction and intention to use such services in organizations, and how different types of organizational cultures may moderate the influence of system-related quality factors on users intention to use cloud computing services. Keywords: Cloud Computing Service, Organizational Culture, D&M IS Success Model.

3 1 INTRODUCTION The research conducted by Institute of Information Industry at the third quarter of 2011 reveals that 8% of manufacturing and service industries in Taiwan have adopted cloud computing services, a growth of 3.1% compared to the 4.9% in Besides, 38% of manufacturing and service industries consider adopting cloud computing services in the future. The overall proportion of cloud computing services adopted organizations in Taiwan is fairly low, but we can infer that organizations in Taiwan have been taken cloud computing services as a key project in IT investment through the observation that 38% of organizations will consider cloud computing services adoption. Many previous studies indicate that cloud computing services help organizations reduce the cost and time of IT development, shorten the timetable for IT implementation, and bring competitive advantages. However, the challenges of cloud computing services adoption are also the reasons which keep organizations from adopting cloud computing services (Armbrust et al. 2010; Marston et al. 2011). In addition, organizational culture might also cause resistance to the innovation of introducing new information technology (Bradley et al. 2006; Cooper 1994; Kappos & Rivard 2008), causing the difficulties for cloud computing service providers to promote those services. Therefore, based on the DeLone and McLean s Information System Success Model (ISSM) (DeLone & McLean 2003), this study develops a theoretical model for investigating the impact of organizational culture on organizations intention of using cloud computing services. It is expected that by validating the proposed model using empirical data, we can get insights into the influence of different types of organizational cultures may influence organizations willingness to adopt cloud computing services. The research results may be used as a reference for cloud computing service providers for developing strategies to improve the quality of their services with reference to the key concerns of their potential customers. 2 RESEARCH BACKGROUND 2.1 Cloud Computing Services The concept of cloud computing services is proposed by Google s CEO, Eric Schmidt, at Search Engine Strategies Conference in 2006 (Schmidt, 2006). It is the idea that any devices can get access to the cloud for computing resources and materials. Marston et al. (2011) define cloud computing services as a type of information technology through which users acquire computing services (both hardware and software) on their demands in a self-service way. Instead of requiring the services to be provided by a third-party, Marston et al. (2011) emphasize more on resource utilization, virtualized physical resources, architecture abstraction, dynamic scalability of resources, elastic and automated self-provisioning of resources, ubiquity, and the operational model. Cloud computing services can be set up by using current resources existed in organizations, or it can be rented from cloud services providers. The core concepts of cloud computing services can be classified as virtualization, multitenancy, and web services based on the diverse definitions of cloud computing services proposed by various academics and institutions (Marston et al. 2011). Virtualization is not an abstract technique. Instead, it assigns one or more physical computers to multiple users, those may not be in the same area with computers, but control them through the Internet (Vouk 2008). The concept of multitenancy refers to a condition in which an application software serves multiple clients at the same time. Clients do not have to install the application software individually so that creates the benefits of cost-saving and better utilization of a system s resources (Marston et al., 2011). A web service is a software system designed to support machine-to-machine interaction over a network. In this study, cloud computing

4 services are defined as a form of information technology outsourcing, via which users of such services can use any kinds of devices to connect to network and get access to cloud computing services provided by their service providers. The advantages of cloud computing services adoption in organizations mainly include IT-related cost reduction and rapid development and extensions of information systems. First, for large enterprises, they can enjoy the benefits from private clouds or hybrid clouds through equipment upgrades. Small and medium corporations with constrained resources can rent public clouds to reduce large upfront investment in IT infrastructure and by lease of computing resources at peak demand on computing resources to avoid unnecessary procurement of equipment due to temporary demands (Clemons & Chen 2011; Marston et al. 2011). Additionally, because the resources of cloud computing services are managed through software applications, when new requirements arise, those resources can be reallocated immediately via proper software settings (Armbrust et al. 2010; Marston et al. 2011). Compared to traditional development of applications, the deployment of cloud computing services significantly shorten the time needed for system development and implementation. However, all cloud computing services must be accessed through networks and the data is not stored within organizations, which leads to the security concerns of the organizations. The issue of information security has been noticed by stakeholders in corporations. They are concerned about relevant issues when considering could computing services adoption and those concerns would affect their decisions on selecting cloud computing services providers (Clemons & Chen 2011; Marston et al. 2011). Previous academics have pointed out the challenges which corporations may encounter when adopting cloud computing services. Therefore, if cloud computing services providers can provide solutions to manage those challenges, they would be able to encourage their customers to adopt their services in a more effective manner. 2.2 Organizational Culture and Cloud Computing Services Organizational culture is a very abstract concept. It is composed of shared beliefs, values, and behavioral regulations in organizations which are followed by all members. Organizational culture has a profound influence on organizational development. Previous studies define organizational culture differently based on the research levels and goals (Deshpande & Webster 1989; Messmer 2001; Wallach 1983). In this study, we define organizational culture as a shared culture composed of a set of values, beliefs, and norms shared by the employees of an organization (Mitchell & Yates, 2002). The formation of organizational culture begins with the changes in internal and external business environment and the successful or failed experiences which organizations have learned from challenges (Robbins & Judge 2010; Schein 2010). Organizational culture is a tradition shaped by organization development as well as the core value of an organization. Therefore, organizational culture could be a powerful facilitator or an insurmountable obstacle when implementing change in organizations (Levin & Gottlieb 2009). Duncan (1972) argues that organizations that operate in dynamic and complicated environments tend to have more innovative organizational culture and these forward-looking organizations are more likely to accept new informational technology, such as cloud computing services (Marston et al. 2011). In contrast, organizations under stable environments tend to have more conservative organizational culture which may lead to severe resistance to the changes caused by the adoption of new information technology (Cooper 1994). Bradley et al. (2006) also find that organizational culture will have influence on the successful adoption of information systems. Moreover, organizational culture also affects user acceptance of information systems (IS) and IS use process (Kappos & Rivard 2008). Cloud computing services change the information technology structure of organizations and they may also bring evolutions or resistances to organizational culture (Cooper, 1994). Previous studies indicate that the adoption of new information technology could make differences in terms of organizational flexibility and employees powers and values. Organizations would undergo cultural transformation to adapt to new information technology (Leidner & Kayworth 2006). Therefore, organizational culture

5 plays a critical role in determining the success of cloud computing services adoption in organizations (Marston et al. 2011). Recent studies of cloud computing services tend to focus more on cloud economics, pricing strategies (Etro 2011; Kantere et al. 2011), and the technology and performance of cloud application (Losup et al. 2011). However, few studies have specifically investigated the effect of organizational culture on cloud computing services adoption. By identifying and investigating the critical concerns related to organizational culture regarding cloud computing services adoption, we will be able to help organizations determine what kinds of information technology that are compatible with cloud computing services and help cloud computing service providers better plan for their services and strategies with respect to the organizational culture of each of their client corporations. There have been typologies of organizational culture (Bradley et al. 2006; Cameron & Freeman 1991; Wallach, 1983). The Competing Values Framework has been widely applied in organization-related research, such as organizational efficiency (Cameron & Freeman 1991; Quinn & Rohrbaugh 1983), and organizational life cycle (Cameron & Quinn 1999). There have been IS academics use this framework for investigating the adoption of information systems and information technology (Cooper 1994; Cooper & Quinn 1993; Livari & Huisman 2007). Bradley et al. (2006) aggregate the four types of organizational cultures of Competing Values Framework into two types, which are entrepreneurial and formal, to help researchers conduct studies regarding organizational culture more conveniently. Therefore, in the study, we adopt the Competing Values Framework revised by Bradley et al. (2006) to investigate the influence of organizational culture on the adoption of cloud computing services. 2.3 Information Systems Success Model DeLone and McLean (1992) proposed the Information Systems Success Model (ISSM), which addresses the measures that contribute to information systems success from a comprehensive perspective, it has been intensively testified and utilized. The ISSM has six major constructs of system success measures that are interdependent and thus should not be adopted individually for evaluating system success. Those constructs include system quality, information quality, service quality, use, user satisfaction, individual impact, and organizational impact. However, some academics discover problems of adopting this model in their studies. Moreover, in the upcoming E-Commerce age, this model may not be completely applied to new information systems. DeLone and McLean (2003) thus propose a re-specified ISSM by adding a new construct, service quality, and replacing individual impact and organization impact with net benefit. Regarding the application of the ISSM, Bradley et al. (2006) add three variables, plan quality, hardware quality, and communication quality into ISSM to develop their research framework and use it to examine whether the result of information system adoption would be influence by different organizational cultures. Yusof et al. (2008) develop an evaluation framework by combining ISSM and IT Organization Fit Model to discuss the issues among technology, human and organization in the realization of Health Information System(HIS) and to observe whether hospital organizational culture affect the success of HIS. In this study, we discuss whether different organizational cultures would lead to different concerns of organizations when considering the adoption of cloud computing services and how the concerns will have influence on cloud computing services adoption. Based on the literature review in this chapter, we believe that IS Success model is suitable to be applied in a research regarding organizational culture and e-service. Therefore, DeLone and McLean s updated ISSM (2003) is used as the theoretical base for integrating the concept of organizational culture to develop the research model for investigating the adoption of cloud computing services in organizations from an integrated perspective of information system success and organizational culture.

6 3 RESEARCH MODEL Based on the discussion above, we develop a research model for understanding the adoption of cloud computing services in organizations from an integrated perspective of information systems success and organizational culture, as presented in Figure 1. The hypotheses developed are presented as follows: H1a: System quality of cloud computing services positive influence users intention to use such services H1b: System quality of cloud computing services positively influences user satisfaction regarding such services H2a: Information quality of cloud computing services positive influence users intention to use such services H2b: Information quality of cloud computing services positively influences user satisfaction regarding such services H3a: Service quality of cloud computing services positive influence users intention to use such services H3b: Service quality of cloud computing services positively influences user satisfaction regarding such services H4: User satisfaction regarding cloud computing services positive influences users intention to use such services H5a: Entrepreneurial organizational culture positively moderates the positive influence of system quality on user satisfaction regarding cloud computing services rather than formal organizational culture H5b: Entrepreneurial organizational culture positively moderates the positive influence of information quality on user satisfaction regarding cloud computing services rather than formal organizational culture H5c: Entrepreneurial organizational culture positively moderates the positive influence of service quality on user satisfaction regarding cloud computing services rather than formal organizational culture Figure 1. The research model.

7 4 CONCLUSION Cloud computing services have become popular in both industrial and academic fields since they were proposed in Virtualization, multi-tenancy, and web service, the core concepts of cloud computing services, allow organizations to set up information technology infrastructure and information systems with lower costs, to cut down expenses efficiently, to improve work efficiency, and to gain competitive advantages. However, the adoption of information technology forces organizations to face revolutions. The inherent features of organizational culture will affect the degree of acceptance when organizations adopt new information technology and will impact the attitudes of organization members regarding using information technology. While precious studies on cloud computing services mostly focus on operational-related issues, including cloud economics, pricing strategy (Demirkan et al. 2010; Etro 2011), cloud technologies, and cloud efficiency (Losup et al. 2011), very few of them investigate how organizational culture affects cloud computing services. Different organizational cultures have different levels of acceptance to technology usage which consequently affects the implementations of organizations about information technology adoption. Additionally, different organizational cultures have different attitudes toward information technology usage (Bradley et al. 2006; Cooper 1994; Duncan 1972; Kappos & Rivard 2008; Marston et al. 2011). Therefore, organizational culture may become a strong and powerful advocator or an unavoidable obstacle when organizations consider cloud computing services adoption (Levin & Gottlieb 2009). Organizations that operate in dynamic and complicated environments will have more innovative organizational cultures, thus being more willing to adopt cloud computing services. In contrast, organizations that operate in relatively static and stable environments tend to have more conservative organizational cultures and they may be less likely to adopt cloud computing services (Bradley et al. 2006; Cooper 1994; Duncan 1972; Kappos & Rivard 2008; Marston et al. 2011). Furthermore, organizations with conservative organizational cultures tend to have more negative attitudes toward relevant information services, which will cause negative results to cloud computing services providers who try to promote their services. Therefore, organizational culture should be considered in studies examining cloud computing services adoption in organizations. In this study, we use DeLone and McLean s updated ISSM (2003) as the theoretical base to examine how organizational culture affects organizations willingness to adopt cloud computing services and its relationship with other critical success factors in the ISSM. It is expected that the results of this study can provide insights into the relationships between the design of cloud computing services, in terms of key system-related quality factors, and user satisfaction and intention to use such services in organizations that have different tendency of organizational culture. ACKNOWLEDGMENT The author thanks the coordinators of the PACIS conference for their support. The author also thanks the anonymous reviewers for their valuable feedback on this paper. This study was funded by the Ministry of Science and Technology, Taiwan [grant number: MOST H MY3]. References Armbrust, M., Fox, A., Griffith, R., Joseph, A. D., Katz, R., Konwinski, A., and Zaharia, M. (2010). A view of cloud computing. Communications of the ACM, 53(4), Bradley, R. V., Pridmore, J. L., & Byrd, T. A. (2006). Information systems success in the context of different corporate cultural types: An empirical investigation. Journal of Management Information Systems, 23(2), Cameron, K. S. and Freeman, S. J. (1991). Cultural congruence, strength, and type: Relationships to effectiveness. Organizational Change and Development, 5,

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