Business Process Digitization, Strategy, and the Impact of Firm Age and Size: The Case of the Magazine Publishing Industry

John M. Gallaugher
Assistant Professor of Information Systems
Wallace E. Carroll School of Management
Boston College
Chestnut Hill, MA 02467
john.gallaugher@bc.edu
Tel: 617-552-2519

Pat Auger
Melbourne Business School
Melbourne, Australia
Tel: 61 (03) 9349-8194
e-mail: p.auger@mbs.edu

The dramatic growth in the number of firms that use the Internet to conduct business prompts many questions regarding the nature of this activity. Of special interest is the question: Which firms are more likely to choose this mode of operation, and why? This paper examines the relationship between the extent to which firms utilize the Internet to conduct business and the firm’s age, size, and strategic orientation. Findings suggest that the degree to which firms digitize business processes does vary as a function of firm age and size. We found that established firms digitize activities associated with marketing, administration, and communication more than newer firms and that larger firms digitize marketing activities more than smaller firms. Results also indicate that process digitization predicts strategic orientation of innovation and strategic orientation of low cost, explaining 12 and eight percent of the variance, respectively. Our results also suggest that the relationship between digitization and innovation efforts are stronger in newer firms than in established firms, and that the relationship between digitization and low cost efforts are stronger for smaller firms than for larger firms. Specifically, digitization variables account for 22 percent of innovation variance in newer firms compared to 10 percent in established firms and 15 percent of the low cost strategy variance in smaller firms compared to four percent in larger firms.

BarNir, Anat, Auger, Patrice, and Gallaugher, John M., "Business Process Digitization, Strategy, and the Impact of Firm Age and Size: The Case of the Magazine Publishing Industry," forthcoming in the Journal of Business Venturing.

Electronic Commerce, Information Goods, Revenue Streams, Internet Business Models, Empirical Research