Conceptual Framework To Explain Digital Divide Commerce Essay

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Innovations in information technology (IT) have enabled organizations shape new business rules and create competitive advantage. Information technology provides opportunities for the creation of wealth from knowledge-based economic activities which contribute to the GDP. Successful creation of knowledge-based society primarily relies on narrowing the digital divide.

Digital divide is a complex concept. It is characterized by issues on varying levels of information and communication technologies (ICT) access, basic ICT usage and patterns of ICT applications among countries and peoples (Borbora, 2005). The OECD (2001) defined digital divide as differences between individuals, households, companies, and regions related to the access and usage of ICT. The Executive Development Center at the University of Minnesota identifies digital divide as the gap between individuals, households, businesses, and geographic areas at different socio-economic levels with regard to both their opportunities to access ICT and to their use of the Internet for a wide variety of activities. It further defined three levels of digital divide that is, national level, organizational level and household level.

The lack of operationalization and measurement of digital divide (Barzilai-Nahon, 2006; Vehovar et al., 2006) has been an issue among researchers. Our review of the literature indicates that past research streams include conceptualization of digital divide at the national level (Corrocher and Ordanini, 2002; Dewan et al. 2005; Pick and Azari, 2008) and household level (Scanlan 2008; Jackson et al. 2008). As an example, at the national level, Barzilai-Nahon (2006) proposed a conceptual model of contributors to digital divide grouped by (i) social and government constraints/support (training, active help, support/suppression/apathy, investments and funding) (ii) affordability (physical layer, logical layer, content) (iii) use (frequency, time online, purpose, users' skills, autonomy of use) (iv) infrastructure access (communication channels and capacity, computers per capita, websites per capita, number of ISPs per capita, ISPs governmental incumbent or private) (v) accessibility (disabled and special needs populations) (vi) sociodemographic factors (socioeconomic status, age, education, geographic dispersion, ethnic diversity, race diversity, religiousity, language). Despite being widely acknowledged that digital divide exists at all levels, researches in this area continue to remain scarce (Dewan and Riggins, 2005). We contend in this paper, for the need of a conceptual model to explain digital divide in information technology organizations in a similar frame as the one developed at national level by Barzilai-Nahon in recognizing the remarkable advancement, diversity and pervasiveness of technology.

The information technology industry has been regarded as a significant contributor to national economies, in particular, in India and China. In a similar fashion, Malaysia is fast catching up in information technology advances. In 2007, AT Kearney Inc.'s Global Service Location Index ranked Malaysia as the world's third most ideal outsourcing destination. In the same year, Frost & Sullivan Inc.'s Global Shared Services and Outsourcing (SSO) Hub placed Malaysia as one of the top five most preferred locations in the world for SSO. [1] The Malaysian government has been consistent in promoting the growth of IT industry through incorporation of new companies, creation of new information corridors, participation of equities, provisions of grants and incentives etc. We believe that with these developments, gaps exist at the organizational level in terms of digital divide conceptualization. Our ultimate aim is to develop a model that would explain digital divide in organizations in particular, information technology organizations in a developing country like Malaysia. This article reports an in-progress research that reviews past theoretical frameworks and proposes a conceptual framework.


Dewan and Riggins (2005) proposed directions of ICT innovation, access and use at each level. This was based on an extensive review of literature for the period between 1980 and 2000 citing predominantly findings in the Western world. At the organizational level, Dewan and Riggins (2005) characterized digital divide by distinguishing adopters and non-adopters of a particular technology. In their study, firm size, the importance of promotion by the owner/manager and the importance of geographic location were cited as the main contributors to digital divide in organizations.

Many prior studies had focused on firm size characteristics. (Papazafeiropoulou and Pouloudi, 2004; Guo et al, 2004; Caloghirou et al. 2004). Firm size refers to gaps between small and large firms. Firm size has been shown to significantly contribute to profitability (Papazafeiropoulou and Pouloudi, 2004) and productivity (Guo et al, 2004).

The top management's characteristics i.e. the chief executive officers (CEO) have been the subject of much discussion in the information systems research. We contend that for management to champion the cause for IT and to allocate investments to IT and IT-related researches, the CEO has to first have a strong background of IT. Auh and Menguc (2008) examined the influence of institutional theory within the realm of the Resource Based View (RBV) by producing the first study to combine both theoretical domains into a single conceptual model. The authors collected the data for the constructs employed in this study among CEOs and/or senior executive and marketing managers of Australian large and mid-sized manufacturing firms. They used two institutional factors (e.g. CEO's functional background and politics in marketing decision making) to determine whether the respondents enhance or impede resource and capability development (e.g. transformational leadership and market orientation) as well as whether they strengthen or weaken the performance effect of those resources and capabilities. The authors found that market orientation had a stronger positive effect on performance in firms with marketing CEOs.

The idea of management championship in driving IT adoption and IT-enabled change in organizations is not new in information systems research. Many prior studies had cited this factor as a significant predictor of IT implementation success (Premkumar and Ramamurthy, 1995; Byrd and Davidson, 2003). Management championship refers to managerial beliefs and participation in the initiatives. Chatterjee et al. (2002) found that management championship is significant in assimilation of web technologies.

In another study, Li et al. (2000), focused on the location of firm, ownership of firm and investment in technology as contributors to organizational performance. Location of firm refers to whether a firm was operating in China's coastal area or inland regions. Ownership of a firm refers to whether a firm is funded by foreign capital. They suggested that these two variables might have an effect on firm performance in China's electronics industry. Li et al. (2000) tested the hypothesis for the relationship between technology investment and firm performance. They found that there was a positive relationship between technology investment and firm performance. Firm performance referred to marketing efficiency and effectiveness. The relationship applied regardless of the nature of firm location and ownership of a firm.

Relating these prior researches to the Malaysian IT national agenda and IT organizational environment, we propose the need for further investigation into the roles of firm size (small and large IT organizations in terms of number of employees and revenues), geographic location (location within multimedia super-corridor cyber-centers), CEO background (those with prior IT industry experience), research and development focus (grants provided by government and allocations set aside in firms for researches), firm equity (homegrown and with some foreign equity ownership) in explaining digital divide.


Based on our review of literature and the definition of digital divide, we would classify research on digital divide in organizations having its roots in theories of innovation adoption, diffusion and assimilation in organizations. Damanpour (1991) defined innovation as "adoption of an internally generated or purchased device, system, policy, program, process, product or service that is new to the adopting organizations". Fichman(2000) defined innovation diffusion as "the spread of an innovation across organizations while assimilation represents the process within organizations stretching from initial awareness of the innovation to potentially formal adoption and full-scale deployment". Cho and Kim (2002) coined similar definitions. Recent advances in ICT adoption have categorized ICT into (i) computing (ii) communication (iii) communication and computing.

Many recent researches on innovation adoption are grounded on the Diffusion of Innovations (Rogers, 1995) and assimilation theories. We trace these theories and some prior to these and we discuss them as follows:

Stages of Growth (Nolan, 1973)

IT Diffusion Framework (Fichman, 1992)

Information Systems Innovation (Swanson, 1994)

Diffusion of Innovations (Rogers, 1995)

Assimilation Patterns of Information Technologies (Lewis et al. 2004 ; Bajwa et al. 2008)


Nolan (1973) proposed a framework for managing stages of growth for computer resource. There were four prescribed stages:

Stage I Initiation - refers to the introduction of the resource in the organization.

Stage II Contagion - defines the managerial climate that encouraged alienated users to investigate the potential of the resource.

Stage III Control - is characterized by management's actions for control of expenditures of the resource.

Stage IV Integration - is marked by refinements in managing the computer resource.

The model follows the traditional management paradigm i.e. planning, organizing and controlling which has been useful in characterization of technology hardware and off-the-shelf software. With the recognition of the Internet as the application of information technology and systems that has grown out of open-source software community, the model has not addressed the current tradition of open standards, shared source code and collaborative development. However, the contagion effect has been acknowledged as a factor for innovation adoption (Fichman, 2004).


Fichman (1992) proposed an information technology diffusion framework that covers individual or organization, although a focus on industry was cited as possible. The framework maps two broad classes of technology against locus of adoption (i.e. individual or organization). Individual adopter is confined to a single organization. The dependent variables include binary adoption/non-adoption, time of adoption, and frequency of use. Organizational adoption studies look at adoption by large aggregates, such as companies, business units, agencies, or departments. Dependent variables include binary adoption/non-adoption and stage of implementation (e.g., adoption, adaptation, infusion).

Fichman (1992) distinguished two classes of IT. The first type is characterized by a lack of user interdependencies and a lack of a substantial knowledge burden on would-be adopters (e.g. micro computers, laptops, portable terminals) and software (e.g. word processing, spreadsheets). The second type is characterized by high knowledge barriers (e.g. structured systems analysis, stand-alone CAD drawing systems) or significant user interdependencies (e.g., E-mail, voice mail), or both (e.g. MRP, integrated CAD/CAM).

It has been widely cited that IT innovation follows a stage model of initiation, adoption and implementation. This model has not addressed the different degree of adoption. Recent researchers addressed the different degree of adoption with the conceptualization of assimilation which is discussed below.


Swanson (1994) proposed a typology of information systems innovations:

Type I innovation - process innovation that is restricted to the functional information systems core that focuses on either administration or technical information system task. Prototyping is an example of this innovation.

Type II innovation - this applies to the information systems products and services for the administration of the business. Examples of this type could be payroll or personnel record systems.

Type III innovation - this integrates information systems products and services with core business technology. Examples of this type include material requirements planning (MRP) systems or computer integrated manufacturing (CIM) systems.

Swanson characterized Type I and II innovators as organizations that are professionally-oriented rather than business-oriented organizations. Type III innovators however, were those whose information systems were strategic to the business.


According to Rogers (1995), diffusion of innovations is characterized by:

process − by which an innovation is communicated through certain channels over a period of time among the members of a social system

innovation − an idea, practice, or object that is perceived to be new by an individual or other unit of adoption

communication − a process in which participants create and share information with one another to reach a mutual understanding.

Figure 1 shows the DOI theoretical framework.

Figure 1 Diffusion of Innovations (Rogers, 1995)

The University of Twente [2] summed five elements that diffusion researches have focused on notably (i) the characteristics of an innovation which may influence its adoption (ii) the decision-making process that occurs when individuals consider adopting a new idea, product or practice (iii) the characteristics of individuals that make them likely to adopt an innovation (iv) the consequences for individuals and society of adopting an innovation (v)communication channels used in the adoption process. We note that the DOI has been used in many past researches using not only individual but also organization (Guo et al., 2004; Zhu and Kraemer, 2005; Kuo et al. 2008) unit of analysis.


Building on the diffusion of innovation theory, Lewis et al. (2004) and Bajwa et. al. (2008) conceptualized a framework for analysis of assimilation for collaboration technologies (Figure 2). They provided the following definitions for which the framework was based on:

Acquisition - the extent to which the technology is made available to members of the organization

Deployment - the extent to which the technology is actually used by members of the organization

Figure 2 A Framework for Analysis of Assimilation for Collaboration Technologies

(Lewis et al. 2004)

The framework further defined the following:

Limited Assimilation (Sector I) - this is characterized by low levels of access to technology and low utilization which could be attributable to new or unfamiliar technology.

Lagging Assimilation (Sector II) - this is identified by high access to technology but low utilization which might occur when management brought in a particular technology but users might not utilize it as expected.

Focused Assimilation (Sector III) - this is characterized by low access to technology with high utilization. Technology such as Computer-Aided Design (CAD) is an example of this kind.

Pervasive assimilation (Sector IV) - this is identified by technologies that have been assimilated organization-wide and are being highly utilized in organizations.

This section has reviewed the theories of innovation adoption, diffusion and assimilation and other prior related theories in the quest of understanding the digital divide issues in organizations. The theories suggest that adoption is a complex process in organizations. The measures for the dependent variable depend on the stage of the adoption to be studied. Secondly, with the vast nature and advancements of technology, there is a need for a focus on the types of technologies to be studied. The subsequent section presents our conclusion of this paper.


We began with the notion that digital divide is a complex concept in that there are three levels of approaches researchers may consider. We have reviewed and discussed past theories used in conceptualizing digital divide as the dependent variable in organizations. Although our main concern in this paper has been largely on the organizational level, we acknowledge that digital divide at this level is a complex phenomenon. Questions that linger in the mind include (i) What are the stages of adoption process that characterize digital divide? (ii) How do we operationalize digital divide? (iii) Do we use binary measures or other types of measures? (iv) What technology innovations are we studying?

Our review of contributors to digital divide at the organizational level suggests an extension to that made by Dewan and Riggins (2005). In sum, we propose that in a growing economy and IT industry like Malaysia's, digital divide in IT organizations could be marked by certain variables notably firm size, research and development focus (grants provided by government and allocations set aside in firms for researches), CEO background, management championship, geographic location and firm equity (Figure 3).

Firm Size - In IT adoption literature, firm size has been shown to produce mixed findings. Parhi (2007) found that firm age is an important factor in determining the decision to adopt new technologies. Pinho & Macedo (2008) found that firm age is an important factor in Internet adoption. However, Chau & Thakkar (2008) reported that the age of a firm did not have any effects on Internet assimilation in Chinese firms.

Research and development focus - In IT adoption literature, research and development focus has been shown to produce consistent findings. Parhi (2007) found that R&D performance was positively associated with the probability of adoption of CAD/CAE, ERP, LAN and WAN etc. Raymond [20] found that firms with higher R&D focus have a higher propensity for networking. In another study, Luukkonen (2002) found that high R&D intensive companies were more market-oriented.

CEO background - CEO's background has been a research interest in IT adoption. Among independent retailers, in Netherlands, Weltevreden & Boschma (2008) found that CEO's age, ethnicity, Internet experience and competitive pressure were significantly associated with Web site adoption. Chuang et al. (2009) found that the average age and education of CEO in small businesses were significant predictors of IT adoption. Ko et al. (2008) found that CEO age significantly affected CRM adoption; that is, the younger the CEO' age was, the higher the implementation of a CRM.

Management championship - Management championship is distinguished from sponsors with their distinct role to bring about change in the organizations by using their influence processes besides providing funds and authority. Also, information technology champions have been described as managers who actively and vigorously promote their personal vision for using information technology, pushing the project over or around for approval and across implementation hurdles (Reich and Benbasat, 1990). Management championship has been found to be an important enabler of change in information technology adoption and interorganisational systems (Beath, 1991) and EDI adoption (Hwang et al. 1991).

Geographic location - The effects of geographical location have shown mixed findings. For instance, Li et al. (2000) found that location of firms (China's coastal area or inland regions had no significant effects on firms' marketing efficiency. Windrum & Berranger (2002) studied the key factors that influence the adoption of e-business technology by SMEs and identified the potential importance of sector specific, and location specific factors to technology diffusion. Grilli & Colombo (2007) found that the adoption of broadband applications is driven by location-specific characteristics that reflect the availability in the local labor market of younger and more skilled individuals.

Firm equity - In a growing economy like China's, Li et al. (2000) initially suggested that completely owned Chinese firms versus those owned by foreigner might be significantly different in terms of firms' performance. Their analysis did not indicate a significant difference. However, due to the characteristics of foreign direct investments into Malaysian IT industry, we believe that firms with direct foreign equity may demonstrate a higher level of IT adoption. As such, firm equity may characterize the digital divide effect.

Figure 3 A Conceptual Framework to Explain Digital Divide in

Information Technology Organizations in Malaysia

This article has reviewed past theories in digital divide and proposed a conceptual framework in explaining digital divide in Malaysian IT organizations. IT adoption is important in organizations in that it has shown to affect firms' performance in a growing economy like China's (Li et al. 2000). In the light of this importance, the researchers will consequently embark on testing of the framework in Malaysian IT organizations.


The research is supported by Fundamental Research Grant Scheme IIUM/504/RES/G/14/3/05/FRGS 0207-74. We express our appreciation to Srs. Nur Sabariha binti Mohamed Sabri and Zubaidah Muataz Hazza for their assistance in this research.