The Role of Organizational Absorptive Capacity in Strategic Use of Business Intelligence to Support Integrated Management Control Systems

Abstract

This study examines the influence of organizational controls related to knowledge management and resource development on assimilation (i.e., strategic integration and use) of business intelligence (Bl) systems. Bl systems use analytics and performance management concepts to leverage enterprise system databases and provide core management control system (MCS) capability. Our results indicate that organizational absorptive capacity (i.e., the ability to gather, absorb, and strategically leverage new external information) is critical to establishing appropriate technology infrastructure and to assimilating Bl systems for organizational benefit. Further, findings show that while top management plays a significant role in effective deployment of Bl systems, their impact is indirect and a function of operational managers' absorptive capacity. In particular, this indirect effect suggests that leveraging Bl systems is driven from the bottom up as opposed to the top down. This differentiates Bl from other isolated strategic MCS innovations that have traditionally been viewed as top-management driven.