Infotech Week3 discussion
WHAT MAKES INFORMATION STRATEGIC? AN EXAMINATION OF ACCESS TO INFORMATION RESOURCES FOR
ENTREPRENEURS AND BUSINESS PERFORMANCE
by
Yao Zhang
Bachelor of Arts Nankai University, 2006
Master of Arts
The University of Sheffield, 2009
Submitted in Partial Fulfillment of the Requirements
For the Degree of Doctor of Philosophy in
Library and Information Science
College of Information and Communications
University of South Carolina
2016
Accepted by:
Kendra Albright, Major Professor
Samantha Hastings, Committee Member
Paul Solomon, Committee Member
Dirk Brown, Committee Member
Amir Karami, Committee Member
Lacy Ford, Senior Vice Provost and Dean of Graduate Studies
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All rig hts re se rve d
INFO RMATIO N TO ALL USERS The q ua lity o f this re p ro d uc tio n is d e p e nd e nt up o n the q ua lity o f the c o p y sub m itte d .
In the unlike ly e ve nt tha t the a utho r d id no t se nd a c o m p le te m a nusc rip t a nd the re a re m issing p a g e s, the se w ill b e no te d . A lso , if m a te ria l ha d to b e re m o ve d ,
a no te w ill ind ic a te the d e le tio n.
All rig hts re se rve d .
This w o rk is p ro te c te d a g a inst una utho rize d c o p ying und e r Title 17, Unite d Sta te s C o d e Mic ro fo rm Ed itio n © Pro Q ue st LLC .
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Pub lishe d b y Pro Q ue st LLC (2016). C o p yrig ht o f the Disse rta tio n is he ld b y the Autho r.
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© Copyright by Yao Zhang, 2016 All Rights Reserved.
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DEDICATION
This dissertation is dedicated to my parents, who offer me unconditional love and
support, who encourage me to chase my dreams, who want me to be me. To my future
beloved one and children, thank you for letting me get prepared.
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ACKNOWLDEGEMENTS
I would like to acknowledge the vast amount of support of my friends and family.
Group JJNN and 110120, you and your beloved ones have made this journey full of joy. I
could have never made this far without the support from my warmest family members.
My appreciation also goes to Dr. Liangzhi Yu, who is the first person shows me
the world of Library and Information Science, a role model of a scholar with great
attitude and elegance.
My many thanks go to my committee, Dr. Sam Hastings, Dr. Paul Solomon, Dr.
Amir Karami, and Dr. Dirk Brown. Your words of wisdom have made this process so
enjoyable. Thank you very much for your time and patience.
Dr. Kendra Albright, there will never be enough words to express my appreciation.
It is definitely the rightest decision I made to walk into your classroom in Sheffield.
My gratitude also goes to the SLIS family in USC and dearest friends at the
USC/Columbia Incubator. Life is so much easier with you guys around. Dr. Bob, don’t
work too hard, drink tea!
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ABSTRACT
The purpose of this study is to explore the nature of the relationship between the
access to and use of information resources of entrepreneurs and their business
performance. The survival and competence of organizations relies heavily on their
recognition of information as important strategic resource. Entrepreneurs, specifically,
face a constantly changing environment and are in a disadvantaged competitive position
in finance and experience compared with large companies. Access to, and use of
information resources, will help them improve their business performance.
This study collects both qualitative and quantitative data, investigating the
entrepreneurs’ business performance and their behaviour in accessing and using
information resources. The qualitative data is applied to explore the technology incubator
consultants’ understanding of business performance indicators for entrepreneurial
businesses. For the quantitative data collection, entrepreneurs are selected from
technology incubators in the U. S to participate in a questionnaire survey. Structural
Equation Modeling (SEM) is used to process and analyze the data reflecting the business
performance, access to information resources, and use of information resources.
A preliminary Access-Performance model and a Use-Performance model are
presented. The results indicate that the use of information resources has a positive
influence on the performance of entrepreneurial businesses. No strong relationship is
revealed between the access to information resources and business performance.
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However, there is a high probability that the entrepreneurs have other information
resource accesses options than those covered in the original model.
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TABLE OF CONTENTS
DEDICATION ....................................................................................................................... iii
ACKNOWLEDGEMENTS ........................................................................................................ iv
ABSTRACT ............................................................................................................................v
LIST OF TABLES ................................................................................................................ viii
LIST OF FIGURES ................................................................................................................. ix
LIST OF ABBREVIATIONS .......................................................................................................x
CHAPTER 1 INTRODUCTION ...................................................................................................1
CHAPTER 2 LITERATURE REVIEW ........................................................................................17
CHAPTER 3 METHODOLOGY ................................................................................................37
CHAPTER 4 DATA ANALYSIS ...............................................................................................48
CHAPTER 5 DISCUSSION AND CONCLUSION .........................................................................67
REFERENCES .......................................................................................................................77
APPENDIX A – SURVEY MATRIX FROM INCUBATOR............................................................96
APPENDIX B – INTERVIEW QUESTIONS ...............................................................................97
APPENDIX C – QUESTIONNAIRE SURVEY ............................................................................98
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LIST OF TABLES
Table 1.1 Definition of Independent Variables from Choo et al. (2008) ...........................12
Table 3.1 Dependent variables and measures ....................................................................41
Table 4.1 Response rate of questions .................................................................................52
Table 4.2 Codes for information resources access.............................................................55
Table 4.3 Access—Performance model fit ........................................................................59
Table 4.4 Significant test of variables in Access-Performance model (P (>|z|)) ...............60
Table 4.5 Use—Performance model fit .............................................................................61
Table 4.6 Use—Performance model standardized parameter estimate .............................63
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LIST OF FIGURES
Figure 1.1 Stage of Firm Growth (Woodward et al, 2011) ..................................................8
Figure 3.1 Theoretical Framework of the Study ................................................................39
Figure 4.1 Age of the participants......................................................................................49
Figure 4.2 Gender of the participants ..............................................................................49
Figure 4.3 Education background of the participants ........................................................50
Figure 4.4 Entrepreneurial experiences .............................................................................51
Figure 4.5 Revenue growth ................................................................................................53
Figure 4.6 Investment attracted..........................................................................................53
Figure 4.7 Patents in holding or in pursuing ......................................................................54
Figure 4.8 Access-Performance model ..............................................................................56
Figure 4.9 Use-Performance model ...................................................................................57
Figure 4.10 Use-Performance model with parameter estimate ..........................................62
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LIST OF ABBREVIATIONS CFA ........................................................................................Confirmatory Factor Analysis EFA .......................................................................................... Exploratory Factor Analysis ICTs............................................................ Information and Communication Technologies NAICS....................................................... North American Industry Classification System RMSEA ............................................................ Root Mean Square Error of Approximation SBA ...................................................................................... Small Business Administration SEM ....................................................................................... Structural Equation Modeling SRMSR ............................................................... Standardized Root Mean Square Residual
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CHAPTER 1
INTRODUCTION
1.1 Purpose of Study
The purpose of the present study is to investigate the nature of the relationship
between the access to and use of information resources by entrepreneurs and their
business performance. This study focuses on entrepreneurs in technology incubators in
the U. S. by investigating the information resources that are available to them and their
use of those information resources as well as their business performance using a
quantitative data collection approach. Information and knowledge have, for a long time,
been regarded as valuable resources for strategic management and decision making
(Porter, 1998; Choo, 2005). Entrepreneurs face a constantly changing environment and
are in a disadvantaged competitive position in finance and experience compared with
large companies; access to and use of information resources will help them improve their
business performance. In addition, this study expands the issue by exploring the
relationship between access to and use of information resources in different industries.
Furthermore, it investigates whether access to and use of information resources have
positive or negative, financial and non-financial impacts on the companies studied. Using
a structural equation model, this study intends to address the complexities of those
concepts through the measured variables.
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1.2 Background
Entrepreneurs have been frequently linked to economic development and the
creation of wealth in the modern society (Lavoie, 2015). In addition, entrepreneurs have
played various roles throughout the history of economics (Barreto, 2013), for example:
the coordinator of resources, the arbitrageur in a world unbalanced with information, the
uncertainty-bearer in the business field, and the innovator of economic development
(Schumpeter, 1934). However, the failure rates of these businesses are consistently
incredibly high. Only about half of entrepreneurs survive beyond five years (Lueg. et al,
2014). The number is even lower among high-tech oriented companies (Cader and
Leatherman, 2011). Therefore, the sustainability of the entrepreneurs becomes a great
concern of research on entrepreneurs. The scope of this study goes beyond economic
conditions to include a diversity of factors such as industry, location, and various
environmental factors (Luo and Mann, 2011). Sustainable development is defined as a
way of social and structural economic transformation that optimizes the current available
benefit without jeopardizing the potential benefit in the future (Goodland and Ledec,
1987), which, in the case of entrepreneurial businesses, means entrepreneurial entities
should make the best use of the available resources and still keep the potential benefit for
strategic development in the future. The entrepreneurs leverage a set of resources and
produce goods and services valued by consumers to earn a profit. However, this process
is not supposed to be a one-time activity. The entrepreneurs need to repeat this cycle or
an variation of it to achieve the development of their companies and eventually grow to
be stable businesses, which are capable of resolving challenges from outside and within
the organization.
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Information has become recognized as a strategic resource for business in the
“information age” (Davenport and Prusak, 1997, p. 3). The infusion and the wide
application of information and knowledge have revolutionized the way organizations
operate and conduct business. The survival and competence of these organizations will
heavily rely on their recognition of information (Choo, 2005). The purpose of this study
is to explore the nature of the relationship between the access and use of information
resources of the entrepreneurs and their business performance.
Small businesses and entrepreneurs represent a vital and vigorous power in the
U.S. economy and have a significant impact on economic development. In the latest
Small Business Administration (SBA) report, small businesses added 1.4 million net new
jobs through the first three quarters of 2014; in the first quarter of fiscal year 2015,
venture capital investments totaled $23.4 billion (SBA, 2015). Entrepreneurs not only
contribute to economic growth and job creation but also lead in innovation. They are
responsible for half of all innovations and 95% of progressive changes in the U.S.
(Timmons and Spinelli, 2009). Innovation is the core ingredient of business success. It is
the application of a new idea or better solutions that meets existing or unarticulated
market needs. Information helps businesses discover existing opportunities as well as
potentially offering foresight to emerging trends, and, therefore, to allow businesses to
stay ahead of their competition as the environment changes.
The development of small business and entrepreneurs is even more significant in
the present economic environment. Economic development is abandoning the traditional
approach, which heavily relies on financial and labor capital, and shifting to a new
strategy, one which relies on building new businesses and supporting existing businesses
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(Edmiston, 2007). Supporting small businesses and entrepreneurs is the key intent of this
strategy, for small businesses and entrepreneurs are developing new ideas, creating
additional jobs, and producing innovative products and services. Entrepreneurship also
plays an indispensable role in the race for global innovation advantage (Atkinson and
Ezell, 2012). It is entrepreneurship that takes new products and services into commercial
application and tests the market. The market evaluates the utilization of the “idea” and
available knowledge and selectively keeps those ideas that can secure innovation
advantage. The action of taking a technological idea from concept to commercialization
is the only way to realize the economic value of creation and invention. Despite the value
that entrepreneurs create as goods and services, continuing evolution and innovation help
their organizations maintain a competitive advantage.
Along with the opportunities brought about by innovations, there are also
challenges for entrepreneurs. Newness and smallness make the chances of survival and
success extraordinarily problematic. Even if they do survive, they may be less financially
secure than large companies and their financial rewards smaller during the first couple of
years (Timmons and Spinelli, 2009). Historical research shows that only two of every
five new small firms survive six or more years, with few achieving any growth during the
first four years (Phillips and Kirchhoff, 1988). Studies illustrate that the failure rates
among entrepreneurs are very high; even the most optimistic research has indicated
failure rates as high as 46.4% (Timmons and Spinelli, 2009). It is not uncommon to find
that the business performance of many of these companies failed to meet the
entrepreneurs’ expectation (Cassar, 2014; Solaimani and Bouwman, 2012).
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Despite their poor survival record, entrepreneurs have a number of qualities that
help them survive and achieve their ultimate goal—sustainable development of the
business.
1.2 Statement of the problem
Entrepreneurs have realized that sustainable development is necessary for them to
achieve economic, social, and environmental goals without compromising their future
growth. Therefore, entrepreneurs must constantly prepare for change, including the
identification of potential markets and opportunities for organizational learning.
Environmental scanning is recognized as a key approach of generating such business
insights. Through information acquisition and knowledge transformation, environmental
scanning sustains and enhances business performance in a turbulent environment (Choo,
2002).
Innovation is necessary for survival and sustainable development (Timmons and
Spinelli, 2009) and is a characteristic that distinguishes entrepreneurial businesses from
other small businesses. Developing an entrepreneurial business is a process of
recombining the existing knowledge and exploiting new knowledge (Schumpeter, 1934).
Successful technical innovation is usually associated with the flow and diffusion of
knowledge (Porter and Stern, 2001; Acs et al., 2009; West & Noel, 2009; Sullivan &
Marvel, 2011; Lai et al., 2014; Lueg. et al, 2014; Love and roper, 2015). More
importantly, the nature of knowledge allows it to be transferred into economic gain by
using knowledge to support creation, manufacturing, and business management processes
(Zander and Kogut, 1995; Zucker, Darby, and Brewer, 1998; Jensen and Thursby, 2001;
Gans and Stern, 2003; Block et al., 2013; Braunerhjelm, 2015;). Entrepreneurship serves
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this function very well because it spurs innovation into production and services and bring
products to the market in exchange for revenues.
In order to supplement the insufficient financial resources of entrepreneurial
businesses and to assist developing the features that will help such businesses to secure a
competitive advantage, information and knowledge are desperately needed and are
strategic assets in the overall business field (Kenny and Gudergan, 2006; Schiuma, 2012;
Dobbin and Baum, 2014). De Geus (2002) points out that “during the past 50 years, the
world of business has shifted from one dominated by capital to one dominated by
knowledge” (De Geus, 2002, pp.16). As information and knowledge become a central
productive and strategic element, organizations are increasingly reliant on their ability to
access and use information and knowledge.
Information plays multiple functions in entrepreneurial organizations, which
include optimizing creation, keeping the flow of innovative trends, and establishing a
learning environment in order to maximize profitability. Understanding relevant
regulation and policies also help businesses to locate available financial support, cut costs
to explore potential products and services, and add protections on existing assets; for
example, filing a patent. Information provides supports to these activities in multiple
ways, such as time, cost, and strategic planning. Therefore, accessing and using
information is a central management responsibility for entrepreneurs in order to
consolidate their achievement and maintain the competitive advantage.
The process of systemically and actively managing the knowledge in an
organization is equally important to maintaining competitive advantages. The
management of knowledge can be categorized into a number of activities, including
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creation, validation, presentation, distribution, and application. It is a process of
capitalizing on knowledge, which aims at creating a learning environment to nurture the
growth of technology, techniques, and people (Hislop, 2013). Knowledge management is
significantly facilitated via the access and the use of information resources. Information
resources provide the sources of particular types of data for knowledge creation as well as
the approaches, which enable the communication of knowledge.
The phrase, information resources, is defined as “the services, the packages, and
the support technologies and systems used to generate, store, organize, manipulate, and
provide access to these information-bearing entities” (Matthews 2002, p.1). In this study,
interpersonal contacts will also be included. Information resources will assist
entrepreneurs in investigating the market, locating financial resources, spotting latest
technology, and developing efficient networks by providing timing and comprehensive
information and knowledge (Davenport and Prusak, 1997). Previous research found that
information is an important component for business success (Vaughan, 1999; Klusek and
Bornstein, 2006; Wu and Kendall, 2006; James, 2010; Chang and Wang, 2011; Isik et al.,
2013). There is also a positive correlation between information use and financial benefits
(West & Olsen, 1988; Subramanian et al., 1993; Keh et al., 2007). In addition, the
absence and dysfunction of access to information resources have also been identified in
recent studies (Banda et al., 2004; Underwood, 2009; Leavitt et al. 2010). The nature of
the relationship between information resources and entrepreneurial business performance,
however, is not broadly recognized nor has there been much discussion on any specific
function of the ways in which information resources support the growth and development
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of entrepreneurs. This study seeks to fill that gap by investigating the function of and
contribution made by information resources to entrepreneurial business performance.
1.3 Definitions
Before examining the role of the access to and the use of information resources in
entrepreneurial business development, it is useful to have a better understanding of what
these and other terms mean in this research context. The following section includes
definitions of important concepts used in this study.
Entrepreneur
Ahmad and Hoffman (2008) define entrepreneurs as “those persons (business
owners) who seek to generate value, through the creation or expansion of economic
activity, by identifying and exploiting new products, processes or markets” (Ahmad and
Hoffman 2008, pp. 8). The firms they own or manage are founded within a relatively
short time but have been helped through the incubation period (Figure 1.1) (Woodward et
al, 2011). Incubator, in the entrepreneurial business context, refers to organizations
dedicated to help startup and early-state companies to develop by providing office spaces,
business advisory, or technical assistance (Bruneel et al. 2012). This assistance is
accessible through counseling activities with the incubator management and networking
interactions with other businesses.
Not all business people in private enterprise economies are entrepreneurs.
Distinguished from other young firms, the identifying feature of entrepreneurial
organizations is that they are doing something new, whether they are inventing new
products or installing a new process. The role of the entrepreneur is to innovate
(Schumpeter, 1934). In the Oslo Manual innovation is defined as “the implementation of
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a new or significantly improved product (good or service), or process, a new marketing
method, or a new organizational method in business practices, workplace organization or
external relations” (OECD, 2005, pp. 49). The newness or significant improvement of the
product, process, marketing method, or organizational method to the firm means the firm
has to initially develop the product, process, or method, or be the first to adopt from other
firms or organizations (OECD, 2005).
Figure 1.1 Stage of Firm Growth (Woodward et al, 2011)
This study focuses on the entrepreneurs in technology incubators, who operate or
manage their own businesses. To capture the opportunity of taking technological concept
to commercialization, they need to acquire relevant and applicable information to help
them keep a fast pace of innovation. A technology incubator is an infrastructure that
provides lab, office, and manufacturing facilities to the newly-formed technology-
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intensive firms at a reasonable price until they enter the stable growth stage (Stevenson
and Thomas, 2001; Sá and Lee, 2012). Technology incubator staffs provide technology
assessment, help write business plans and proposals, and offer entrepreneurial mentoring.
Entrepreneurs within the incubators are normally examined and pre-selected according to
certain standards. For example, to be qualified to be accepted by the University of South
Carolina’s technology incubator, a business must “need interaction with the university, be
a technology-based company with a business plan, and have growth potential and team-
building capability” (Stevenson and Thomas 2001, pp. 11).
Information Resources
Information resources are defined as “the available data, technology, people and
processes within an organization to be used by the manager to perform business
processes and tasks” (Pearlson and Saunders 2010, pp. 48). Information resources can be
assets that a firm uses to create, produce, or distribute its products and services, or
capabilities that it learned and developed to forge those activities. As the entrepreneurial
businesses are restricted by size and have limited financial support, they also have to seek
information resources, which are able to provide business insights at a relatively
acceptable price to fulfil their needs. Such resources are scattered in a variety of
professions and fields. Therefore, this research redefines information resources within the
entrepreneur business context as the available people, institutions, and ICTs-based
(Information and Communication Technologies) social networks that can be used by
entrepreneurs to perform business processes and tasks.
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Interpersonal Connections
Studies show that interpersonal connection is the major channel for entrepreneurs
and small business owners to acquire information regardless of their operating
environment (Lillard, 2002; Ikoja-Odongo and Ocholla, 2004). Based on previous
research, people can serve as information resources. This includes the entrepreneurs
themselves (as they often make decisions based on previous experience), friends, family,
coworkers, suppliers, customer, consultants/experts/specialists in the industry, faculty and
students from the university, and information specialists, such as librarians.
Institutional Platforms
Information institutions are units that facilitate the creation, distribution, and
management of information to support the user’s needs. The forms and services they
provide vary and have greatly expanded over time. Information creation institutions
include book publishers, newspapers publishers, magazine and journal publishers, and the
film and record industry (Lester, 2003). In previous studies, the film and record industry
is hardly mentioned as a useful source of information for entrepreneurs, so it is excluded
in this research. Lester (2003) also lists the mass media and Internet based technologies
(which are categorized as information technology) as information distribution
approaches. The convergence of media and technologies has had tremendous growth
since the volume of information has increased the complexity of managing information.
Meanwhile, knowledge, whose importance in attaining competitive intelligence and
organizational advantage (Semertzaki, 2011), has been realized, and is therefore valued
not only as a power, but also as an organizational asset. It is given equally as much
attention as information, if not more. Professional and targeted services are in such urgent
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demand, and organizations to process information have emerged to fulfill those needs.
Libraries, database vendors, educational programs, business consulting units, and
information centers, despite the difference in title, have all served this purpose with each
one of their specialties.
ICTs-based Social Networks
Information and knowledge in business context are continuously recreated and
reconstructed through dynamic and interactive activities, therefore, it is necessary for
entrepreneurs to adopt and use a variety of emerging social networking technologies
(Burke, 2013). ICT-based social network refers to computer-based systems that support
the creation, collection, distribution, and management of information. It includes the
hardware (such as computer), software (such as mobile application), as well as the
Internet-based platform (such as Twitter).
Use of Information
The use of information involves a process of gathering, organizing, analyzing, and
communicating (Taylor, 1991). The result of using information resources is rarely
presented in terms of tangible products or services, as the products and services are most
often evaluated by the revenue generated or customer satisfaction, which raises questions
regarding whether information plays any role in business activity. In consideration of the
difficulties in measuring the use of information, usage is measured in various ways
including: 1) the time entrepreneurs spend in retrieving information, 2) the money they
spend in acquiring the information, 3) the information use behavior of the entrepreneurs,
for which there is clear evidence that information is used by individuals and businesses.
Choo et al. (2008) introduced new information behavior and value variables, which are
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based on Kirk’s (2002) information use outcome model—the result of his information use
and culture study. Choo et al. defined the independent variables (Table 1) in this model,
and evaluated outcomes of information use in three companies in Canada. In their study,
the variables were weighted on information use behavior, not the value or principle for
data collection, so the researchers were able to tell if the variables have created any
outcomes.
The Choo et al study addresses the question of does the use of information
resources of entrepreneurs have effects on their business performance, but the use cannot
be directly observed. Choo’s theory provides an approach to explain this behavior by
evaluating measurable factors, which include information sharing, information
proactiveness, information transparency, information integrity, information informality,
and information control. Definitions of these variables are based on Choo et al. (2008).
Table 1. 1 Definition of Independent Variables from Choo et al. (2008)
Variables Definition
Information sharing Willingness to provide others with information in an
appropriate and collaborative manner
Information proactiveness Active concern to obtain and apply new information to
respond to changes and to promote innovation
Information transparency Openness in reporting information on errors and failures
thus allowing learning from mistakes
Information integrity Use of information in a trustful and principled manner at
the individual and organizational level
Information informality Willingness to use and trust informal sources over
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