TOE Framework

The TOE framework puts the firm context and its adoption of new technologies in the center of attraction. As this framework contributes to the organizational-level theory, three main pillars impact firms’ decisions to adopt innovations. Therefore, the TOE framework, in its bases, is composed of the

technological, the organizational as well as the environmental context (Baker, 2012). Ramdani and Kawalek (2007a) pointed out in their study about factors influencing the adoption of enterprise software (e.g. ERP or CRM) among SMEs that the TOE framework is used quite often in empirical research. However, it was not transparent to them which factors are the most crucial ones and which need to be included in their research. Moreover, they found out that the factors’ influence differs depending on the technologies applied. Results for different technologies used for the same innovations lead to contrasting results in regard to the factors (Ramdani & Kawalek, 2007a). Hence, it is advised by literature to extend the TOE framework further and study different innovations (Chau & Tam, 1997). Due to this call for more research, many studies use the TOE framework. Consequently, this has demonstrated the vast application field of the TOE framework in several industries (e.g. manufacturing, healthcare, retail, and financial services) and different cultural settings (Europe, America, and Asia as well as developed and developing countries) (Baker, 2012). Furthermore, the adoption of several technological innovations such as e-commerce (e.g. Scupola, 2003), open systems (e.g. Chau & Tam, 1997), software (e.g. Thong, 1999), enterprise software such as ERP and CRM (e.g. Ramdani & Kawalek, 2007a), e-businesses (e.g. Zhu, Kraemer, & Xu, 2006) and electronic data interchange (e.g. Kuan & Chau, 2001) are tested. Commonly, all studies are based on the same three elements of the framework. In line with the statement of Ramdani and Kawalek (2007a), Baker (2012) also claimed that each researcher accomplished small modifications regarding the factors tested in the study. All in all, the essence of the framework remained the same, but the review of Baker (2012) emphasized that each technology or context requires unique variables. Hence, the factors used for the TOE framework depends on the innovation, the cultural setting as well as the industry and the organization (Baker, 2012). On the one hand, this can be seen as an advantage to customize the framework. On the other hand, it is hard to compare such studies. Figure 3 emphasizes the original TOE framework introduced by Tornatzky and Fleischer (1990).

Figure 3: Technology-Organization-Environment Framework

The technological factors focus on technologies within the firm and those technologies which are available outside the organization (Awa et al., 2015). The benefits perceived from an innovation and the ability to adopt the new technology plays a crucial role in the adoption process. Since not all innovations are significant to a firm. It is important to consider the characteristics of the new technology as well as the equipment and the needs of the company (Chau & Tam, 1997). The technological innovations facilitate new ways and possibilities for organizations and set at the same time boundaries of technological change of a firm. The existent technologies can affect the scope and speed of the technology which is planned to be introduced into a firm (Baker, 2012). Based on the 75- article meta-analysis conducted by Tornatzky and Klein (1982) the relationship of the innovation characteristics by Rogers (1983) and the adoption-implementation was established. Moreover, relative advantages, compatibility, and complexity showed the most significant relationship between the technological characteristic and adoption implementation (Thong, 1999; Tornatzky & Klein, 1982). This article demonstrated the connection of the IDT with the technical context of the TOE framework.

The organizational variables describe the firm in detail. They include all resources within the company as well as linkages between departments and employees, the communication process, the firm size and the availability of resources (slack of resources). Research at the organizational level and innovation adoption find several possibilities to link the organizational context to adoption. The informal and the formal linkages of departments, as well as employees, are coherent with innovation adoption (Baker, 2012; Tushman & Nadler, 1986). Besides, the structure of firms has been examined to determine a relationship to adoption. Literature identified that decentralized organizations are linked to new technology adoption (Daft & Becker, 1978). Furthermore, decentralized structures foster communication within a firm (Baker, 2012). The communication, as well as the support of the management, is a critical determinant towards an innovative organization. It is necessary to promote

Organization

Formal and Informal Linking Structures

Communication Processes

Size

Slack

External Task Environment

Industry Characteristics and Market Structure

Technology Support Infrastructure

Government Regulation Technology Availability Characteristics Technological Innovation Decision Making

the vision and strategy in order to create an innovative environment (Baker, 2012; Tushman & Nadler, 1986). The size of a firm and availability of resources (slack) are most discussed in the organizational context. On the one hand, literature claims that the higher the number of available resources, the higher the adoption rate of new technologies (Baker, 2012). On the other hand, Tornatzky and Fleischer (1990) argued that innovation can be created even without slack of resources. The link between the size of a firm and the adoption of innovation could not be constructed, even though literature found out that larger firms are more likely to adopt new technologies (Kamien & Schwartz, 1982). Hence, researcher call for a more complex measurement concerning the company size (Baker, 2012).

The external world a firm operates in is the environment of an organization. Those external factors can lead to opportunities as well as threats regarding the new technology (Thong, 1999). It was examined that fast growing industries are more likely to innovate than declining industries (Baker, 2012; Tornatzky & Fleischer, 1990). Thong (1999) especially valued the work of Mansfield (1968), who found evidence that competition stimulates the diffusion of innovation. In addition to that, he argued that uncertainty in markets lead to a more powerful technology push. In order to create innovation and adopt new technologies, employees with the right skills are needed as well as experienced external consultants and providers of technological services. Another variable is governmental regulations, which can either foster (e.g. subsidies) or hinder (e.g. fees) innovation within a firm (Baker, 2012).