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ESSAYS ON ANTECEDENTS AND CONSEQUENCES OF CLOUD COMPUTING CAPABILITIES IN ORGANIZATIONS: AN EMPIRICAL ANALYSIS OF FIELD DATA BY RUI GUO DISSERTATION Submitted in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Business Administration in the Graduate College of the University of Illinois at Urbana-Champaign, 2016 Urbana, Illinois Doctoral Committee: Associate Professor Ramanath Subramanyam, Co-Chair, Director of Research Professor Michael J. Shaw, Co-Chair Assistant Professor Eric C. Larson Assistant Professor Ali Tafti, University of Illinois at Chicago ABSTRACT Cloud computing is widely recognized as a potential disruptive paradigm that changes how IT is consumed and business is conducted in various industries. Managerial and academic literature has shown that cloud computing may benefit firms in various ways such as cost savings, fast project development, and business innovation. Nevertheless, there are many different interpretations and perceptions of cloud computing about how to better prepare for and use it in the information systems (IS) literature. A systematic analysis is necessary to clarify the equivocal issues around cloud computing and guide managers to better understand and utilize cloud computing in practice. This dissertation addresses several important relationships around cloud computing using theoretical models and empirical data as a representation of how the questions about cloud computing may be investigated in the IS literature and how the findings may benefit organizations in using cloud computing. Therefore, the dissertation comprises three connected chapters that address one important antecedent of cloud computing adoption – internal IT modularity within firms and two important consequences – firm performance and strategic alliance formation. It is found that in order to better prepare for cloud computing adoption, firm users can do something themselves by modularizing their internal IT systems. Firms also need to know whether and how cloud computing, after all, can benefit their firm performance or other activities such as strategic alliance formation. The findings show that cloud computing overall and its various specific cloud services may promote firm performance directly or complementarily with internal enterprise resources. Cloud computing and its specific cloud services may also exert different effects on strategic alliance formation. This dissertation systematically addresses the issues around cloud computing in the IS literature and sheds lights ii on how such a study can be applied to help managers and decision makers in industries to better understand and use cloud computing to achieve their business goals. iii ACKNOWLEDGEMENTS I would like to sincerely thank my adviser Prof. Ramanath Subramanyam and former adviser Prof. Ali Tafti for their kindness and generosity on providing me with the secondary survey datasets based on which my three empirical studies about cloud computing are possible. I am very grateful for Prof. Ramanath Subramanyam’s insightful guidance on my doctoral study over the years not only in the dissertation but also in other aspects such as how to be a successful teacher and researcher. I owe the success of this dissertation to my former adviser Prof. Ali Tafti a lot. He was the very first person who led me to the direction of econometrics and empirical research in Information Systems. His encouragement and education are invaluable to me. When he was my adviser here at the University of Illinois at Urbana-Champaign, he gave me very detailed and precise guidance on my study. Even after he left here to be a faculty member at the University of Illinois at Chicago, he has been still extensively involved in my research. My heartfelt gratitude goes to Prof. Michael J. Shaw who suggested this interesting topic of cloud computing for my dissertation in the early days of my doctoral study. He gave me insightful suggestions on my early attempts of finding appropriate research questions and subsequent chapter developments. My genuine appreciation also goes to Prof. Eric C. Larson who gave me very careful and detailed suggestions on the dissertation chapters and the presentation slides. I would also like to express my gratefulness to other faculty and administrative members in the Department of Business Administration for their enthusiastic help on my study. Prof. Vishal iv Sachdev helped me on how to write an appropriate academic paper in my early development of the second chapter of this dissertation. Prof. Sung W. Kim gave me suggestions on how to be a competent instructor. Prof. Joseph T. Mahoney from the Strategy group pleasantly agreed to read and advise my early manuscript of the second chapter of this dissertation, and gave me very detailed and inspiring suggestions including the typos during his busy time of teaching and research. Prof. Huseyin Leblebici from Organizational Behavior also read the manuscript and gave me very suggestive strategies and tactics of how to get the idea into a real paper. As the Assistant Director of Graduate Programs, Ms. Diana K. Gonzalez cordially helped me with various issues related to my doctoral study. Finally, I would like to thank my parents for their love, sacrifice and trust. Without their support, all of this would not have been possible. v TABLE OF CONTENTS CHAPTER 1: GENERAL INTRODUCTION ............................................................................... 1 CHAPTER 2: THE EFFECT OF IT MODULARITY ON ADOPTION OF CLOUD COMPUTING ................................................................................................................................. 6 CHAPTER 3: THE IMPACT OF CLOUD COMPUTING ON FIRM PERFORMANCE ......... 67 CHAPTER 4: THE ROLE OF CLOUD COMPUTING IN STRATEGIC ALLIANCE FORMATION ............................................................................................................................. 143 CHAPTER 5: CONCLUSION ................................................................................................... 210 BIBLIOGRAPHY ....................................................................................................................... 219 APPENDIX A ............................................................................................................................. 232 APPENDIX B ............................................................................................................................. 244 APPENDIX C ............................................................................................................................. 255 vi CHAPTER 1: GENERAL INTRODUCTION In the past decade, cloud computing has gained its momentum in commercialization. Cloud computing is a novel information technology (IT) consumption model that synthesizes multiple preceding technologies such as networking, grid computing, distributed computing, virtualization, utility computing and service-oriented computing and allows users to provision, consume and dispose of IT resources (including raw resources, system and platform software, and applications) as they need (Armbrust et al. 2010; Marston et al. 2011; Zhang et al. 2010). In theory, organizations no longer need to plan and own their own IT resources. Rather, they simply subscribe to cloud providers and are billed for what IT resources they have consumed. Cloud computing offers organizations with abundant, affordable and easily accessible IT resources from third parties1, frees organizations from owning and managing IT resources and systems, and eventually enables organizations to focus on their core businesses and innovation (Brynjolfsson et al. 2010). It is widely observable that cloud computing has been successfully utilized by various firms in different industries. Small businesses have used third-party cloud computing resources such as from Amazon Web Services (AWS)2 to energize and pursue the projects they would have never been able to and compete with the incumbent tech giants on an equal footing IT resource basis. Large enterprises have also shown great interests in cloud computing and tried to use cloud applications and platforms even though they may have considerable internal IT resources (Marston et al. 2011). 1 Here we assume that cloud computing is provided mainly by third-party cloud vendors (i.e., public clouds), though it can also be provided and owned privately by consumer organizations (i.e., private clouds). See more details about public and private clouds in Mell, P., and Grance, T. 2010. "The NIST definition of cloud computing," Communications of the ACM (53:6), p 50. 2 See the Amazon Web Services website for more details: https://aws.amazon.com 1 Cloud computing is an umbrella paradigm that contains multiple types of services such as the three basic service layers of Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS) (Mell and Grance 2010) and many other extended services such as Knowledge as a Service (KaaS) and Business Process as a Service (BPaaS). Given these many cloud services, organizations may perceive, interpret and utilize cloud computing in various ways. For example, while many startups and small companies appreciate the enablement and convenience of cloud computing, others may think that cloud computing is merely a cost-saving means for them and cannot provide any sustainable competitive advantage. Companies are also very concerned about the risks cloud computing can bring such as IT availability, security and
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