ORGANIZATIONAL PERFORMANCE, SIZE, AND THE USE OF DATA PROCESSING RESOURCES

Abstract

This study addresses two issues-whether the size of an organization determines its methods of obtaining, structuring or controlling data processing resources, and whether organizational performance is influenced by how a firm makes use of these resources. Several propositions are tested using data from a sample of 58 mutual savings banks with a 10:1 range in size. The results suggest that, although no difference is found in the proportion of operating expense allocated to data processing, larger banks do tend to develop in-house computing resources while smaller banks obtain these services from other banks or service bureaus. Consequently large and small banks must resolve different kinds of managerial issues if they are to provide high quality data processing service to their organizations. Unexpectedly, no relationship is found between organizational performance and the relative proportion of resources allocated to data operating cost and the intensity of data processing use. These findings raise questions about the extent of benefits obtained from a data processing intensive strategy as well as questions about the efficiency with which firms convert capital and labor into application systems.