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The 'Digital Façade' of Rapidly Growing Entrepreneurial Organizations


Abstract and Figures

Entrepreneurial organizations that grow into larger established enterprises typically undergo periods of rapid growth that are rife with challenges. Although it is clear that digital technologies have been a key driver in organizational transformation for decades, their role in the growth of entrepreneurial organizations is virtually absent in the literature. This paper reports the findings from an exploratory study of 16 entrepreneurial organizations that are undergoing, or have undergone, periods of rapid growth. Our analysis suggests that digital technologies often complement or even substitute for organizational practices commonly associated with enabling growth. From this analysis, we identify one important mechanism whereby digital technologies enable this growth—what we refer to as the " digital façade. " A minimally-implemented digital facade enables companies to loosely couple their activities from the presentation of these activities to customers and partners. This façade provides a space for the organizations to build necessary digital capabilities.
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The ‘Digital Façade’ of Entrepreneurial Organizations
Thirty Sixth International Conference on Information Systems, Fort Worth 2015 1
The ‘Digital Façade’ of Rapidly Growing
Entrepreneurial Organizations
Completed Research Paper
Sanja Tumbas
University of Liechtenstein
Vaduz, Liechtenstein
Nicholas Berente
University of Georgia
Athens, Georgia USA
Stefan Seidel
University of Liechtenstein
Vaduz, Liechtenstein
Jan vom Brocke
University of Liechtenstein
Vaduz, Liechtenstein
Entrepreneurial organizations that grow into larger established enterprises typically
undergo periods of rapid growth that are rife with challenges. Although it is clear that
digital technologies have been a key driver in organizational transformation for
decades, their role in the growth of entrepreneurial organizations is virtually absent in
the literature. This paper reports the findings from an exploratory study of 16
entrepreneurial organizations that are undergoing, or have undergone, periods of rapid
growth. Our analysis suggests that digital technologies often complement or even
substitute for organizational practices commonly associated with enabling growth.
From this analysis, we identify one important mechanism whereby digital technologies
enable this growthwhat we refer to as the “digital façade.A minimally-implemented
digital facade enables companies to loosely couple their activities from the presentation
of these activities to customers and partners. This façade provides a space for the
organizations to build necessary digital capabilities.
Keywords: Digital entrepreneurship, theory building, organizational growth, loose coupling
The ‘Digital Façade’ of Entrepreneurial Organizations
Thirty Sixth International Conference on Information Systems, Fort Worth 2015 2
As they grow into larger organizations, entrepreneurial firms typically go through a stage where they
transition from ad-hoc entrepreneurial coordination to mature professional management (Levie and
Lichtenstein 2010; Quinn and Cameron 1983). During this important stage, organizations face various
challenges and they need to overcome many of the very practices that made them successful when they
were newly founded, such as a highly involved founder and informal improvisation (Adizes 1979a). To
address challenges of growth, entrepreneurial firms change their culture and modes of organizing to
include increased formalization, professionalization, focus on quality, and specialization (Churchill and
Lewis 1983; Greiner 1998; Kazanjian 1988; Lippitt and Schmidt 1967). Entrepreneurial organizations are
either newly born firms or established firms that are somehow willing and able to consciously transform
themselves (Langlois 2007 p. 1120).
Although digital technologies have been the main driver in organizational transformation over the past
decades (Yoo et al. 2012), an investigation of their role in the rapid growth of entrepreneurial
organizations is virtually absent in the literature. This is problematic, since all areas of contemporary
organizations are deeply impacted by digital technologies and digital infrastructures, including areas such
as organization design (Zammuto et al. 2007), strategic decision making (Sawyaradaj et al. 2013), and
governance (Tilson et al. 2010). Information systems (IS) research has begun to explore how digital
technologies affect the early phases of the organizational lifecycle (Davidson and Vaast 2010; Hull et al.
2015) as well as the role of digital technologies in raising funds (Aggarwal et al. 2012; Burtch et al. 2013).
In this paper we extend this body of work to also include the role of digital technologies in the transition
to mature organizations. Certainly, digital technologies can aid in formalization, professionalization,
quality, specialization, and other practices that enable entrepreneurial organizations to mature, but how
does this occur? Do digital technologies affect this period of growth in other ways? What is different about
entrepreneurial organizations during these growth points of inflection as compared to established
organizations in their use of digital technologies? How, specifically, can digital technologies aid
entrepreneurial organizations in the phase of rapid growth?
The organizational transition from a start-up to a medium-sized enterprise is turbulent and involves many
changes. During this stage, management, structures, and policies are formed and digital technologies
likely shape and are shaped by these transitions as the “magic ingredient that inspires and most often
enables contemporary entrepreneurial endeavors (Del Giudice and Straub 2011 p. iii). Since there is no
established theory about the role of digital technologies during this liminal, transitioning stage of growth,
an exploratory study is appropriate—one where we can build and extend theory “grounded” in the
observation of empirical phenomena (Glaser and Strauss 1967).
In this study, we report on an open-ended exploration of 16 small and medium sized enterprises (SMEs)
that are either undergoing a period of growth, or have recently successfully transitioned to a mid-sized,
mature organization. Grounded theory methodology (Glaser and Strauss 1967; Strauss and Corbin 1998)
is appropriate in situations where extant theory does not directly apply to empirical phenomena. Through
our grounded analysis, we find evidence that digital technologies do appear to support many of the
practices that have been identified in the literature for supporting the growth of entrepreneurial
organizations. Beyond this, however, we characterize a particular way that digital technologies support
this growth and develop process theory in this regard. Process theory focuses on sequences of events
(Burton-Jones et al. 2014) and our objective is to provide explanation, which is a primary goal of building
theory (Gregor 2006). Specifically, our model highlights how entrepreneurial organizations enact a
“digital façade,” and how this façade enables them to loosely couple and periodically reconcile their
transitioning practices with external stakeholders (primarily customers in our data), while maintaining a
stable and professional front to those stakeholders.
The remainder of the paper is structured as follows. In the next section, we introduce the background
literature that continuously informed our study during data collection and analysis. Note that we did not
begin our research with these ideasrather, in constant comparison between what we were seeing in the
field and the literature; we found these to be important ideas. Therefore, we present the relevant literature
on the practices that help organizational growth (from the literature on organizational lifecycle models) in
advance of the findings to help the reader understand how our findings of digital technologies are
consistent with the literature that does not explicitly attend to digital technologies. We then describe the
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research methodology and present and discuss our findings. The paper concludes by highlighting the
contributions that our study makes to research and practice.
Literature Review
Organizational Growth Models
Research on organizational growth often involves models that view the evolution of organizations as a
lifecycle, with associated stages that take the organization from inception to maturation or demise. There
is neither consensus on the appropriate number of stages, nor their sequence, nor the mechanisms that
drive the progress (Levie and Lichtenstein 2010). However, it is generally accepted that growth is a
desirable process that most organizations seek to accomplish, and that this growth occurs in stages
(Leitch et al. 2010; Whetten 1987).
There is abundant literature on life cycle models, going back decades. Quinn and Cameron (1983)
analyzed close to 30 life cycle models and identify four generic stages: entrepreneurial (early innovation,
creativity), collectivity (high cohesion, commitment), formalization and control (stability and
institutionalization), and elaboration and structure (domain expansion and decentralization). They
highlight the importance of the liminal period of collectivity, formalization, and control that is vital to
rapid entrepreneurial growth. Since the time of their review, numerous other stage models have been
developed. More recently, Levie and Lichtenstein (2010) conducted a detailed literature review on 104
stages of business growth published in the last 45 years and find that most models have three to five
stages, but again, their work highlights the way so many elements of an organization transform as
entrepreneurial organizations grow rapidly. They find that over time as the growth increases,
organizations change their culture and structure, their formalization of systems, and the activities of top
managers. Next, we turn to the challenges that organizations face during stages of rapid growth.
Challenges in Phases of Organizational Growth
To focus on the transition stage from entrepreneurial to more mature organizations, we review
frameworks that inspired ten or more subsequent stage models according to Levie and Lichtenstein
(2010). These models include those by Adizes (1979a), Christensen and Scott (1964) as cited in Levie and
Liechtenstein (2010), Churchill and Lewis (1983), Greiner (1998), Kazanjian (1988), and Lippitt and
Schmidt (1967), as well as a model proposed by Levie and Liechtenstein (2010) as an alternative
explanation to the predominant literature. According to their “dynamics states approach” the number of
stages in the organizational development path is not predefined and could occur in a variety of sequences.
Figure 1. The Founder’s Trap
(adapted from Adizes 1979)
The transition stage is described differently in each model, but there are many parallels across models.
Due to space limitations, we will address one of the most well-known models in depth as an example
(Adizes 1979a, 1979b, 1988), and then touch upon the findings from the various other models. In his
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seminal work, Adizes (1979a) describes the transition as going from the “Go-Go” stage to the “Adolescent
organization. This transition is critical for the “rebirth” of the organization, which must shed some of the
practices that made it successful, but will now impede that growth (Adizes 1988). At this stage, an
entrepreneurial organization might fail to develop its administrative system, and as a consequence fall
into the so called “Founder’s Trap,” which limits the organization’s growth to only those areas that can be
directly managed by a founder who does not delegate (see Figure 1).
The organization is born once it transitions from “Courtship” to “Infant. In Courtship,” the physical
form of the organization is non-existent and only the ideas about its inception exist. During this time,
strong commitment of the founders is a key driving force. When moving to the next phase, the
organization becomes a reality and risks are taken in terms of investments. For this reason the keyword
describing the Infant organization is “sales.” There are no formal structures in place to guide the
organization towards systematically generating sales, and people are hired ad hoc based on emerging
needs. This is an experimental phase which demands continuous commitment of the founder, who is the
only management body at the time. Managerial practice such as planning, hierarchies, or job title
definitions typically do not apply to infant organizations.
The next stage, Go-Go, reflects the realization of entrepreneurial ideas in terms of products. The
struggle from the previous stage to achieve sales is not present anymore. That does not mean that the
organization has a structured approach to growth, but rather that the organization is exploiting
opportunities as they arise. Thus the orientation is mainly short term, and there is no planned approach to
prioritize chances for growth. Also, up to this point the management process was the same as the
founder’s decision making process. However, in the Go-Go phase, management processes need to
become detached from persons and the organization becomes structured around tasks rather than people.
The transition from the “Go-Go” stage to an “Adolescent” organization is critical for the “rebirth” of the
organization (Adizes 1988).
Table 1. Management Practices during Organizational Growth
and Lewis
Lippitt and
Levie and
Formalizing activities
Professionalizing management
Shifting towards quality focus
Reaching global optimum
Specializing the skill set
Maintaining liquidity
Establishing planning activities
Building reputation
Considering environmental influences
Retaining entrepreneurial orientation
Other lifecycle models are similar to Adizes in their treatment of this critical transitional phase, and
together they identify several common challenges to be faced in order to make this transition (Christensen
and Scott 1964; Churchill and Lewis 1983; Greiner 1998; Kazanjian 1988; Lippitt and Schmidt 1967; and
Levie & Lichtenstein 2010). One of the first steps is to institutionalize leadership and design a system that
supports the shift in leadership style. The founder must delegate and decentralize activities. Getting past
the pathology of the “Founder’s Trap” is essential. Thus, the Adolescent organization exhibits success in
delegation of authority, change of leadership, and goal displacement. Delegation calls for new incentive
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systems, developing policies for budget, and ultimately professional management. The focus is not only on
quantity, as during the “Go-Go phase, but dedicating attention to the quality and the way growth is
achieved. Naturally, the establishment of administrative practices means temporarily shifting focus from
growth to laying the ground for the long run, strategic achievement. This causes tensions as
entrepreneurial individuals might perceive the administrative part as of less importance.
Table 1 highlights common management practices identified by the literature to help with this transition.
These practices emphasize the need for formalization in terms of institutionalizing policies, systems of
control, and structures instead of ad hoc actions (e.g., keeping up with the data is difficult because of all
the special deals), professionalization of management, and understanding the relevance of delegation
instead of management by intuition. Also, there is a need for more of a focus on quality and improving
products and processes, and acquiring the necessary skill set that leads to new employment positions but
also specialization of existing ones. One major issue is the management of cash flow, as fixed costs
increase through the transition. Further, there is a need for the establishment of planning activities, in
particular long term strategic planning. Finally, even though establishing stability, control, and
transparency is important, the organization also needs to preserve the entrepreneurial spirit in order to
survive through these growth stages and navigate environmental factors (Adizes 1988).
Next, we describe our research method and begin our findings by showing how many of these professional
practices can be supported by digital technologieswe then go beyond this with our theory of a digital
façade enacted to aid in managing the growth transition of entrepreneurial organizations.
Research Approach
Data Collection and Analysis
The research approach is inductive and is based on a rich empirical foundation to produce novel
theoretical insights about the role of digital technologies in the growth phases of entrepreneurial
organizations. We chose a grounded theory approach (Strauss and Corbin 1998) to produce theory
through intensive engagement with the collected data (Urquhart et al. 2009). Grounded theory
development is based on the continuous interplay between collecting and analyzing data (Glaser and
Strauss 1967; Strauss and Corbin 1998). Data is analyzed and emerging concepts are used to decide where
to sample from next, a process referred to as theoretical sampling (Urquhart 2013). Researchers are active
participants, who construct and reconstruct experience and meaning with the respondents (Mills et al.
2008). In this view, the theory is the result of the researcher interacting with the field and is deliberately
constructed (Charmaz 2006), based on conscious decisions and interpretive acts” (Seidel and Urquhart
2013 p. 237). Importantly, the researcher is not seen as a “blank slate”; throughout the process we have
thus consulted the literature for possible confirmatory or conflicting explanations (Urquhart and
Fernández 2013; Urquhart 2013). This process also resulted in the overview of literature presented in the
previous section.
The data collection took place in 16 different organizations from distinct industry sectors, including 20
interviews with the overall length of 19 hours and 38 minutes, and with an average interview time of
approximately 59 minutes. To gain in-depth insights, our key informants were mostly the founders of the
organizations or were employees in key decision making roles (at vice president or director levels). The
interview protocol developed throughout the study and was refined after each round of data collection. In
the early stages of the research process, the interviews covered general questions about the respondents,
their organizations, as well as digital technologies. During this phase, we allowed the topics to emerge and
aimed to avoid being biased by preconceptions. As the interview rounds proceeded, and as further
insights from the literature were incorporated, our questions were guided by a lexicon (e.g., important
organizational challenges) we drew from the literature and that sensitized us for the discovery of concepts
and relationships about particular topics (e.g., how technologies are used to respond to specific
organizational challenges). All interviews were recorded, anonymized, and transcribed. We used the
NVivo software (version 10) for qualitative data analysis. Though interviews were the key data source, our
analysis also included publicly available information about the organizations.
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Theoretical Sampling & Coding
Throughout our research, we engaged in four broad rounds of iterative data collection and analysis. We
started with open coding where we identified first concepts. We then proceeded to develop categories (i.e.,
more abstract concepts) and related those categories to each other. Through this process, we identified
two strategies organizations choose in the growth phase and that involve the use of digital technologies:
complement and substitute organizational practices. In addition, our data analysis sheds light on the
contextual factors that impact on the application of those strategies (e.g., weather the organization is
rooted in digital technologies and infrastructure since the beginning or not). In what follows, we provide
an overview of how data collection and analysis evolved throughout the study, and how theoretical
sampling allowed us to contribute to our theory development.
First, we conducted a set of interviews in different entrepreneurial organizations. We sampled those
organizations and respondents where we expected to gain in-depth insight into the role of digital
technologies in stages of rapid growth. By “rapid growth” we refer to discontinuous stages of growth at a
level much greater than was previously experienced. There is no universal rate for rapid growth, it is
always in relation to previous incremental or continuous patterns of growth in that organization. Often
this period of rapid growth accompanied the acquisition of a large customer or the release of a
surprisingly popular product. All of the organizations that we studied had experienced such growth in
their retrievable memory or were currently experiencing such growth. These organizations represent a
number of different industry sectors. The organizations from the first round engage with producing sports
equipment (Sporting), packaging machines (Packaging), wholesaler for gifts (Gift), and insurance
(Insure). All the interviews were open-ended and addressed the role of digital technologies related to
processes, products, and business models. After the first analysis cycle we revisited Sporting and Gift to
learn more about their growth phase. Sporting was currently undergoing these changes, while Gift has
already successfully survived. Through our initial open coding an important theme emerged: the role of
digital technologies during phases of rapid growth.
In a second stage, grounded in our understanding from the analysis of the first round of interviews, we
engaged with prior literature in the field of entrepreneurship. The literature provided us with a lexicon
(including concepts such as formalization, specialization of skill set, establishing planning activities, etc.)
we could use to further analyze and make sense of the data. We treated the literature as a sensitizing
device (Klein and Myers 1999) in order to remain open and allow for emergence throughout the process.
We included additional organizations in the study: a producer of box packaging (Box), a home builder
(Housing), a printing house (Printing), a company engaging in the analysis of plant nutrition (Plants), and
a special fiber producer (Fiber). In this stage, we started to identify relationships between digital
technologies and practices identified in the literature (e.g. establishing planning by implementing a
business intelligence system). We found that digital technologies sometimes substitute for organizational
practices, or enable those practices. For instance, formalization of activities resulted from the
implementation of an ERP system in one case. In other examples, digital technologies facilitated
organizational practices that were previously not recognized in the rich body of knowledge on growth in
entrepreneurial organizations. All of these organizations, except Fiber, started with minimal attention to
digital technologiesonly beginning to more intensively relying on digital technologies during the growth
phase. In contrast, Fiber intensively invested in robust digital capabilities from the beginning. We
constantly made comparisons between incidents within each case and across cases to explore variations in
key concepts (Strauss and Corbin 1998). At this stage, most organizations explained what we describe as a
“digital façade. Digital technologies enabled an interface with their customers and partners in a way not
previously characterized in the literature. Fiber was an exception that informed our next round of
In the third round, we extended our sample to additional organizations in order to further develop
emergent concepts. In the second round, we had identified one organization that did not follow the digital
façade process; it presented a case that was different from the others and could be characterized as a
born digital” organization where IT played a central role right from the organization’s inception. We thus
decided to follow up on this idea and the new sample consisted of organizations that relied on digital
infrastructures from their early beginnings. One company maintains several Internet portals (Portal).
Another company processes payments for ecommerce sites (Financing). Essentially, the business model of
these two organizations relies on digital infrastructure and technologies. Both organizations had a
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dedicated person/department exclusively in charge of keeping the IT infrastructure running. The question
that emerged next was whether digital technologies play a different role in organizations tightly liked to
producing or providing software related products and services. In these cases, the business models reflect
that the business indeed is entangled with digital technologies. For these born digital organizations, their
growth is intrinsically linked to the crucial role digital technologies play.
In the fourth round, we included companies for which digital technologies are both a tool and end product
as well as organizations that offer services related to the development, implementation, and post
implementation of information systems. We involved a software vendor for franchising (IT Franchise),
two ERP software vendors (ERP1 and ERP2), a company offering near shoring software development
services (Nearshore), and a business intelligence consultancy (BIConsult). These organizations not only
use digital technologies, but offer services related to the development, implementation, and post
implementation of digital technologies. Digital technologies are the core of these organizations.
During the continuous iteration between data analysis and collection on the one hand, and engagement
with the existing literature on the other, we identified several core categories, relations between these
categories, and contextual factors. Our analysis suggests that (1) digital technologies are often
complementary to, or even substitutes of, the organizational practices that are commonly identified with
enabling growth. Moreover, digital technologies afford the creation of new organizational practices.
Further, (2) many organizations sampled built up a “digital façade”—a digitally established relation to
their customers and partners. We also found (3) that organizational growth materializes differently,
depending on the time when digital technologies start to play a significant role. We thus distinguish
between organizations that are “born digital” and those that later digital capabilities in later stages. We
discuss the three key emergent categories of digital practices, digital façade, and temporality of digital
capabilities, in turn.
Digitally Enabled Practices: Digital Technologies and Organizational Practices
in the Process of Growth
From our data it became clear that digital technologies were complicit in the growth efforts of
organizations. Informants continually described the short-term, local benefits of flexibility in tension with
the long-term needs of the organization as they scale up. In analyzing the literature simultaneously with
data coding, we identified a number of practices (see Table 1 above). Table 2 below provides examples of
how digital technologies were used in a variety of ways in a manner consistent with the practices
identified in the literature (Notemany of the informants identified similar practiceswe just selected
one example for illustrative purposes.)
Table 2. The Role of Digital Technologies in Challenges faced during Organizational Growth
Organizational practices
Example quote
Formalizing activities
“So, people knew their areas that they worked in. But there was so
much crossover and lack of definition.” […] “the culture was fly by the
seat of our pants. I said no titles no accountability, no responsibility, no
definition. […] “During our go-live…that we did over 7 months which is
still aggressive, but it gave us enough time to get business process
owners defined, because they hadn't been. And say what is that you are
doing in QuickBooks [accounting software], why are you doing it that
way?” (COO, Sporting)
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“We have more projects. Difficult to handle, difficult to track, and after
that [ERP system implementation] we started to handle those projects
in the manner where we know how many consulting days we are
actually spending and what is cost side of the projects. We then realized
that we are doing that passively. We are dealing with consequences.
[…] Then the real answer for that is, okay, we should start assigning
people and training people to be project managers.” […] “Planning is
the core skill of every project manager, and actually in the company
people are doing the planning actually more ad-hoc. Not in the manner
that project managers should do that. At that point of time, the
company started to invest in trainings and also some seminars and
other education events where we started to develop our project
management skills.” (CBO, ERP1)
Shifting towards quality
“But above all, the formalization process influenced gaining reputation,
by this I mean the official standardization process. In parallel to the
ERP implementation we became ISO certified. There are only two
companies in the town that have ISO 27000 standards. It is related to
handling privacy sensitive data with banks, insurance companies and
public institutions.” (Founder, ERP2 company )
Reaching global optimum
“One of the things we had to tackle is an organization that grew was,
developing our series of key process maps.” […] “So, we identified
champions or owners of certain areas. And we identified the
interaction with each different organization in terms of process
mapping. Uh, you know, how different, systems were going to work.
And who was responsible for what, so that there was you know,
accountability and that helped the development of the software and
helped our operation as well, through process and procedure maps.”
(Founder, Housing)
Specializing the skill set
We have done some off-site training. One of our engineers, the guy
that is our IT guy, was fluent in Solid works [3D computer aided design
software] when we bought it. So, incrementally, people would go and
put their chairs in his office, and just work there for a week. And say
oh, how you do this? Oh yeah ok, and you go back to work. First day
you are stopping them all day long, the next day…by the fourth or fifth
day you have moved back out, saying - I got it.” (Founder, Packaging)
Maintaining liquidity
“It would not be possible to operate in this level without a system like
that. I mean also it's important because we don't want to keep a huge
amount of materials at our stock. For example we track it down in an
hour and then we see some materials are more than it's needed and
then we know what we need and if we have enough for maybe next 2 to
3 months, 6 months, it depends” (Director, Printing)
Establishing planning
“Every consultant has to maintain from today - 15 months in advance
his utilization. For the current and the next month, on a daily level, and
from the month plus 2 onwards, on a monthly level. This has to be
refreshed weekly. […] “It's also a very hardcore business intelligence
approach. I say if a consultant is 2 days free, I want to have the
possibility to recognize this. If a customer asks for troubleshooting day,
I can offer the consultant in these little time frames.” (Founder,
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Building reputation
“So that they [sub contractors] know that they don't have dry runs, you
know. They don't go to the job site, they don't have the information that
they need, or it's not ready, things like that. The reputation that we
built through the system with them, was one of reliability for them,
that, the information is there. The information is correct. The schedule
is right. I know I can show up ... I mean and being able to deliver that
and allow them real time wide updates via that web interface is huge.
And that builds your reputation on that end with our trade and supply
partners.” (Founder, Housing)
Considering environmental
“The first one to implement a fully-functional and dynamically-driven
e-commerce site […] so we're the first one to have the database-driven
site where you could do dynamic searches on, characters or things or
messages or seasons or whatever, and I mean, that, definitely was
advantage because we got in.” (IT Director, Gift)
Retaining entrepreneurial
“It is where the growth is. It's. It's helping to stay flexible because it
allows us to see the buying pattern of customers and buyers, help to see
which products are attracting them to our website where we can make
quick adaptation and quick changes to strategy to make sure we're
maximizing efforts in the eCommerce world.” (IT Director, Gift)
In our study, rapid growth refers to the phase when organizations experience an increasing number of
employees, generate more sales, and have more transactions to handle. The stories of interview
participants describe the phase in various ways. For example, in Sporting the COO described how the
existing system (accounting system) is only designed to do 500 transactions a day. We were, at December
when I came, doing up until 3000 transactions a day. […] “It was slowing people down, just in day-to-day
activities, whether it was an order entry, or finance and accounting trying to get information. (COO,
Sporting). Similarly, the founder of Nearshore described the moment when the company started growing:
“When we started to work on outsourcing and opened our outsourcing analysis, then we grew a lot. […]
Yes, the last three years, we have worked a lot regarding the organization, how to trace and manage the
projects. […] “The main thing which has changed is that that we have entered into the new market.”
Upon reflection, the analysis of our data suggests that the previously identified organizational practices
(Table 1) are often lagging behind and are established only after digital technologies are already
implemented. For example, in Sporting the formalization took place during the implementation of the
ERP system. In this case, digital technologies substituted for decisions about assigning responsibilities
that are sometimes taken a priori. In ERP1, the system triggered a need for new competencies, team
structures, and delegation (professionalizing project management). The newly implemented systems
provided insights previously not available and led to a decision to attend trainings for building up project
management skills. Furthermore, Gift was a first mover in the industry to implement a dynamic e-
commerce website. Over time it resulted in efficiencies and enabled the organization to engage in
analytics based on the collected data on the website, however, without integrating their back-end systems.
All these examples indicate the interrelatedness of digitally-enabled practices. However, many of the
interviewed organizations seem to compartmentalize their activities while building up capabilities
incrementally. It is challenging to constantly navigate between fulfilling contradicting requirements in
terms of: focusing on internal stability vs. flexibility and responsiveness to the environment; keeping
enough cash flow while making wise decisions about investments in digital technology; rolling out global
processes while preserving special local needs.
Consequently, we find that this process often starts by using digital technologies to build up the “façade”
towards customers and partners. Entrepreneurial organizations seek to create an image of a professional,
mature organization and to appear that way to the outside world. While at the same time, in the
background they keep on relying on existing ad-hoc practice as the organization gradually builds up new
digital capabilities.
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The Digital Façade: Maintaining Customer and Partner Relationships during
Rapid Growth
Regardless of the type of organization or the reasons to adopt digital technologies, our analysis suggests
that growing entrepreneurial organizations build up a “digital façade.” Traditionally, the term façade
refers to the front of the building” (Merriam Webster Dictionary). In the context of digitization in
growing organizations, it is the face to the customers or business partners. Digital technologies become a
part of the front stage in entrepreneurial organizations. We observed this phenomenon in organizations
from all rounds of data collection using different digital technologies (see Table 3 for examples).
Table 3. The Role of Digital Technologies in Building up a “Digital Façade”
Digital technology
Example quote
Electronic Data
Interchange (EDI)
Invoicing was done in QuickBooks as well, except we went live with [major
sporting goods retailer] in 2013, and also [another major sporting goods
retailer], and that’s where EDI started to become a factor. So we had two
partners. The world largest EDI provider, the company called […], offers
multiple iterations of EDI interfaces. […] “You can do whatever you want as
long as they get the inbound and get the functional acknowledgement, 997 FA,
and then we return the documentation that they require.” (COO, Sporting)
I mean, obviously, EDI is the standard format through exchange of electronic
information and, that became a prerequisite, almost a, a price to pay if we
wanted to continue with [a large supermarket chain], specifically, but while
that was the one customer that was asking for, we also knew that would give
us a platform to sell ourselves to other chain accounts.” (IT director, Gift)
3D Computer Aided
Design (CAD)
“Yeah, well the Solid Works designing in 3D versus 2D for the type of the
equipment we do is so much easier for both the engineer and the customer. We
do a lot of go-to-meetings; we do that on a pretty regular basis” […] “They [the
customers] want to have a design review and there is a higher expectation for
design reviews today that might have been, you know, ten years ago. And
that's directly related to companies giving us specification packages, like this
for a couple of machines (showing the specification). So we have this, and they
said, 'did you do this?' And we say 'yeah, let's have a meeting, we will go
through the machines and show you the different things that we've done.
(Founder, Packaging)
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Web based interface
“So, every major department had their own separate standalone system. So,
we went through a study and, and tried to find the best system. Uh, that fit our
organization and, and it's helped. And we use that and we leveraged it to help
us grow. It allowed us to you know, come into the new century in terms of
technology. Where it had an integrated web interface. So that our customers
could interface into the data, through the web with what they allowed. And
because we're a general contractor, we hire hundreds of sub-contractors to
help build our homes. And they allowed us to communicate information easily,
to our sub-contractors via this web interface - called the internet tool kit. The
logistical challenge of getting that all there and communicating that schedule,
was the most critical. That was one of the biggest driving forces around,
improving our technology. That was that scheduling, because it was so
important and critical to driving our efficiency and the numbers of homes we
were able to build in a year.(Founder, Housing)
“In all the website was, was general data. You couldn’t do anything on it. It
was just like sheets of paper. It was no different than a flier. The first time you
could actually use the website, it was about, it was about nine…eight or nine
years ago. […] “I think they started getting requests for it. You know you hear
about something and somebody kept asking, you know, “Can I get this online
because most of this stuff is generated from marijuana growers because if we
emailed stuff to a specific IP address…So people, they were afraid they were
going to get tracked to whatever they were checking their email and, whatever
so we started doing it where they could just log on and look at it that way. And
they had their own specific ID and password. (Director of Operations, Plant)
From the example quotations, it is clear that the organizations we studied started with building up a
digital façade, but then streamlined other processes in turn (following the order in Table 3).
Sporting started working with the big distributors of sporting goods, and EDI was a precondition for that
relationship. Nevertheless, behind the scenes the data was manually entered, exported in one data format
and imported in another one to match the existing accounting software. The connections between the
systems were patched, manually-intensive, and far from being integrated. However, Sporting started
gradually bringing the rest of their operations up to date by implementing an ERP system, thereby
justifying the need for a new warehouse system by using examples of inefficiencies due to manual parts of
the process. Another organization that implemented EDI quite early in order to maintain the relation with
a large supermarket chain is Gift. This organization sells decorative objects, flowers, and balloons to other
businesses. In the beginning, it was a precondition to implement EDI, but then it became a capability the
organization utilized to establish business with other partners.
Packaging initially wanted to use 3D drawings mainly to fulfill a particular customer’s requirements for
seeing machine prototypes in real time and doing design reviews. Behind the digital 3D drawing software,
however, there was no integration between the design and manufacturing activities as the production was
not digitized. Nevertheless, Packaging introduced a vault based system used for the designers to check in
and out. This improved the process and allowed for reusing parts and increasing process transparency
and quality.
In case of Housing, the façade was built up towards the partners. They needed to make sure that different
subcontractors had easy access to information through a web interface based scheduling and monitoring
system which triggered them to rethink their business including their internal processes. Similarly, Plant,
an analytic agricultural laboratory, decided to move away from delivering results per post or email.
Gradually, they started storing the results, assuring their customers data security, and providing
comparative analyses across previously stored reports.
Throughout these cases the decisions about the façade further influenced the development of digital
capabilities in the organization. This refers to both IT skills that were built up over the time in the
organization and further investments in digital technologies. In developing digital skills, for example in
Gift, the IT director pointed out that there was no IS department in the beginning (see Table 4). First, they
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started with EDI, but then gradually moved to develop their own e-commerce website. Over time, the e-
commerce unit became a separate IT department entity reporting to the IT director. Next to digital skills,
the organizations further invested in IT systems to develop a corporate wide infrastructure. Sporting was
going through a lot of changes and planned for developing a digital infrastructure in terms of future
integration between EDI and the ERP system. EDI as the face to the distributor was largely disconnected
from the rest of the IT landscape. As the organization grew, the implementation of the ERP system
followed, but still not commutating with EDI and also not incorporating all necessary modules to ensure
that key operations are running efficiently.
Table 4. The Indirect Effect of the “Digital Façade” on Building up Digital Capabilities
Example quote
Digital skills
“Well, it was a combination. It was somewhat gradual. So, back when we
started trading with the big players, there really still wasn't much of an IS
department[…] So, within the overall organization of the eCommerce
department - eCommerce strategy in general, as far as the business as a
whole, the analytics from the website impacted greatly.” […] (IT director, Gift)
So, all of these data [from the ERP system] will allow me to plan short, mid,
and long-term. So, these data will validate my need for a warehouse
management system because I'll be able to tell you I'm shipping on cancel date
every month. […] “So what I was told [about the ERP system] was obviously
it's a very affordable, scalable platform.” […] Um, but it is not out of the box
EDI-ready. […] “So, there's customization that's gonna have to be done, or
just ...It [Enterprise system] would be integrated right in. So, what the bigger
guys do is that you'll have...Everything is in X12. It will go into an
intermediate file within your ERP system where you can do any sort of data
scrub. (COO, Sporting)
So far we have focused on organizations that acquired digital capabilities during their growth. However,
we did find some organizations that came into existence rooted in digital capabilitiesoften with business
models rooted in digital infrastructures. To better understand the distinction between born digital and
grown digital organizations we provide illustrations from the data in the next section.
Born Digital” vs. “Grown Digital” Organizations
Born digital organizations are already embedded in digital technologies and infrastructures when they
enter stages of rapid growth. It might be that their business model dictates early IT capabilities and
associated explicitly defined processes. In contrast, organizations that are grown digitaltypically start
off with paper based manual processes, without structured IT capabilities in the organization, and thus
need to hire additional IT related staff during the growth period. Table 5 provides an overview.
Table 5. “Born Digital” vs. “Grown DigitalOrganizations
Born Digital
Grown Digital
Role of digital
Growth-related organizational
practices are embedded in digital
technologies and infrastructures.
Growth-related organizational practices
may exist largely independent of digital
technologies and infrastructures.
Acquisition of
Acquire digital capabilities when
Acquire digital capabilities over time.
The acquisition of digital capabilities
often starts from the investment in a
“digital façade.”
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Thirty Sixth International Conference on Information Systems, Fort Worth 2015 13
Role of IT-related
Required from the beginning on.
May be hired during growth period as the
organization builds up digital capability.
The organizations we described in the previous section acquired digital capabilities over time, often
starting from the investment in a “digital façade that they perceived the most relevant, or that certain
customers demanded. The defining characteristic of this sort of enterprise is that in the beginning many
processes are manual and digitized only during stages of growth. In contrast, “born digital” organizations
are rooted in digital technologies and digital options are built into their DNA. These organizations are
structured and professionalized in a way that is rooted in digital technologies. Since the key areas of the
organization are imprinted in the digital, the growth involves the constant utilization of digital options.
Our analysis indicates two main reasons for the existence of born digital organizations (see Table 6).
The analysis of our data thus suggests that the investment into a digital façade is typically found in “grown
digitalorganizations. However, it might well be the case that born digital organizations invest in digital
façades in later stages of growth.
Table 6. Characteristics of “Born Digital” Organizations
Example quote
No existing
In the market there was no system which can handle all the different parts in an
automatic way that we can scale up. Okay? So, that was the reason why we set
up, started developing a tool.” […] By the way this was together with our only IT
developer who was a student worker. You know drawing down the first
processes, how it could look like(Founder, Financing)
“So I had to go there and find out about what business model, what they're doing
at the moment.” […] “I modeled the whole business and then based on these
models I developed a system.” (Software developer, Financing)
Because, when we started we didn't know the market, we were disrupting the
market, before us people used job advertisements in the newspapers. We came on
the Internet and our main business was to inform the people and stop them to use
paper and come to the Internet. And this was the biggest task.(Founder, Portal)
Founder’s vision
to grow and
“Right. So, two key reasons. One is paranoia about where the data is because I
used to worry about people keeping stuff in their Excel spreadsheets and their
own computers and then losing it. And the second reason was I always believed
that I would be big. And when I would be big, to integrate a whole bunch of
dysfunctional units would be more painful than just buying it up front and living
it. So those were the two biggest reasons.” (Founder, Fiber)
“Yes. It's quite easy. I'm a very simple man, and if I don't organize and structure
it, I'm getting lost. Therefore I'm organizing everything from the very beginning
if possible. If you organize it and if you have a clear structure how you do, you
can control it and you can steer it.” (Founder, BIConsult)
Early work on the role of digital technologies in small businesses suggested that information requirements
become more sophisticated as organizations grow (Kagan et al. 1990). Some studies looked at particular
industry sectors and identified factors that determine the propensity of organizations to adopt software
technology (Pierre-André and Raymond 1994). The goal of this study is to regard the specific context of
entrepreneurial organizations, thereby considering the whole range of different digital technologies. There
seems to be no particular sequence in which organizations adopt technologies in each particular stage.
The reason is that the role entrepreneurial organizations assign to different classes of technologies very
much differs. Nevertheless, rich empirical insights point us to certain patterns in the growth process.
The key finding from this research involves the observation that many organizations used digital
technologies as a sort of “façade” through which they interacted with customersgiving the appearance of
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a professional, mature companywhile, at the same time, they scrambled to deliver according to those
customer and partner expectations using many of the old ad-hoc processes that they used in the past.
Through their role as a façade, digital technologies carve out a space for organizations to build greater
professionalism and to develop capabilities that they will need as they grow. Sporting adopted EDI which
enabled them to seamlessly integrate with the largest sporting goods retailers and to fit the integrated
business processes of those retailers. But this integration did not run through all of Sporting’s processes.
They took the information from the EDI system and followed their old processes to deliver their product.
At the same time, Sporting used the additional cash flow to fund the implementation of an enterprise-
wide ERP system that will one day enable them to fully integrate with their customers.
In another example, Packaging adopted a three-dimensional computer-aided design system (SolidWorks)
for the sole purpose of interacting with a large customer during design meetings. Over time, as they
acquired capabilities with this new digital tool, they adopted it for all of their product designs and
improved the quality and documentation for their engineering. Other examples abound in our data.
Housing implemented a scheduling system to keep track of subcontractors for the customerthen over
time this system helped them run their organizations. Gift had an ecommerce website before its
competitorsenabling rapid growth and very professional relationships with customers, while they were
still following their traditional ways of delivering the product. ERP1 implemented a customer relationship
management system (CRM) but then as a consequence they had to restructure the whole software
development process and eventually switch from customer based versions to yearly releases. Ultimately,
they also adopted an open source versioning software to keep track of the changes. Printing implemented
a warehouse management system to become more up to speed in providing information to their
customers about the status of their order. As a result they gained insights to their operations and now plan
to implement a production planning system as well.
Figure 2. Theory of the Digital Façade in Entrepreneurial Organizations
Figure 2 is an illustration of a process model of the digital façade of fast-growing entrepreneurial
organizations. Organizations explore and adopt technologies, often to service a particular customer, then
use this technology for the sole purpose of intermediating or supporting some interactions with that
customer, while enabling the company to maintain its ad-hoc practices. Providing this digital façade then
requires building up capabilities around the digital technologies, which support the professionalization of
the organization, which then supports stronger, integrated relationships with customers, in turn. This
model has implications for the process of building capabilities while satisfying many differentoften
divergentrequirements. Further, it provides some insight into the second-order, or indirect, effects of
digital technologies in entrepreneurial contexts. Finally, by theorizing about exceptions, this work also
distinguishes dramatically between those organizations that are “born digital” and those that build digital
capabilities over time. Next we will discuss each of these points followed by relevant propositions.
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Thirty Sixth International Conference on Information Systems, Fort Worth 2015 15
Organizations in stages of rapid growth need to reconcile multiple imperatives simultaneously, such as:
Cash flow and fixed costs: As entrepreneurial organizations go through different stages of the
lifecycle, they need to professionalize their managerial practices and formalize structures, while at the
same time staying in business and maintain adequate levels of cash flow (Churchill and Lewis 1983).
Cash is precisely what growing organizations need to professionalize, because these practices carry
overhead that entrepreneurial firms are not accustomed to. Many entrepreneurial organizations
minimize committing to fixed costs, whereas large, established organizations tend to spread fixed
costs across their activities to take advantage of economies of scale and scope.
Practices and stages: The practices that made organizations successful in one stage in the lifecycle
may undermine organizational performance in subsequent stages (Greiner 1998). A classic example is
the highly involved founder that becomes a micromanaging hindrance as an organization scales
(Adizes 1979a). Other examples might involve the flexible, ad hoc practices that allow organizations to
be responsive to customers early in the lifecycle, but then actually undermine the organization’s
ability to meet customer demand at scale.
Local and global optima: An issue for all organizations, which is especially important for
entrepreneurial organizations, is reconciling what is needed locally and what is good for the company
overall, or in the long-term. Many ventures experience a sequence of functionally localized problems
as each function faces the difficulty of building an efficient and effective task system” (Kazanjian 1988
p. 264). Large established companies create ways to reconcile local efficiency with the organization’s
global needs (that is, perhaps, the central role of the manager, see Thompson 2011). In early stage
entrepreneurial firms, the two are closely aligned and no practices are well-established for resolving
issues between local and global imperatives, and must thus be developed.
Core and peripheral process: The core processes of organizations are those that contribute the
most added value to the business. Early stages of growth are very much focused on improving
products and services. This is perceived as key to success and establishes a culture where “product is
the king. However, as the organization grows, the differentiator to competitors sometimes lies in
streamlining peripheral processes such as operations and distribution channels. Thus, there is a
constant reconsideration of both these aspects that causes an ongoing tension.
What we find is that by putting a digital “face” on the organization to its customers and suppliers,
organizations can essentially create a space for working through the different imperatives until such a
time that appropriate digital capabilities and professional practice can be established. From the practices
we identified in the literature that help organizations maturesuch as maintaining an entrepreneurial
orientation and liquiditysome are directly opposed to increased structure, formalization, and oftentimes
quality and reputation-building programs. A digital façade enables minimum investment, impinging less
on cash flowswhile allowing the organization to loosely couple (Orton and Weick 1990) its practices
from this system. This form of loose couplingwhere actions are distinct from their presentations in
order to comply with contradicting institutional requirementsis a fundamental way to reconcile
conflicting imperatives in institutional analyses of organizations (Meyer and Rowan 1977), and has
recently been used to show how individuals can reconcile their activity with organizational systems in the
information systems literature (e.g., Berente and Yoo 2012; Berente et al. 2010). Satisfactory presentation
of a “front space” often enables individuals a range of activities in their “back spaces” (Goffman 1959).
This leads to our first proposition:
Proposition 1: Minimal implementation of digital technologies for the purposes of interacting
with customers and partners (i.e., “digital façade”) enable organizations to work through
multiple tensions and conflicting imperatives by loosely coupling their activity from the
presentation of that activity to those customers and partners.
Our analysis also points to a possible relationship between professionalization and long-term success, as
well as how digital technologies are complicit in this professionalization. By the need to implement EDI
for Sporting, or Solid Works CAD for Packaging, these organizations started building capabilities. Once
they have these capabilities they were able to offer those capabilities to other customers to get more
business (e.g., Sporting getting a second large retail customer) or do things to improve the quality of their
work in other areas (e.g., Packaging using Solid Works for all of their engineering activity). What starts as
a minimal implementation results in capability building. This capability building, in turn, enables further
business or improved professionalization. We conceive of this as the “second-order,” or indirect, effect of
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Thirty Sixth International Conference on Information Systems, Fort Worth 2015 16
a digital façade. What is implemented superficially or minimally at first, eventually leads to the very
professionalization that enables the company to maturethrough the mechanism of acquiring digital
capabilities. Grounded in our analysis of data and engagement with prior theory, we put forward another
key proposition that emerges from our study:
Proposition 2: The direct (first order) effect of a digital façade involves meeting minimum
requirements for a particular customer or partner; however, the indirect (second order) effect
of a digital façade involves increased professionalization, through the mechanisms (mediator)
of building digital capabilities.
This insight builds upon the typical way digital capabilities are thought to enable entrepreneurial action.
Typically, organizations with established structures and developed practices have more difficulties in
remaining entrepreneurial and seizing digital options. Their agility or “ability to detect and seize market
opportunities with speed and surprise” (Sambamurthy et al. 2003 p. 238) often poses a challenge.
Existing theory highlights that initial experiences with investing in digital technologies often influence the
agility of the organization in seizing new IT based opportunities and building up related competencies in
remaining entrepreneurial (Sambamurthy et al. 2003). The digital capabilities act as a platform for
subsequent activitynot only in the form of agility, but also in the form of professionalization.
This distinction between organizations with or without digital capabilities is common in IS research.
Established organizations are typically thought to build these capabilities over time, and those that do so
have better outcomes. This view is very consistent with our model of the digital façade. However, this does
not account for those organizations that are born digital. Of course, software companies in our sample are
clearly born digital, but they are not the only sorts of companies in this category. Take Fiber, for
examplea manufacturer of foam products. This organization was founded with large-company
processes: world-class ERP, a business process mindset, lean manufacturing principles, etc. The founder
had experience in large-scale established organizations and brought their professional practices to bear in
his organization from the first dayresisting the temptation to be too flexible and ad hoc. The result was
that digital capabilities and associated professionalism was there from the outset. In these situations of
organizations that are digital from the outset, if they are to survive and grow, they must create business
models and cost structures that can absorb higher fixed costs associated with the professionalization.
Therefore, we did not find evidence for a need for the digital façade in the same way other organizations
use it; instead, we found that “born digital” organizations did not build a digital façade:
Proposition 3: The more an organization is “born digital,” (i.e. founded with digital
capabilities fundamental to the business model) the less the organization will require a digital
façade during its liminal period of rapid growth.
Implications for Research and Practice
Our study has important implications for both research and practice. Through our work, we provide an
initial theory of the “digital façade” that entrepreneurial organizations create in stages of rapid growth.
The theory explains how entrepreneurial organizations enact a “digital façade” and how this enables them
to loosely couple and periodically reconcile their transitioning practices while maintaining a stable and
professional front to their customers. We thus contribute to the body of knowledge on organizational
growth by shedding light on the more specific role of digital technologies in early stages of the
organizational lifecycle. We summarize our findings in three key propositions emerging from our analysis,
which provide a logical point of departure for future inquiry. Specifically, future research must investigate
the more specific relationships between various digital capabilities and the digital façade. Doing so, there
is a potential in linking current insights to specific features of digital artifacts (Kallinikos et al. 2013) as
well as the literature on digital infrastructures (Tilson et al. 2010). While the digital façade does not play a
major role in early phases of growth in organizations that are born digital,at least not in our sample, it
will be interesting to see whether there are other stages in the organizational lifecycle where organizations
build a digital façade, and for what purpose. Future studies could further apply the proposed theoretical
model in different settings (e.g., in different industries) and with both born digitaland grown digital
organizations to further corroborate our findings and define the model’s boundary conditions.
For practitioners, our study likewise suggests that building a digital façade is an important strategy to
reconcile transitioning practices while maintaining a stable and professional front to their customers.
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Thirty Sixth International Conference on Information Systems, Fort Worth 2015 17
Such knowledge becomes increasingly important in the digital age where organizations across industries
automate and digitize their practices. Importantly, our study suggests that organizations can benefit from
indirect (i.e., second order) effects of building a digital façade in terms of increased professionalization
through building digital capabilities. As a consequence, decisions about the facade will influence the
further development of digital capabilities in the organization, which means that it requires a very
thorough evaluation process of possible IT solutions. However, there may be also potential threats that
organizations can face due to building the façade. Overall, it may be too ambitious attempt in terms of the
image that the facade emits and thus could fire back at the organization that cannot live up to the
expectations and upgrade the organizations digital capabilities. Also, digital technologies constituting the
façade might be too advanced for the organization to be able to gradually build up capabilities in the back
end. Moreover, during the first phase of growth, organizations shift from ad hoc and short term planning
to rather strategic decisions, and in case the organization does not succeed in switching from an ad hoc to
a planning mode, the digital façade could be used to cover up short term deficiencies rather than become a
chance for further digital development.
Organizational growth is generally considered to be desirable and important (Leitch et al. 2010; Whetten
1987). Business growth is a core topic in entrepreneurship and organization theory (Shane and
Venkataraman 2000; Van de Ven and Poole 1995). For this reason, the point in time when the firm
undergoes sudden changes and needs to take action to propel in growth is highly relevant for both single
organizations and economic growth. Regardless if the stages follow each other in an iterative manner or
are recursive, there is general agreement that there is a transition in the rapid growth of organizations
that is distinguishable from other times during the organization’s lifetime. In this research, we have set
out to build theory on the role of digital technologies during this critical transition point. In doing so, we
contribute to the burgeoning research on the role of IT in entrepreneurial organizations and digital
entrepreneurship (Davidson and Vaast 2010; Kelestyn and Henfridsson 2014). We hope that this will
inform subsequent research in this important domain.
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... In line with this, Lehmann and Recker (2019) argue that, in order to recondition core DT to new use contexts, streamlining of core activities as well as their separation from context-specific functionalities is necessary. Tumbas et al. (2015) and Harryson (2008) both came to the conclusion, that a highly involved founder and informal improvisation is not appropriate when a venture arrives at the transition stage towards a mature professional management. Thus, a change in leadership can be beneficial in this phase. ...
... Grown digital firms. According to Tumbas et al. (2015) these digital entrepreneurs are traditionally starting non-digital with manual processes and they lack IT capabilities which is why they need to hire respective IT stuff during growth. Steininger (2019) speaks of IT-facilitated startups (IT does not directly impact the value creating activities of the venture), IT-mediated start-ups (IT connects the venture with its clients) and IT-bearing start-ups (value creation and capture is mainly based on IT as an outcome, e.g. ...
... The way in which these entrepreneurs pursue DI appears to be completely different from so-called "born-digital" ventures. In contrast to born-digitals, grown digital firms build a digital façade to build relationships to key stakeholders for rapid growth (Tumbas et al., 2015). This means, they only implement novel DT for the purpose of relationship building but work with legacy systems in the background until they have incrementally built digital capabilities. ...
Digital innovation and digital entrepreneurship are two research streams that focus on the intersection of digital technologies with traditional entrepreneurship or innovation processes , respectively. In this sense, both streams can cross-fertilize each other when it comes to theorizing about digital technologies and their distinct characteristics in the context of entre-preneurship. However, recent studies show that there seems to be a large gap between these two fields of research. By analyzing 86 articles from four different disciplines, this review synthesizes the current knowledge on the intersection of digital entrepreneurship and digital innovation through a digital technology-perspective. The contribution of this paper is threefold: (1) Providing an overview of current knowledge about the relationship between digital entrepreneurship, digital innovation and digital technology, (2) Building a framework of digital innovation entrepreneurship, which describes how digital entrepreneurs engage in continuous digital innovation through the use of digital technology, and (3) identifying avenues that guide future research.
... Prior scholarship on DT has highlighted its positive effect on performance and innovation (Karimi & Walter, 2015;Svahn et al., 2017;Van Thuy, 2020). Besides, Tumbas et al. (2015) discover a positive association between DT and firm growth. Furthermore, the results of scholars like Kane (2016) and Yang et al. (2012) who investigated the association between DT and reputation show that DT has a direct significant influence on reputation. ...
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Digital transformation is critical to enhancing the firms’ sustainable growth, but this association is rarely explored, especially in the emerging market literature. Building upon the dynamic capabilities perspective, we address how digital transformation affects firms’ sustainable growth. Particularly, we examine the moderating effects of cross-border search capability and managerial digital concerns on the digital transformation and firms’ sustainable growth link. Using a survey dataset by 289 firms from Chinese manufacturing and service industries, we perform a hierarchical linear model (HLM) analysis to test our hypotheses. Our results reveal that (1) digital transformation positively enhance firms’ sustainable growth; (2) cross-border search capability moderates the effects of digital transformation on firms’ sustainable growth; and (3) managerial digital concerns moderate the effects of digital transformation on firms’ sustainable growth. Our findings illustrate how cross-border search and managerial digital concern matters in firms’ sustainable growth. It further extends the scope of digital transformation research.
... The current study adds value and advancement of knowledge in building further Business Model Theory (BMT) blocks which explain and are directly linked to sustainable digital transformation for digital marketing firms. In addition to this, the current study adds value to the works of recently emerging authorities who have applied and expanded knowledge to the Business Model Theory (BMT) who include, but not limited to Kulins et al. (2016), Ricciardi et al. (2016), Foss and Saebi (2017), Svahn et al. (2017a), Ritter and Letti (2018), Massa et al. (2017), Sohl et al. (2020), Karimi and Walter (2015), Tumbas et al. (2015), Kane (2016c), Neumeler et al. (2017 and, Climent and Haftor (2021). The Business Model Theory (BMT) is an integral tool, through its business model themes (novelty, complementarity, efficiency and lock-in), can be used as a benchmarking guide digital marketing firms' institutionalisation of proper sustainable digital transformation. ...
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The study examines sustainable digital transformation aspects, comprehensively unpack their nature and implications to digital marketing firms’ ambidexterity. Sustainable digital transformation building blocks are discussed in detail. It further identifies and delineates sustainable growth strategies for digital marketing firms in order to successfully transform digitally. Business Model Theory (BMT) has been used as the theory informing the current study and is based on the PRISMA methodology. Sustainable digital transformation is influenced by a variety of factors and as a process, it is triggered by digital disruption which forces digital firms to seek for value creation and structural changes. Systematic literature review period January 2012 to April 2022 (ten year time gap). A conceptual modelling framework has been developed for future research to test and validate its applicability and relevancy to similar studies to the current one. Future researchers are encouraged to consider alternative methodologies to examine sustainable digital transformation within a longitudinal research design.
... By changing the business scopes (Hess et al., 2020) and value creation processes (Gölzer and Fritzsche, 2017;Verhoef et al., 2021), introducing new business models (Zott and Amit, 2008;Iansiti and Lakhani, 2014;Karimi and Walter, 2015), and influencing the collaborative ways and corporate culture (Warner and Wäger, 2019), the companies achieve the competitive advantages (Casadesus-Masanell and Ricart, 2010;Liu et al., 2011). Digital transformation also makes innovativeness (Svahn et al., 2017), financial performance (Karimi and Walter, 2015), firm growth (Tumbas et al., 2015), and reputation (Yang et al., 2012;Kane, 2016). ...
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Emerging new digital technologies speed up the pace of the layout of the digital economy in various countries. As the main body of China’s real economy, the manufacturing industry does not account for a high proportion of the digital economy. Hence, the digital transformation of the manufacturing industry has become a hot topic. From the view of value chain reconfiguration, we selected B company as the case and introduced data from the closed loop of collection, transmission, storage, processing, and feedback into the analysis of the value chain. This study deeply studies the path of value chain reconfiguration of B company in the context of digital transformation. It finds that, under the impetus of digital transformation, B company has formed a new value chain form which is connected by data nodes in the value chain link and completed the reconfiguration of value chain through value chain boost, value chain integration, and value chain bond. On this basis, the study puts forward countermeasures and suggestions for the next phase of B company’s digital transformation and the digital transformation of the manufacturing industry.
... Our conversations with winemakers and other tasting providers revealed that they had little incentive to digitalize prior to the Covid-19 crisis. However, necessitated by the crisis, their quick and frugal approach to digitalizing wine tasting helped them to construct a digital façade (Tumbas et al., 2015) while developing their digital capabilities. By offering virtual wine tasting, they signaled their digital affinity and their willingness to transform their customer interactions. ...
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Open-acess paper: ================================================================== Wine tasting is a multisensory collective activity because it involves other senses in addition to sight and hearing. The importance of these multiple senses for wine tasting makes it more challenging to digitalize than other collective activities. We conducted an ethnography and used a semiotic analysis to explore the strategies to digitalize wine tasting session. In so doing, we examined how small artisanal winemakers and wine merchants in Austria, Germany, Liechtenstein, Luxembourg, and Switzerland moved their wine tasting sessions online to compensate for their lost key revenue streams during the global Covid-19 crisis. Based on our analysis, we present a typology of virtual wine tasting and illustrate how the approach to digitalize wine tasting evolved from a reactive approach to a more proactive one. We also identify strategies to digitalize wine tasting and characterize its social space. We discuss some avenues to regard virtual wine tasting as something more than just a digital representation of in-person wine tasting session by highlighting the mediating role of an information system. Finally, we propose some implications for digitalizing other multisensory collective activities.
... In terms of organizational performance, DT has something to with value increases in several aspects. According to Vial (2019), DT can increase value in innovativeness [19], financial performance [7], firm growth [20], reputation [18] as well as a competitive advantage [21]. For NIKE, DT create value in the above ways as well. ...
Trade credit is essential for enterprises in business activities. Given the current wave of digitalization, it is important to explore how digital transformation affects trade credit provision. Based on data on Chinese A-share listed enterprises from 2012-2019, we empirically examine the relationship between digital transformation and trade credit provision. We find that digital transformation significantly increases trade credit provision. The mechanism of the relationship is an increase in short-term bank credit. We further examine the heterogeneity of firms’ supply capacity and willingness, and find that the relationship is more significant among non-state-owned enterprises, enterprises with greater financing constraints and fierce market competition, and enterprises located in provinces that have low social trust than among other types. This paper extends the study of the economic consequences of firms’ digital transformation and the influencing factors of trade credit provision.
Tandis que la digitalisation du travail est décrite par les milieux stratégiques et managériaux comme une transformation nécessaire et souhaitable, elle rencontre simultanément une résistance parmi certains professionnels. La littérature gestionnaire interprète généralement cette rupture soit à l’échelle « macro », en étudiant comment les usagers résistent à certaines pressions appliquées à l’ensemble d’une organisation ou d’un secteur, soit à l’échelle « micro », en décrivant des processus locaux de contournement des outils digitaux par les usagers. La présente thèse propose de réunir ces deux échelles en mobilisant une approche « multiniveau », consistant à étudier comment la digitalisation se diffuse à différents niveaux afin de transformer la façon dont les professionnels se représentent leur propre activité. Pour comprendre à la fois le rôle spécifique de chacun des niveaux dans cette diffusion ainsi que leurs influences réciproques, nous mobilisons le modèle structural des conventions, et définissons la digitalisation comme une convention d’effort, c’est-à-dire comme une remise en cause de l’effort que les usagers-professionnels appliquent dans leur travail. En étudiant un cas d’adoption du Building Information Modeling (BIM), une base de données modélisable et partagée promue au sein d’une entreprise française de construction, nous montrons comment le niveau institutionnel, composé d’éditeurs de logiciel et de consultants, légitime l’usage du BIM dans l’effort quotidien des professionnels ; comment le niveau organisationnel, composé des cadres digitaux de l’entreprise étudiée, prescrit son mode d’usage, et comment les deux niveaux professionnels, composés des concepteurs de plan en bureau d’étude et des exécutants de bâtiment sur chantier, réalisent (ou non) ce nouvel effort. En outre, nous montrons comment chaque niveau est influencé dans sa diffusion par ses interactions avec les autres niveaux, et parvenons à expliquer grâce à ce phénomène pourquoi les concepteurs acceptent le BIM, et pourquoi les exécutants le refusent. D’un point de vue théorique, ces résultats nous permettent de lire par le même cadre heuristique les interactions intra et inter niveaux, ainsi que d’interpréter leurs effets sur les représentations des professionnels. Ils reconsidèrent également le phénomène de digitalisation, en voyant celui-ci non pas uniquement comme un moyen rationnel de « désiloter » l’entreprise, mais aussi comme une multitude de médiations construites par le mimétisme non-intentionnel de ses acteurs. D’un point de vue managérial, cette recherche énonce diverses recommandations stratégiques à travers une typologie des modes de digitalisation, et enjoint les organisations à interagir avec leurs professionnels en développant des espaces de discussion sur les transformations du travail.
This paper aims to shed light on collaborative networks’ role in boosting sustainability at the country level, both in terms of digital infrastructures and cultural factors supporting collaboration. Using three different country-level databases, it investigates how different combinations of cultural factors supporting collaboration and digital infrastructure lead to sustainability performance. Longitudinal data on 16 European countries are analyzed employing fuzzy-set qualitative comparative analysis (fs-QCA). The findings suggest that in the presence of high levels of digital and cultural factors that enable collaborative networks, countries also are characterized by high sustainability performance. Furthermore, even in the absence of high levels of cultural factors supporting collaboration, digital infrastructures are sufficient for enhancing sustainability performance.
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SMEs around the world are constantly under threats to their survival and sustainable growth. This study evaluated the variables influencing the sustainable growth of SMEs in the technological evolution of digital transformation. I propose a business model innovation strategy for the sustainable growth of SMEs. Furthermore, I evaluated the variables influencing growth by industry sector and present strategies for innovation in the business model. Data were collected from 205 CEOs in six sector industries in Korea, and I investigated the effect of variables that affected the company’s sustainability when introducing digital transformation. A partial least-squares regression was used for the statistical analysis and was performed using a data group analysis. I found that the SME performance varied by industry and that technological competency had a mediating effect. The variables that most affected the SME performance were management, technology, and technical competence in marketing and innovation. This research went beyond the limitations of studying only the effects of each of the previous literature variables through causal studies linking these variables. The variables affecting the performance of the industries were found to be different. By comparing the variables that led to a difference in performance in the industrial sector, I developed a business model innovation strategy that can affect the sustainable performance of SMEs.
Conference Paper
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Digitization has created extremely favourable conditions for digital innovation, initiating shifts in the organizing logic of products, services, and various aspects of organizational practices. Current literature has eagerly explored this digitally enabled diversification. However, it has paid little attention to the digitization of everyday practices and how forms of entrepreneurship emerge from such practices. In this paper we propose that digital technology instigates a new type of digital innovation - future-shaping practices, and will attempt to exemplify and explore the forces behind such newly emerging everyday practices. Our research draws on a multimethod research design based on four case studies that represent future shaping practices in transportation, healthcare, education, and sustainability. Drawing on document analysis and semi-structured interviews, we report on our research-in-progress that seeks to determine the generative mechanisms that enable the inception, shift, and scaling of future shaping practices.
This project investigates the use of information systems by small business firms. Five research objectives guided the analysis of this project. These objectives are: 1) sectoral differences relative to information systems usage; 2) impact of firm size on the level of software sophistication; 3) hardware capacity and remote processing capability; 4) the relationship between software satisfaction and software sophistication; and 5) fact finding nature of MIS applications.
If small and medium-sized enterprises (SMEs) in retailing are to be competitive in today's market, they need to master management and production information technologies. These technologies must be linked to the firm's operations, such as inventory, distribution, and shipping. The aim of this research is to identify the organizational, structural, and strategic factors that determine hardware and software technology adoption by retail SMEs. The sample is composed of 79 firms in the food (grocery), hardware, and (ladles') garment sectors. The determinant factors identified include sector, status (independent or affiliated), decentralization, bureaucratization, strategic proactiveness, and time-frame.
Diverse applications of the concept of loose coupling are embodied in five recurring voices that focus separately on causation, typology, effects, compensations, and outcomes. Each has a tendency to drift away from a dialectical interpretation of loose coupling toward a unidimensional interpretation of loose coupling, thereby weakening the explanatory value of the concept. The authors first use the five voices to review the loose coupling literature and then to suggest more precise and more productive uses of the concept.