Measuring the power of information in organizations

Abstract

This study empirically explores the link between power and information in organizations, and while doing so it also suggests a method to measure the relative power of an organizational unit in an organization due to the information it possesses. The study is based on the Strategic Contingencies Theory according to which the better a unit copes with uncertainty, the more central it is to the organization and the harder it is to replace its employees, consequently, the unit is more powerful relative to other units in the organization. In this study, information is regarded as an explanatory (independent) variable, additional to the traditional variables of the strategic contingencies theory. Two types of power were measured – perceived power and participation power; and two types of information were investigated – conveyed information and produced information. In general, it was found out that information indeed affects the organizational power of units within the organization. The influence is both direct and indirect, through a control variable – the type (i.e., the function) of the unit. Counter intuitively, the size of the unit or sub-unit (except for one case), the industrial sector and the number of employees in the entire organization were not found to affect the power of a sub-unit. It is known that some top executives in organizations tend to minimize the importance and value of the information systems when they do not produce immediate financial benefits. The result of this study, defining information as a factor influencing the power of the organizational sub-unit, is likely to confirm the important role of the information systems in the organization and to provide an additional explanation to the productivity paradox in the sense that information is not only a vehicle to provide economic value but rather an instrument to increase or sustain power.