Abstract A study of Korean service firms found that the level of information technology use is
significantly related to the performance of the marketing function. Support was lacking only for
the categories of ``use of outside database'' and ``networking between mainframe computer and
PCs.'' In addition, the form of information technology use is significant in its contribution to the
performance of the marketing function. This study supports the argument that benefits of
information technology investment can be identified. Furthermore, there is evidence of a time lag
in the payoffs from information technology, because the benefits of connectivity have not yet been
realized.
Introduction
The investment of information technology (IT) in the service sector has been
criticized by economists Hackett (1990) and Roach (1991) for not showing a
corresponding improvement in productivity similar to that observed in
manufacturing. However, following the publication of the Hammer and
Champy (1993) book on reengineering and the extensive redesign of service
processes that followed, using information technology as the enabler, we feel it
is time to revisit the debate on the contribution of IT in the service sector. With
the introduction of integrated software using the Windows platform and
personal computer networking, we expect to find a different level and form of
information technology use than that found in the late 1980s.
A study of IT adoption in the service sector of Korea is particularly interesting,
because the lack of a domestic computer industry has allowed the Koreans to be
late adopters and, consequently, beneficiaries of the experience of others. In
particular, because of the late entry, they are in a position to embrace the idea of
reengineering a process before the investment in IT and thereby to capture the
significant benefits of process redesign. Furthermore, Korea is an important
Asian country that has become an industrialized nation only in the past several
decades and now is on the threshold of embracing the information age.
A Korean Chamber of Commerce report (1995) indicates that, in developed
and developing nations alike, the service industry assumes an increasingly
important role in the economy as the country industrializes. Korea is no exception to this trend. The service industry in Korea contributed 41 per cent to
the GDP in 1975, compared with 46 per cent in 1991. During the same period,
the labour force in the service industry increased from 34 per cent to 48 per cent
of the total labor force. Consumption of services has also increased from 29 per
cent in 1975 to 35 per cent in 1985. Compared with developed nations, the
productivity of the Korean service industry is low and the growth in
productivity remains slow. Productivity in the Korean service industry has
increased only 2 per cent per year between 1971 and 1988. This is relatively low
compared with the manufacturing industry, which gained 3 per cent per year in
productivity during the same period.
Market liberalization in Korea has resulted in accelerated penetration of the
Korean service markets by foreign firms. At the same time, the cost of
acquiring computer and telecommunications systems has been decreasing,
resulting in accelerated use of these products. Such trends have resulted in
increased reliance on information technology in the service industry.
Considering such trends, it becomes apparent that the need for improving
competitiveness is critical. To achieve this end, investment in advanced
information technology, improvements in customer service, reducing costs,
differentiating service offerings, and expanding business territories are needed.
As a beginning, basic studies to determine the level of information technology
utilization in the service industry must be conducted.
The main objective of this research is to analyze the level and form of
information technology use by the Korean service industry and its contribution
to marketing performance as measured by marketing competitiveness,
marketing activities, and marketing effectiveness. The study seeks evidence
that investment in information technology in the service sector has resulted in
benefits at the functional level of the organization. In addition, evidence may be
found that a time lag exists in the benefits from information technology
investment and, thus, earlier criticism of IT investment could be premature.
Abstract A study of Korean service firms found that the level of information technology use is
significantly related to the performance of the marketing function. Support was lacking only for
the categories of ``use of outside database'' and ``networking between mainframe computer and
PCs.'' In addition, the form of information technology use is significant in its contribution to the
performance of the marketing function. This study supports the argument that benefits of
information technology investment can be identified. Furthermore, there is evidence of a time lag
in the payoffs from information technology, because the benefits of connectivity have not yet been
realized.
Introduction
The investment of information technology (IT) in the service sector has been
criticized by economists Hackett (1990) and Roach (1991) for not showing a
corresponding improvement in productivity similar to that observed in
manufacturing. However, following the publication of the Hammer and
Champy (1993) book on reengineering and the extensive redesign of service
processes that followed, using information technology as the enabler, we feel it
is time to revisit the debate on the contribution of IT in the service sector. With
the introduction of integrated software using the Windows platform and
personal computer networking, we expect to find a different level and form of
information technology use than that found in the late 1980s.
A study of IT adoption in the service sector of Korea is particularly interesting,
because the lack of a domestic computer industry has allowed the Koreans to be
late adopters and, consequently, beneficiaries of the experience of others. In
particular, because of the late entry, they are in a position to embrace the idea of
reengineering a process before the investment in IT and thereby to capture the
significant benefits of process redesign. Furthermore, Korea is an important
Asian country that has become an industrialized nation only in the past several
decades and now is on the threshold of embracing the information age.
A Korean Chamber of Commerce report (1995) indicates that, in developed
and developing nations alike, the service industry assumes an increasingly
important role in the economy as the country industrializes. Korea is no exception to this trend. The service industry in Korea contributed 41 per cent to
the GDP in 1975, compared with 46 per cent in 1991. During the same period,
the labour force in the service industry increased from 34 per cent to 48 per cent
of the total labor force. Consumption of services has also increased from 29 per
cent in 1975 to 35 per cent in 1985. Compared with developed nations, the
productivity of the Korean service industry is low and the growth in
productivity remains slow. Productivity in the Korean service industry has
increased only 2 per cent per year between 1971 and 1988. This is relatively low
compared with the manufacturing industry, which gained 3 per cent per year in
productivity during the same period.
Market liberalization in Korea has resulted in accelerated penetration of the
Korean service markets by foreign firms. At the same time, the cost of
acquiring computer and telecommunications systems has been decreasing,
resulting in accelerated use of these products. Such trends have resulted in
increased reliance on information technology in the service industry.
Considering such trends, it becomes apparent that the need for improving
competitiveness is critical. To achieve this end, investment in advanced
information technology, improvements in customer service, reducing costs,
differentiating service offerings, and expanding business territories are needed.
As a beginning, basic studies to determine the level of information technology
utilization in the service industry must be conducted.
The main objective of this research is to analyze the level and form of
information technology use by the Korean service industry and its contribution
to marketing performance as measured by marketing competitiveness,
marketing activities, and marketing effectiveness. The study seeks evidence
that investment in information technology in the service sector has resulted in
benefits at the functional level of the organization. In addition, evidence may be
found that a time lag exists in the benefits from information technology
investment and, thus, earlier criticism of IT investment could be premature.
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