Is Information Systems Interoperability an Innovation Driver? an Empirical Investigation

Most of the research that has been conducted on the business value of information systems (IS) interoperability focuses mainly on the efficiency related benefits it can generate, but deals much less with its potential to drive innovations in firms’ products/services and processes. Our study contributes to filling this research gap by empirically investigating the effect of interoperability of firm’s IS (meant as compliance with various types of relevant standards) on firm’s innovation performance. It is based on a large dataset from 14.065 European firms (from 25 countries and 10 sectors), which has been collected through the e-Business W@tch Survey of the European Commission, and is used for estimating product/service and process innovation models. It has been concluded that IS interoperability has strong positive effects both on product/service and process innovation, which are weaker than the corresponding effects of the degree of development of firms’ IS, but stronger than the effects of the degree of functional development of firm’s e-Sales IS; also they are stronger than the corresponding effects of R&D and competition (regarded as important innovation drivers according to previous literature). Finally, a comparison among different types of IS interoperability standards shows that their positive effects on firms’ innovation activity differ, with the industry-specific and the XML-horizontal standards having stronger effects of similar magnitudes, while the proprietary standards have weaker ones.