Antecedents and Effects of CIO Supply-Side and Demand-Side Leadership: A Staged Maturity Model

as organizations’ information technology (It) investment goals evolve from improving operational efficiency to enhancing strategic growth, the chief information officer (CIO) is increasingly expected to play not only the traditional supply-side leadership role that focuses on exploiting existing It competencies to support known business needs but also the demand-side leadership role that focuses on exploring new It-enabled business opportunities that result in competitive advantage. Using matched CIO business executive responses from 174 firms, we test a staged maturity relationship between CIO supply-side and demand-side leadership and examine three 232 ChEN, PrEStON, aND XIa antecedents (CIO human capital, CIO structural power, and organizational support for It) and two effects (It contribution to firm efficiency and strategic growth) of CIO leadership. the staged maturity model is supported by our findings and provides insight into how these two stages of CIO leadership influence It impact within the organization and how they are influenced by these key antecedents. Key WorDS anD PhraSeS: chief information officer, exploitation, exploration, It functional impact, It leadership, staged maturity model, strategic value of It, structural equation modeling, survey research. the Degree to WhiCh inveStmentS in information teChnology (It) create value for an organization depends on how It is deployed and managed by the organization [12, 60]. as the top executive who is responsible for a firm’s overall It deployment and operations, the chief information officer (CIO) plays a critical role in ensuring that the firm derives business value from its It investments. as both the business and the technology environments have become increasingly complex and dynamic, the responsibilities of the CIO position have changed significantly over the years [19, 34, 54], from those of an operational It provider to those of a strategic business leader [16, 73]. In their book, Broadbent and Kitzis [16] refer to supply-side leadership as the CIO’s traditional responsibilities needed to ensure that the It function delivers cost-effective services that run seamlessly, and demand-side leadership as the CIO’s more recent responsibilities that entail enabling the firm to derive strategic value from It, thereby allowing for business innovation and transformation. top management has recently made increasing demands for the CIO to contribute to the organization through demand-side leadership [54]. however, our interactions with CIOs and our observations of other researchers’ findings suggest that, although CIOs have generally recognized the need to adjust to the new requirements of demand-side leadership, many of them have experienced great difficulty in making such a transition. For example, Westerman and Weill [84] report that many CIOs are ranked favorably by their business executive counterparts with regard to the supplyside requirements but unfavorably with regard to the demand-side responsibilities. the current study was motivated by an intention to better understand the relationship between the CIOs’ supplyand demand-side leadership and the organizational antecedents and effects of such leadership. Prior literature suggests that the job performance of a CIO is evaluated by his or her colleagues on the business side [26, 73]. as such, we define CIO supply-side leadership as the top business executives’ assessments of the extent to which the CIO leads the It function to exploit existing It resources to meet ongoing known business needs. In contrast, the CIO demandside leadership is defined as the top business executives’ assessments of the extent to which the CIO leads the entire firm in exploring It-enabled innovations and new strategic opportunities. CIO SUPPly-SIDE aND DEMaND-SIDE lEaDErShIP 233 the existing CIO research has generally assumed that CIO leadership influences organizational outcomes through the contributions of the It function [1, 26, 27, 80]. however, most of this literature has been based on anecdotal observations. the distinction between supplyand demand-side leadership is now widely recognized, but there has been a lack of research that uses a systematic approach to empirically investigate whether CIO supplyand demand-side leadership affect organizational outcomes, and if they do, whether they have different levels of influence on the various organizational outcomes. Furthermore, the current research literature provides little insight into the key individual and organizational factors that affect CIO supplyand demand-side leadership. Understanding such factors provides important insights that help explain the difficulties that CIOs are experiencing in making adjustments to the new responsibilities of demand-side leadership. researchers have recently called for more rigorous, theory-based empirical research to advance our knowledge in the domain of CIO leadership, especially theories that embed CIO leadership within a nomological network of antecedent and consequent variables [45]. to help fill the aforementioned gaps in the extant literature, we present a research model that examines the consequences as well as the antecedents of CIO supplyand demand-side leadership. More specifically, we employ the conceptual framework of exploitation/exploration [55, 59] in the organizational learning literature and the recent findings of the It management literature to propose that the development of CIO leadership reflects a staged maturity process from supply-side to demand-side capabilities. We then incorporate strategic leadership theory and the resource-based view to articulate why and how the two stages of CIO leadership have different effects on It functional performance. In addition, we apply the human capital and powerinfluence literature to identify and categorize key antecedents of CIO leadership, which include CIO individual human capital, CIO structural power level within the organization, and organizational support for the It function. the study enriches our understanding of the nature of CIO leadership, the individual and organizational factors that facilitate the CIO’s leadership capacity, and the organizational outcomes of such leadership. the empirical findings support our hypothesized staged maturity model. Furthermore, the results indicate that the two stages of CIO leadership have different levels of impact on the It function’s contribution to firm efficiency and strategic growth. In addition, we find that CIO human capital and organizational support for It directly influence CIO supplyside leadership, while CIO structural power directly influences CIO demand-side leadership. theoretical Development multiPle StreamS of literature ProviDe the grounDWorK for our theoretical development. to keep the study within a testable scope, we consider the most salient antecedent and consequent variables identified from prior literature. Our research model is presented in Figure 1. 234 ChEN, PrEStON, aND XIa Supply-Side and Demand-Side CIO leadership although various prescriptive CIO responsibilities have been described in the It literature [1, 26, 34, 46, 80], there is no universally accepted definition or conceptualization of CIO leadership, due to the multiple job responsibilities and fast-changing nature of the CIO position. Broadbent and Kitzis [16] are the first to categorize CIO leadership in terms of supplyand demand-side leadership. given the prescriptive and descriptive nature of their book, the relationship between CIO supplyand demandside leadership, as well as their consequences and antecedents, have not been theoretically and empirically investigated. In this paper, we use the conceptual framework of exploitation and exploration advanced by levinthal and March [55] and March [59] in the organizational learning literature as a theoretical basis for understanding the distinction and relationship between CIO supplyand demand-side leadership and for categorizing the various CIO leadership responsibilities suggested in the existing It literature. Specifically, exploitation describes a process by which organizations create improvement and reliability within the existing competence base through refinement, selection, production, and focused attention [40, 55, 59]. Exploration refers to a process by which an organization develops a new competence base through search, experimentation, innovation, and risk taking [40, 55, 59]. In the context of It management, supply-side leadership can be viewed as a CIO’s capability to exploit existing It resources and competencies to improve the efficiency of the firm’s operations, whereas demand-side leadership relates to the CIO’s capability to lead the organization to explore new It-driven business opportunities that will lead to organizational innovations and business growth. Whereas CIO supply-side leadership tends to be internally focused on managing the It function to deliver cost-effective It support, demand-side leadership is more externally focused on partnering with business to innovate and change the business. Expanding on this conceptualization, as shown in table 1, we categorize the various responsibilities of the CIO suggested by prior Figure 1. research Model CIO SUPPly-SIDE aND DEMaND-SIDE lEaDErShIP 235 ta bl e 1. C at eg or iz at io n of C IO l ea de rs hi p r es po ns ib ili tie s Su gg es te d by l ite ra tu re St ud y ty pe o f st ud y K ey fi nd in gs /c on cl us io ns St ud y’ s ca te go ri za tio n of C IO r es po ns ib ili tie s de sc ri be d* Su pp ly -s id e le ad er sh ip (e xp lo ita tio n ca pa bi lit ie s) D em an dsi de le ad er sh ip (e xp lo ra tio n ca pa bi lit ie s)