Alessandro Comai (2005) Discover Hidden Needs brf frontiers - proceeding paper

FRONTIERS OF E-BUSINESS RESEARCH 2004

Discover Hidden Corporate Intelligence Needs by Looking
at Environmental and Organizational Contingencies

Alessandro Comai
Ph.D. Candidate, ESADE – University Ramon Llull, alessandro.comai@esade.edu

Abstract
The purpose of this paper is to put forward a research framework capable of detecting the
hidden needs of a firm in terms of type of formal competitive intelligence program (CIP). The
model will focus on the internal and external determinants which compel an organization to
establish a formalized intelligence process. This study is concerned with measuring the
competitive intelligence sensitivity of a particular organization in a particular context. The
first part introduces two different approaches to the examination of the corporate and decision
maker’s needs which are generally used in the competitive intelligence field. Subsequently, it
discusses the decision maker’s role and the potential failure to determine the CI needs as well
as the potential value of the CI program. The second part focuses on research questions. The
third part discusses which types of external and internal factors prompt a firm to establish a
formal CIP. The paper concentrates on putting forward the factors which are assumed to have
the most significant analytical influence and through which it is possible to pinpoint which
organizations need to establish a CIP as well as the type of process required.

Keywords
competitive intelligence, intelligence needs, environmental scanning, managerial blind spots,
contingency factors.

Introduction
It is generally agreed that firms require selected information, called intelligence, for the
strategic decision-making process and there are several differences in the way in which
different companies use their information. Firms differ in the system they use for acquiring
appropriate intelligence and in the degree of resources they devote to it. An increase in
external uncertainties may be related to complexity and in order to cope with environmental
changes, firms have strategic planning tools and information to help them formulate adequate
policies. However, how do they know whether a firm is sufficiently equipped to sustain
environmental information intensity without experiencing a competitive crisis? The objective
of the paper is to identify a set of external and internal contingency factors which allow
decision makers to know when they need a CI program and what type of focuses should be
incorporated into it.

Understanding intelligence needs
Decision maker’s needs have long been studied in the information science and intelligence
field (see for example Nicholas, 2000; Herring, 1996). Intelligence needs differ from
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intelligence wants and requirements. Aguilar (1967, p.7) suggested that the optimal level of
information is the intersection of four specific, strategic information spaces: received
information, wanted information, needed information and all information available from
outside. Intelligence needs may be studied in an anticipatory way, which means that the
intention is to detect them at an early stage. This method allows new information need to be
detected and prevents information gaps. A cursory review of literature suggests that there are
two general approaches used to study corporate and decision maker’s needs. They are:

Extrapolation
The decision maker’s intelligence needs are established by asking direct questions or eliciting
them during interviews. For instance, the “key intelligence topics” (KITs) protocol, suggested
by Herring (1999), where decision makers are asked to specify the kind of strategic decision
they will need to take within six months, the type of surprise they hope to anticipate or the
key players or factor they wish to follow, is applied in order to understand the nature of the
information required. In addition to KITs, Herring observed that intelligence requirements can
be identified either in a proactive or responsive mode. Moreover, some decision maker’s
needs can also be detected from an anthropologist’s perspective, by observing managers and
reviewing the documents they use (Fahey, 1999, p.494), for instance. This indirect technique
can be applied to study either senior or middle management intelligence needs during the
year. Typically, the extrapolation approach employs primary sources.

Endorsement
Refers to a method which detects corporate and individual needs by studying corporate and
business strategy, objectives and purposes. For example, “key success factors” (KSF) studied
by Daniel (1961), Rockfort & Bullen (1981), Leidecker & Bruno (1984) establish which key
management activities require the attention of the company information system (Tyson 1998;
Hussey and Jenster, 1999 p.79). KSF can be tailored to the decision-maker position and can
be defined by looking at managerial goals and priorities or applied to all firms in the same
sector representing the prerequisite factors for those firms wishing to start a venture in that
specific context. On the other hand, KSF can be applied at business or product level.
Nevanlinna (1997, p.88-89) discussed the fact that the best method for understanding decision
maker’s needs may be to study the firm’s core business. Prescott (2001, p.9) considers that CI
needs can be determined using market events. Hill (1993, p.59) introduced the concept of the
“order-winners” and “qualifiers” whereby the marketing and production manager should
monitor the goods- or service-related factors which win contracts and qualify the company as
potential supplier to a client.

Both approaches may detect the implicit needs of decision makers. Even if managers agree on
the value of good information, which allows them to take better decisions and so accomplish
strategic or tactical objectives, they do not have sufficient knowledge to recognize their needs.
However, both approaches may fail to detect corporate CI needs at an early stage. McGonagle
and Vella (2002, p.61) consider that “one of the major problems facing CI professionals is
that they often do not have a clear understanding of what their internal clients really need in
terms of delivered competitive intelligence”. The difficulty of evaluating managerial needs
and the central role they play in this process allows the discussion to introduce the concept of
the organization’s cognitive dissonance which is procured through manager assumption and
cognitive limitation.
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Understanding decision maker blind spots
A cursory review of the literature on competitive intelligence and organizational behaviour,
shows that managers are not always aware of or do not pay sufficient attention to the external
business environment. Organizations often suffer from information cognitive limitation,
myopia or competitive blindness (Levitt, 1960; Zajac and Bazerman, 1991; Zahra and
Chaples, 1993, Gilad, Gordon and Sudit; 1993; Gilad, 1994; Wright et al. 2002; Fleisher &
Bensoussan 2003). Watkins and Bazerman (2003), for instance, discussed the human
“psychological vulnerabilities” as a cause of poor management decision and the study by
Wright et al.(2002) described the “immune attitude” towards CI from the external perspective
of several UK firms.

Corporate illness can occur for several reasons. Andrew (1971 p.60) considers that “the
corporate strategist is usually at least intuitively aware of the features of the current
environment about him”. Managerial blind spots or corporate myopia can have different
forms. Gilad (1994, p.19) identified three main causes of business blind spots: unchanged
assumptions, corporate myths and corporate taboos, which refer to the idea that decision
makers have wrong ideas regarding the external environment and even regarding the company
itself. Porter (1980, p.58-59) described two main assumptions which competitors can make:
about the firm itself and about the industry and other firms. For instance, in a Swedish
electrical company “there was very little that inspired the members of the organization to
monitor the environment in a wider perspective. The coming deregulation of the energy
market was not a “reality” for most of them, even though they all could read about it in the
newspapers” (Hamrefors, 1998b). Management blind spots not only refer to the limited
detection of intelligence needs but also to the failure to understand the benefit of CI (Wright
et al.2002).

Understanding the paradox
As has been discussed previously, the decision maker is one main component which interacts
with the understanding of corporate needs. However, there are other elements which may
influence organizational needs. Figure 1 shows the possible factors and activities which
interact within the firm and which characterize the type and nature of the business information
flow. For instance, Choo (2002, p.104) defined three key elements which affect the scanning
behaviour of the decision maker: “situation dimensions”, which refers to the perception of
managers, “managerial traits”, which refers to the position of the manager in the organization
and “organization strategy” which refers to the organization itself. This paragraph discusses
those factors which can help to reveal why decision makers can misperceive the value and the
need for a CI program. Three key issues will be described as follows:

Issue 1 – CI and decision makers
One of the first issues to arise is which elements have the most important role in the
information scanning process. The decision maker is the central element, playing the main
role in the information process and is also responsible for the evaluation of the CI program. It
is alleged that the relationships between the decision makers, the organization and the external
environment affect the information acquisition process. The idea here is that managers filter,

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process, and categorize the information coming from the environment. Figure 1 shows how
managers play a central role by demanding intelligence and perceiving the benefits of
intelligence. As has been observed previously, intelligence needs are significantly influenced
by personal judgments or beliefs.

Issue 2 – CI and performance
The second issue relates to the benefits of the CI function. Scientific literature states that there
is a positive relationship between CI and the performance of an organization (Miller and
Friesen, 1977; Newgren, et.al. 1984; Dollinger, 1984; West, 1988; Daft, et al., 1988; Olsen,
Murthy and Teare, 1994; Cappel and Boone, 1995; Elenkov, 1997; Ahituv, et al, 1998;
Prescott, 2001, p.1; Wright et al., 2002; Suddaby; 2004 and Hughes, 2004).

Studies show that 3. Firms with a formal CI
CI is related to Studies show that a
program small number of
performance
companies formally
adopts CI

2. Organization 1. Decision Makers (DMs)
Performance Needs, perceptions and Blind
spots
Performance helps
DMs understand the DMs decide when to adopt a
importance of the CIP formal CI program

4. Firms with NO formal
CI program

Figure 1. The circular interaction of the decision maker’s needs, perceptions and blind spots.

Issue 3 – CI and the adoption rate in the firms
The third issue deals with the fact that empirical investigations have shown that a small
number of companies have formalized CI (Ganesh, Miree and Prescott 2003, Tena and
Comai, 2004). The study by Tena and Comai (2004a), for instance, found that 50% of 164
Catalan multinationals have no formalized system. A similar result was found by Preble, Rau,
and Reichel (1988) who assessed that only 51 percent of multinational corporations had any
formal process where executives regularly monitored publications. Anecdotic observation
confirms these findings for North American and European companies (Fuld&Company,
2003). Other studies show that companies are increasing their activities in the information
acquisition process or business intelligence activity (Hannula and Pirttimäki, 2002).
Considering the positive relationship between CI and performance there is no reason why an
organisation should not apply CI.

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Research questions
While there is a significant amount of literature on information needs (see Ashill and Jobber,
2001), few studies have been devoted to the company itself, using a complete external
perspective to ascertain whether or not the firm needs a CI program (see Ryamond, Julien and
Ramangalby, 2001). In other words, the paper deals with the “why” part of implementing a
formalized environmental scanning process rather than focusing on the “what” and “how”,
normally dealt with by specialised literature (Prescott, 2001, p.2-3). This section focuses on
two central questions and relative objectives concerning what contingency factors are relevant
in the understanding of the tacit need for a CIP.

Question 1: Should companies employ a formalized CI program?
A review of literature shows that different perspectives are involved in the definition of a
formalized CI program. Thomas (1980), for instance, defined the scanning practice
characteristics as: 1) continuous over time, 2) applied in the annual planning cycle, and 3)
used by the whole organization. Key words stemming from research carried out to date are:
coordinated (Mark, 1997; APQC, 2000), ongoing or systematic process (APQC, 2000;
Hannula and Pirttimäki, 2002) centralized (Cleland & King 1975) with a defined process in
place (Prescott and Gibbons, 1993; Hirshorn, 2004), have an analytical capability (Mark,
1997) integrated to strategic planning process (Tena and Comai, 2003), the environment
should be continuously scanned (Andrew, 1971, p.77), at least a full time equivalent specialist
dedicated to do the activity (Tena and Comai, 2004b) any level should receive and benefit
from intelligence (Andrew, 1971, p.193) level of resources dedicated (Tena and Comai,
2001). Independently from the definition, a level or degree of this formalization can be
perceived as a way of establishing the CI effort, which relates to two research objectives.

Objective 1: Define which external environmental factors are positively related to the need
for a formal CI program.
The paper assumes that the external environment is one of the contingency factors which
allows an understanding of the corporate CI needs. Beldona, Habib and Inkepen (1997, pp.
72) argue that the degree of variety in an industry is directly related to competitive
intelligence needs. For example, Pacific Enterprises started up a CI unit in order to cope with
the rapid changes in its environment (APQC, 1997, pp.48). However, little work has been
devoted to understanding which set of contingency factors is related to the needs of a CIP.

Objective 2: Define which organizational factors are positively related to the need for a
formal CI program.
Organizational characteristics are also key elements influencing the intelligence activity.
However, there is no literature which discusses the following topic even though anecdotic
observation and other studies indicate a positive relationship between the organizational
characteristics and the degree of CI formalization.

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Question 2: Which contingency factors are related to the CI function characteristic?

Objective 3: Study the positive relationship between the degree of each factor and the type of
CI function characteristic.
Contingency factors can have a significant influence on manager attention and, therefore, on
scanning behaviour. For instance, Prescott (2001, p.3) considers that a CI program is
determined by market and non-market forces. Nevanlinna (1997, p. 69, 113-120) concluded in
his company case study on Nokia, that competitive environment and company culture have an
influence on strategic option with regard to the CI function characteristic. Moreover,
McGonagle and Vella (2002, p.61), who linked several external traits to the CI function,
consider that “not every company can afford to do all types” of competitive intelligence,
which relates to the idea that there are several priorities depending on the type of organization
and/or the type of industry with or in which the firm is competing.

The framework: external and internal contingencies and competitive
intelligence program characteristics
Traditionally, internal and external are the two main environments used when analysing the
strategic position of a firm in terms of its own resources and capabilities in comparison with
the rest of the sector. Several studies have adopted this perspective in order to develop a
theory or prove a hypothesis. The recent empirical study developed by Peyrot, et al. (2002),
suggested that (1) environmental complexity (competitors, clients, products, suppliers) and
(2) organization marketing size are central elements influencing decision-maker attitudes
towards the use of CI. This part of the paper defines a set of the external and internal factors
relating to the CI function. The research adopts the framework described in figure 2 to discuss
two different contingency factor sources and their dependent variables:

- external environment, which describes the general, competitive and commercial
environment.
- internal environment, which describes the organizational characteristics.
- the CI program characteristic which defines the type of scanning process required for the
particular organization in the specific context.

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External Internal
Environment Environment

CI program
Characteristic

Figure 2. The research framework

External environment characteristics
In the discussion so far, it has been observed that specialized and strategic management
literature has paid a substantial amount of attention to management with regard to
environmental traits and the scanning process (see, for example: Aguilar, 1967; Hambrick,
1981, Sammon, et. al 1984, Porter, 1980, Daft et al., 1988; Sawyer, 1993; Lang et al., 1997;
Elenkov 1997).

Although there are significant studies on the independent variables and how these forces
should be analysed, little attention was given to other traits which seem to be positive in
relation to the information gathering activity. Little work has been dedicated to ascertaining
which variables have sufficient weight to stimulate the company into adopting a proactive
approach regarding the scanning of the environment. A review of literature (Miree and
Prescott, 2000, p.219; APQC, 2000, p.60-61; McGonagle and Vella, 2002, p.61-88) revealed
that there are some industry contingencies which affect the coordination of CI activities in the
sales and marketing function, such as, for instance: regulation, information characteristics or
levels of competition which create barriers or simplify the work of the CI unit. McGonagle
and Vella (2002, p.61-88), for instance, defined an exhaustive list of 19 contingency factors
divided into 5 different competitive environment categories. Others, such as Ansoff and
McDonnell (1990, p.71) proposed 21 characteristics for estimating the profitability of a
strategic business unit. Another significant contribution was provided by Ryamond, Julien
and Ramangalaby (2001) who have identified the relative importance of certain external and
internal factors which determine “the nature and the level” of the technological scanning
activity of small Canadian firms. This work demonstrated which external and internal
attributes positively affect the way in which firms gather, analyse and distribute information
and how it is positively related to an increase in scanning activity. However, the question as to
whether an increase in scanning activity is related to an increase in needs has not so far been
answered. The following characteristic describes the principal factors of this particular
environment affecting competitive intelligence programs:

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Industry growth intensity: Firms which are in growing markets are likely to need a CI
function.
Industry life cycle may have a positive relationship with the efforts dedicated to CI (Tena and
Comai, 2001). Markets which are in the growth stage of their life cycle tend to be more
complex. New contenders can be attracted, new customer segments will be developed and
achieved and products will change rapidly. At the same time, a growing market will attract
new players. In a recent survey of PricewaterhouseCoopers it was ascertained that “fast-
growth CEOs report that business information on major competitors is more important today
than it was a year ago.” (PWC, 2002). The assessment of markets as attractive and profitable
suggests that companies must reinforce their strategy and observe possible new competitors.
However, other industrial stages may be related to different kinds of CI needs (Tena and
Comai, 2001).

Industry Rivalry Intensity: Firms which are competing with high level of industry rivalry are
likely to need a CI function.
Firms which are in concentrated markets, where players are well identifiable and have a
substantial market share, such as pharmaceutical, automotive, semiconductor, airline,
telecommunications, investment banking, bulk chemical or petroleum (Saloner, et al., 2001;
p.185), for example, may need a sophisticated CI system. Several studies (APQC; 1999; 2000,
2001) show a higher presence of coordinated CI Units in these industries. Nevanlinna (1997,
p.70-74) also observed the important connection between level of competition in the
telecommunications industry and competitor monitor system type. Du Toit, (1998) considers
that competitor intensity refers to the number and type of companies competing. This
category may consider the number of direct substitutes or the degree of concentration of
competitors in the market as suggested by McGonagle and Vella (2002, p.66).

Regulation Intensity: Firms which are in free (non-regulated) economies are likely to need a
CI function.
The more regulated the industry or the markets, the less formalized the CI needed. Oster
(1999, p. 44-47) argues the key importance of governments in affecting industry profitability.
The liberalization process developed from free economies which also have a significant
impact on globalisation. For example, energy or telecommunications have undergone a
transition from protected to free market. No regulated market reduces the barrier to accessing
information enormously and, simultaneously, the value of the information also increases. The
case of Telecordia Technology, for instance, shows the regulation effects and CI activity
(APQC, 2000, p.24). McGonagle and Vella (2002, p.63) consider that those companies which
face low levels of regulation will have a CI impact.

Globalisation Intensity: Firms which are affected by a globalisation pressure are likely to
need a CI function.
Globalisation may arise as a result of government action on trade barriers. As a result,
globalisation will create new market availability and, simultaneously, new opportunities and
threats in the industry. Indeed, globalization seems to be one of the main reasons for
establishing a CI function (Kahaner, 1997, p.29-30; Coburn, 1999, p.3-4;). This determinant
has a propensity to increase the amount of information required in order to adopt a systematic
intelligence process.

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Industry barrier level: Firms which compete with low levels of industry barrier are likely to
need a CI function
The competence or capabilities of a firm, such as tangible and intangible capital, economy of
scale, skills, and so on are required by markets. If markets do not require particular resources,
it means that the entry barriers are weak. Indeed, if no special requirements were made by
markets, firms acting in that particular market would be vulnerable. For instance, Coburn
(1999) argued that technology can be a determining barrier and that a reduction of it
intensifies the competitive arena. Firms which are not able to improve their competence and
capabilities, if required, may be threatened from other contenders outside the particular
industrial system. Entry barriers and potential and substitute firms were suggested by the five
forces model (Porter, 1980). McGonagle and Vella (2002, p.64-66) consider that those
companies which are in markets with moderate entry or exit barriers will have the greatest
bottom-line CI impact.

Level of technical innovation: Firms which compete with high technology products are likely
to need a CI function.
Technology intelligence as a response to technology intensity has been analysed by several
authors (Ashton and Klavans, 1997; Coburn, 1999; Raymond, et al., 2001) and seems to be
positively related to the need for a CI program (Kahaner, 1997, p.31). The result of the
research into the technology scanning process in small firms developed by Raymond, et al.
(2001, p.134) found that the “technology characteristic significantly affects scanning
activity”. Firms must be able to develop technology in order to leapfrog competitive products
and so respond to customer needs. Certain “disruptive” technologies are considerably
effective when it comes to outwitting the firm’s products (Christensen and Raynor, 2003).
However, some technologies can be suitable for other markets or industries. Cantrell (1998)
stressed this point whereby the technology of a firm can also represent a possible threat to or
opportunity for those companies which have the same technology or where the technology
can satisfy the same customer need in a specific market. APQC (2001) shows that firms with
products incorporating a high level of technology have been adopting competitive technical
intelligence programs.

Industry Network Intensity: Firms which are in low Industry network intensity are likely to
need a CI function.
The network may correspond to the nature and intensity of the relationships between the
external environments. It has been commonly accepted that firms have little capacity for
controlling the more remote environments such as economy and social behaviour and other
eventualities. Allaire and Firsirotu (1989) defined that activities such as lobbying for and
against the law and corporate social responsibilities and/or negotiation, are actions used by
firms against governments with stakeholders, in order to cope with external global
uncertainties. In contrast, there are other environments where firms have some degree of
control over the players, in the form of the management of competitors and customer
relations. Fahey and King (1977) “characterized environmental scanning as the process of
seeking and collecting information about events and relationships in a company's
environment”. The network wants to focus on the boundaries between players and their
particular roles. Andrew (1971, p.70) considers that “the complexity of a company’s
environment begins to appear more manageable as its relationship to other organizations and
individuals is sorted out”. However, the intention here is not to analyse the implication of

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networks but to indicate that the existence between players of a type of network will
significantly affect information availability and accessibility. The number of business
networks, whatever type they may be, seems to have a positive relationship with information
availability. Alliance and business networks provide the firm with a rich information
environment (Koka, Prescott; 2002). Fuld (1995) suggests that when capital is exchanged,
information will also be exchanged.

Organizational characteristics
The following are the descriptions of several internal factors which interfere with the need for
a CI program.

Technology intensity in products or manufacturing process: Firms which produce goods with
a high level of technology are likely to need a CI function.
Technology intensity in the product or manufacturing process may be associated with a need
for intelligence. In a recent study developed by Hannula and Pirttimäki (2002), all
information and communication technology (ICT) firms among the 50 largest Finnish
companies were found to have reported having a systematic CI program. A survey of
Canadian R&D Companies made by Calof (1999) also found that the use of Competitive
Technical Intelligence was developed systematically in 59% of the companies surveyed.

Level of Vertical Integration: Firms which are less integrated vertically are likely to need a
CI function.
Vertical integration represents the level of power in the entire value chain. Integrated
companies tend to build a better manageable environment around them and therefore have a
better control not only with regard to the process but also with regard to information. Fuld
(1995, p.32) considers that highly integrated firms will control contacts and sources of
information on supply and distribution.

Level of diversification: Firms which operate in several Strategic Business Units (SBU) are
likely to need a CI function.
As specified by Kotler (1997) or Walker, Boyd and Larréché (1995) a SBU will have a
defined set of competitors, can be planned separately from the company and will have
independent factors affecting profit. The more SBUs a company has, the more it will need a
coordinated information system capable of coordinating its businesses portfolio. The type of
business a firm may operate is also related to the type of CI function. For instance, the degree
to which a CI program is centralized will depend on the resources which can be shared across
the business (Prescott, 2001, p.6).

Export Intensity: Firms which are heavy exporters are likely to need a CI function
Firms which are active in new markets need to understand those markets and a CI program is
therefore needed. Exporting companies conduct competitive intelligence in a more systematic
manner (Viviers and Miller, 2004). Finnish export companies, for instance, with their small
domestic market, have invested extensively in CI programs in order to gain an understanding
of new profitable markets (Hirvensalo, 2004).

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Organization size: Large firms are likely to need a CI function.
The absence of an intelligence function, and therefore the cost of making mistakes, may have
a greater impact on large firms and therefore on firms which have invested more resources in
businesses. Studies showed that large companies usually have systematic CI in place (Pirttilä,
1997; APQC, 1999; Prescott and Miller, 2001; Hannula and Pirttimäki, 2002; Tena and
Comai, 2004a and 2004b).

CI function characteristic
A large section of literature focuses on categorising the type of intelligence used in the firm
(Fuld, 1995;Tyson, 1998; Marceau and Sawka, 1999, APQC,1999, 2000 and 2001; Prescott
and Miller, 2001; McGonagle and Vella, 2002 and 2003; Hannula and Pirttimäki, 2004).
McGonagle and Vella (2002, p.7) and Prescott (2001), for instance, suggested several areas
where the type of intelligence function is different. The way that a CI program is organized
can differ between firms. The following are six characteristics which define the CI function in
the organization and which represent the dependent variable in the research framework (see
Figure 2).

Process (spot, project, systematic)
This dimension describes the degree of formalization of the CI function in an organization.
The more systematic the function the more formalized the function will be. The CI process
relates to the process of defining needs and collecting, analysing and distributing the
intelligence to decision makers. Fahey and King (1977) defined 3 types of process: the
irregular, which represents the ad hoc study, the regular process which is defined as a
periodically updated study and finally the continuous collection process. Other authors
dedicated significant resources to it (Aguilar, 1967). Generally speaking, CI activities can be
performed in three primary approaches. 1. Spot which means that intelligence is required on
an irregular basis and no staff are dedicated to the CI function. 2. The project process, which
means that the activity is performed by specific corporate or decision-maker request and must
be achieved within a definite period of time (see Prescott and Smith, 1987). In this particular
case the intelligence project is supervised by specialised staff. 3. Finally, the systematic
process involves ongoing scanning of the environment, analysing the information and
distributing the intelligence throughout the organization. This kind of process includes
different intelligence products each of which can have a specific time frame (Prescott and
Williams, 2003).

Position (centralized, decentralized, hybrid)
There are several options for locating the CI function within the organization (Prescott and
Miller, 2001). Empirical studies (APQC, 1999; 2000 and 2001) demonstrated that there can
be as many as seven different positions within the company. However, three central
classifications for the CI function can be adopted: centralized (APQC, 2000, p.77;
McGonagle and Vella, 2003, p.31-32; Cobb; 2003), decentralized (McGonagle and Vella,
2003, p.31-32; Ngamkroeckjoti, and Johri, 2000) and diffused (Fuld, 1995, p.420-422).

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Level (tactical, business, strategic, corporate)
It is commonly accepted that that there are three main decision-making levels: the tactical or
operational, the business unit and the corporate planning level. For each category there is a
specific group of decision makers each with a specific type of CI need.

- Tactical orientation consists of achieving CI bottom-line impact (McGonagle and
Vella, 2002). British Telecom, for instance, has a strong tactical orientation in the CI
group specializing in monitoring other players with lower rates (Prescott and
Williams, 2003). Tactical CI is valuable for different kinds of managers such as brand
managers, for instance, who can achieve a significant impact from it.
- Business level refers to the intermediate management position in the company and the
CI program will satisfy the intelligence needs of business managers. Procter &
Gamble, for instance, which in the past had its business evaluated from just one
perspective, has now been taking a more business-like approach and analysing its
entire portfolio (APQC, 1999, p.22).
- Finally, the strategic perspective of CI was widely argued by Sammon et al. (1984, p.
15) and Vella (1988, p. 19-28). For instance, Compaq Computer Corporation allocates
CI resources primarily to the strategic decision-making process (APQC, 2000).
Anecdotic observation shows that there are firms which apply strategic and corporate
intelligence primarily. Baron (1995) and Fleisher (1999) discussed the importance of
the non-market forces such as governments, interest groups, activists or the general
public, as potential variables to be managed at the corporate level.

Location (Marketing, Finance and Technology)
Location relates to the area of CI specialization. It has been generally accepted that there are 3
main areas of intelligence (APQC, 1999, 2000, 2001):

- Marketing intelligence, introduced by Kelley (1968) will be one of the major sources
of CI and will grow considerably within the firm. For instance, the last survey by Tena
and Comai (2003) shows that for 53.3% of the Catalan multinationals surveyed,
marketing is the most dominant location for the CI unit.
- Technical intelligence refers to the dominant use of science and competitive technical
intelligence (Ashton and Kalvans, 1997; Norling et al, 2000). Typically technology
intelligence includes patent and other sources analysis which should suggest
technological trends, opportunities and threats for R&D departments.
- Financial intelligence is very common in those organizations which are financially
business oriented. BP for instance is very financially oriented and thus differs from
other companies even within the same sector (APQC, 2003 p.25).

Time Span (short, medium or long term)
The time span characteristic refers to the time factor associated with the information. Short-
term and future oriented data needs were suggested by Herring (1999). Decision makers need
to survey current and potential players in the competitive environment. By this Herring means
that the intelligence function should build and maintain specific profiles according to the
organizational need. On the other hand, future oriented CI has also been discussed abundantly
in specialized and strategic management literature (Sammon, et al, 1984, p.114; Fahey and
Randall, 1997; Herring, 1999; Gilad, 2003; Prescott and Williams, 2003). This type of

408


intelligence tends to be prospective and anticipate the environment using the weak signals it
receives.

Object (competitors, consumer, general landscape and stakeholder)
Finally, this dimension includes the research topic. A review of literature shows that there are
two common terms associated with CI: competitor intelligence focusing primarily on the
competition (Porter, 1980; Fahley, 1999, Sammon, et al. 1984; Fuld, 1995; Hussey and
Jenster, 1999) and, on the other hand, competitive intelligence focusing on the broader
environment (Prescott and Gibbons, 1993; Day et al., 1997, Oster, 1999; Prescott and Miller,
2001; Fleisher and Bensoussan, 2003). However, CI can be used to study other particular
issues such as the consumer (Aaker, 1998), for example, or the stakeholders, as suggested by
Freeman (1984) who defined it as “any group or individual who can affect or is affected by
the achievement of the organization’s objectives”.

Conclusion
The proposed research is to generate a set of critical questions to which the organization
should give some thought and consideration before setting up the CIP. Indeed, the
organization should be able to pre-evaluate the CIP project by looking at a set of key
contingency factors using external and internal information. The research objective is to
develop an instrument to detect CI corporate hidden needs and to evaluate whether the
company needs to formalize environmental scanning by adopting a CI program. Moreover,
the firm will be able to detect which type of CIP is more suited to the context in which the
company is currently operating.

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Table of Contents
VOLUME I

TRACK 1 ELECTRONIZATION (DEVELOPMENT) OF BUSINESS
Session 1

MEASURING CUSTOMER PERCEIVED VALUE OF E-SERVICES
Kristina Heinonen, Tore Strandvik, Hanken - Swedish School of Economics and business
administration ______________________________________________________________ 1

WEB USERS’ OPTIMAL ON-LINE EXPERIENCE: A PROPOSED EXAMINATION OF A
MATCHING HYPOTHESIS
Fang Wan, University of Manitoba; Ning Nan, University of Michigan; Malcolm Smith,
University of Manitoba _____________________________________________________ 13

IMPULSE BUYING ON THE INTERNET: ENCOURAGING AND DISCOURAGING
FACTORS
Nina Koski, University of Tampere ____________________________________________ 23

Session 2

ATTRACTION OF COMPANY ONLINE COMMUNITIES
Maria Mäntymäki, Tuula Mittilä, University of Tampere ___________________________ 36

SOURCES OF VALUE-CREATION IN CONSUMER-ORIENTED ONLINE
COMMUNITIES – RESULTS FROM A PILOT STUDY
Miia Äkkinen, Virpi Kristiina Tuunainen, Helsinki School of Economics ______________ 52

CRM IN THE INSURANCE INDUSTRY: AN ATTEMPT TO USE SURVIVAL
ANALYSIS IN RETENTION AND CROSS SELLING
Maria T. Salazar, Tina Harrison, Jake Ansell, University of Edinburgh ________________ 68

Session 3

SERVICES, E-SERVICES AND E-SERVICE INNOVATIONS ─ COMBINATION OF
THEORETICAL AND PRACTICAL KNOWLEDGE
Raija Järvinen, Uolevi Lehtinen, University of Tampere ___________________________ 78

THE EMERGENCE AND EVOLUTION OF E-BANKING IN SAUDI ARABIA: THE
CASE OF SAMBA FINANCIAL GROUP
Mohammed Ben-Jadeed, Alfonso Molina, University of Edinburgh __________________ 90

GOING DIGITAL ─ EVOLVING DIMENSIONS OF eGOVERNMENT
Jyri Naarmala, University of Vaasa ___________________________________________ 107


Session 4

THE RATIONALE OF FINANCIAL SHARED SERVICE CENTRES IN LOCAL
GOVERNMENTS
Timo Hyvönen, University of Tampere; Janne Järvinen, University of Oulu; Lasse Oulasvirta
University of Tampere; Jukka Pellinen, University of Jyväskylä ____________________ 118

DONEGAL INTEGRATED SERVICE DELIVERY PROJECT: DEVELOPING A
SYSTEMATIC APPROACH TO SERVICE MODERNISATION AND THE
MANAGEMENT OF CHANGE
Tony Kieran, Donegal County Council ________________________________________ 131

THE CHALLENGES OF RISK MANAGEMENT IN DIGITAL SUPPLY NETWORKS
Jukka Hallikas, Lappeenranta University of Technology; Iris Karvonen, VTT Industrial
Systems; Mika Ojala, Tampere University of Technology; Tony Rosqvist, VTT Industrial
Systems ________________________________________________________________ 142

Session 5

VIRTUAL TEAMS AS KNOWLEDGE SHARING VENUES
Marja Eriksson, Satu-Marja Mäkinen, University of Tampere ______________________ 157

Session 6

CUSTOMER PERCEIVED QUALITY IN INNOVATIVE ELECTRONIC INSURANCE
SERVICES IN B2B CONTEXT
Aki Ahonen, University of Tampere __________________________________________ 171

CONSUMER ATTITUDES AND REACTIONS TOWARDS THE USE OF PERSONAL
CUSTOMER INFORMATION IN MARKETING
Mirella Lähteenmäki, Helsinki School of Economics _____________________________ 186

A CONSTRUCTION KIT FOR THE APPLICATION OF WORKFLOW-MANAGEMENT-
SYSTEMS IN PRODUCTION ENVIRONMENTS
Klaus Heinz, Horst-Artur Crostack, Oliver Grimm, Reiner Sackermann, Wissem Ellouze,
University of Dortmund ____________________________________________________ 200

Session 7

AN OUTSOURCING PARTNERSHIP MODEL
Marianne Kinnula, University of Oulu ________________________________________ 210

THE POSSIBILITIES OF LIFE CYCLE COSTING IN OUTSOURCING DECISION
MAKING
Anni Lindholm, Petri Suomala, Tampere University of Technology _________________ 226


APPLYING THE VALUE RE-ENGINEERING FRAMEWORK TO SERVICES: A
LONGITUDINAL IT OUTSOURCING CASE
Heli Syväoja, IBM Finland; Kimmo Pekkola, Fujitsu Services Oy Finland ____________ 242

TRACK 2 MANAGEMENT OF INFORMATION AND KNOWLEDGE
Session 1

COMPETITIVENESS OF KNOWLEDGE INTENSIVE SERVICES
Marjo Haataja, Jussi Okkonen, Tampere University of Technology __________________ 255

BUSINESS ECOSYSTEM AS THE NEW APPROACH TO COMPLEX ADAPTIVE
BUSINESS ENVIRONMENTS
Mirva Peltoniemi, Elisa Vuori, Tampere University of Technology __________________ 267

KNOWLEDGE-INTENSIVE BUSINESS SERVICES AND CO-PRODUCTION OF
KNOWLEDGE – THE ROLE OF PUBLIC SECTOR?
Jari Kuusisto, Anmari Viljamaa, SC-Research __________________________________ 282

Session 2

ELECTRONIC BUSINESS: DEPLOYMENT AND STRATEGIES
A CASE STUDY: VACON PLC, A FINNISH MEDIUM SIZED ENTERPRISE
Heidi Puurunen, Josu Takala, Vaasa University _________________________________ 299

AN EXPLORATORY STUDY OF THE ROLES OF INTERNET COMMUNICATION IN
BUSINESS RELATIONSHIPS
Nataša Golik Klanac, Hanken – Swedish School of Economics and Business Administration
________________________________________________________________________ 315

Session 3

TRUST-RELATED TECHNOLOGIES FROM THE CONSUMER'S POINT OF VIEW ─
FEATURES SPECIFIC TO E-HEALTH SERVICES
Riku Lemmetty, Kari Mäkelä, Telemedicine Laboratory, Digital Media Institute, Tampere
University of Technology __________________________________________________ 325

FRAMEWORK FOR CONSUMER RELATED TRUST ISSUES IN E-COMMERCE
Minna-Kristiina Paakki, University of Tampere _________________________________ 332

Session 4

DEVELOPMENT OF A PERFORMANCE MEASUREMENT SYSTEM IN A
KNOWLEDGE-BASED PUBLIC ORGANIZATION
Hannu Rantanen, Tuija Oikarinen, Lappeenranta University of Technology, Lahti Unit __ 340


WEB-BASED BOUNDARY ELEMENTS IN THE MANAGEMENT OF INTERNAL AND
EXTERNAL COMPLEXITY IN AN INDUSTRIAL ORGANIZATION
THE CASE OF OUTOKUMPU COPPER PRODUCTS OCP EUROPE, EPC ELECTRICAL
POWER & COMPONENTS BUSINESS LINE
Marjatta Maula, Tampere University of Technology _____________________________ 347

SUPPORT SYSTEM REQUIREMENTS FOR AN APPLIED COST-BENEFIT-SHARING-
MODEL
Iwo Riha, University of Dortmund; Stefan Weidt, Fraunhofer Institute of Material Flow and
Logistics ________________________________________________________________ 364

TRANSITIONS IN MASS CUSTOMIZATION STRATEGIES – REQUIREMENTS FOR
INFORMATION SYSTEMS
Jaakko Riihimaa, Seinäjoki Polytechnic; Mikko Ruohonen, Marko Mäkipää, University of
Tampere ________________________________________________________________ 373

AUTHOR INDEX

VOLUME II

Session 5

THE ROLES OF INTERNAL AND EXTERNAL INFORMATION IN BUSINESS
INTELLIGENCE
Virpi Pirttimäki, Tampere University of Technology _____________________________ 385

DISCOVER HIDDEN CORPORATE INTELLIGENCE NEEDS BY LOOKING AT
ENVIRONMENTAL AND ORGANIZATIONAL CONTINGENCIES
Alessandro Comai, ESADE - University Ramon Llull ____________________________ 397

THE ROLE AND TYPES OF BUSINESS INFORMATION IN DIFFERENT “SCHOOLS
OF THOUGHT” OF STRATEGIC MANAGEMENT
Marko Mäkipää, University of Tampere _______________________________________ 414

Session 6

LITERATURE RESEARCH APPROACH ON RESEARCH TOPIC: SCANNING
COMPETITIVE ENVIRONMENT
Katja Rajaniemi, ABB Oy __________________________________________________ 428

Session 7

ABSORPTIVE CAPACITY OF KNOWLEDGE INTENSIVE BUSINESS SERVICES: THE
CASE OF ARCHITECTURAL AND ENGINEERING SMES
Jan Waalkens, Rene Jorna, Theo Postma, University of Groningen __________________ 444


CHASING TIME IN ORGANIZATIONS – TEMPORAL STRUCTURING OF R&D WORK
FROM THE PERSPECTIVE OF PRACTICE
Soja Ukkola, University of Lapland __________________________________________ 459

MANAGEMENT OF COMMUNICATION NETWORKS IN KNOWLEDGE INTENSIVE
SERVICE ORGANIZATIONS – THE PERSPECTIVES OF CONDUIT AND LANGUAGE
GAME MODELS
Matti Koivuaho, Tampere University of Technology _____________________________ 470

Session 8

ARE YOU READY FOR THE RIGHT KNOWLEDGE MANAGEMENT STRATEGY:
IDENTIFYING THE POTENTIAL RESTRAINS USING THE ACTION SPACE
APPROACH
Roman Wong, Barry University; Tarja Tiainen, University of Tampere ______________ 480

THE CONCEPT OF REGIONAL CATALYST IN THE CONTEXT OF THE DIGITAL
BUSINESS ECOSYSTEM
Eeva Salminen, eBRC; Andrea Nicolai, T6; Petri Räsänen, Technology Centre Hermia Ltd;
Marko Seppä, eBRC ______________________________________________________ 491

THE ROLE OF SCIENCE PARKS IN DEVELOPING COMPANY NETWORKS
Anne-Mari Järvelin, Professia Ltd.; Hanna Koskela, University of Tampere ___________ 507

TRACK 3 STRATEGIZING IN KNOWLEDGE SOCIETY
Session 1

STAKEHOLDER MANAGEMENT AS A PLAY
Kalle Pajunen, Juha Näsi, Tampere University of Technology ______________________ 520

STRATEGISING IN MULTI-VOICED BUSINESS SETTINGS
Hanna Lehtimäki, Life Works Consulting Ltd.; Johanna Kujala, Tampere University of
Technology ______________________________________________________________ 534

EVOLVEMENT OF TRUST AND MUTUALITY IN EARLY STAGES OF
INTERORGANISATIONAL COLLABORATION
Jari Ylitalo, Eerikki Mäki, Kirsi Ziegler, Helsinki University of Technology __________ 546

Session 2

DEVELOPING MEASURES FOR MANAGERS' STAKEHOLDER ORIENTATION: A
BUSINESS ETHICS PERSPECTIVE
Johanna Kujala, Tampere University of Technology _____________________________ 561

CORPORATE SOCIAL RESPONSIBILITY IN CSR REPORTS
Meri Vehkaperä, University of Jyväskylä ______________________________________ 572


FOUR WAYS OF DEFINING A NARRATIVE IN BUSINESS ETHICS RESEARCH
Anna-Maija Lämsä, Marianne Ekonen, University of Jyväskylä ____________________ 581

Session 3

BUSINESS MODELS IN THE EMERGING CONTEXT OF MOBILE ADVERTISING
Hanna Komulainen, Tuija Mainela, Jaakko Sinisalo, Jaana Tähtinen, Pauliina Ulkuniemi,
University of Oulu ________________________________________________________ 590

BUSINESS DESIGN: THE CASE OF A DIGITAL ART STUDIO
Sébastien Caisse, Benoit Montreuil, CENTOR, Laval University ___________________ 606

Session 4

USING ONTOLOGIES FOR STRATEGIC EARLY WARNING SYSTEMS - A
PRELIMINARY ASSESSMENT OF POTENTIALS AND DRAWBACKS
Stephan Cappallo, Sven Wiegand, University of Duisburg-Essen ___________________ 623

EXECUTIVE USE OF STRATEGY TOOLS: BUILDING SHARED UNDERSTANDING
THROUGH BOUNDARY OBJECTS
Sari Stenfors, Leena Tanner, Ilkka Haapalinna, Helsinki School of Economics _________ 635

Session 5

NETWORK CAPABILITY OF SMALL AND MEDIUM-SIZED ENTERPRISES
Tiina Lemmetyinen, Lea Ahoniemi, Business Research and Education Centre, University of
Tampere ________________________________________________________________ 646

COMMUNICATION IN INTERORGANIZATIONAL COLLABORATION: A CASE
STUDY
Kirsi Ziegler, Jari Ylitalo, Eerikki Mäki, Helsinki University of Technology __________ 656

Session 6

STRENGTHENING EMERGING INDUSTRIES IN THE LESS FAVOURED REGIONS
THROUGH “BRINGING KNOWLEDGE IN” MECHANISM
Kati-Jasmin Kosonen, SENTE, University of Tampere ___________________________ 670

FROM CAPITAL INVESTORS TO KNOWLEDGE INVESTORS: THE RISE OF
ENTREPRENEURIAL VENTURE-TO-CAPITAL
Richard Harrison, University of Edinburgh Management School; Hannu Jungman, Tampere
University of Technology; Marko Seppä, eBRC _________________________________ 685

INSTITUTIONAL INVESTOR’S DECISION MAKING CRITERIA FOR INVESTING IN
VENTURE CAPITAL FUNDS
Harri Kinnunen, University of Jyväskylä ______________________________________ 695


Session 7

A REAL-TIME EVALUATION OF INTELLECTUAL CAPITAL, INTELLECTUAL
PROPERTY AND INTELLECTUAL PROPERTY RIGHTS IN EARLY-STAGE ON-LINE
ENTERPRISES
Geoff Gregson, Richard Harrison, University of Edinburgh ________________________ 710

TRUST OR CONTROL ─ GOVERNANCE CONCEPTS FOR VIRTUAL
ORGANIZATIONS
Christoph Lattemann, Thomas Köhler, University of Potsdam ______________________ 720

KNOWLEDGE CREATION AND DISSEMINATION IN VIRTUAL ORGANIZATIONS
Asta Savaneviciene, Kestutis Duoba, Kaunas University of Technology ______________ 734

Session 8

EXECUTION MATTERS? SEARCHING THE STRATEGY LOGIC FOR GROWTH OF
YOUNG HIGH-TECHNOLOGY FIRMS
Jukka Ala-Mutka, Compass Management Partners Oy/Tampere University of Technology
________________________________________________________________________ 744

TOWARDS UNDERSTANDING SMALL FIRM INTERNATIONALISATION –
TECHNOLOGY BASED SME FOCUS
Sanjay Bhowmick, University of Auckland ____________________________________ 758

AUTHOR INDEX


Author index
Ahonen, Aki 171 Lemmetyinen, Tiina 646
Ahoniemi, Lea 646 Lindholm, Anni 226
Ala-Mutka, Jukka 744 Lähteenmäki, Mirella 186
Ansell, Jake 68 Lämsä, Anna-Maija 581
Ben-Jadeed, Mohammed 90 Mainela, Tuija 590
Bhowmick, Sanjay 758 Maula, Marjatta 347
Caisse, Sébastien 606 Mittilä, Tuula 36
Cappallo, Stephan 623 Molina, Alfonso 90
Comai, Alessandro 397 Montreuil, Benoit 606
Crostack, Horst-Artur 200 Mäkelä, Kari 325
Duoba, Kestutis 734 Mäki, Eerikki 546, 656
Ekonen, Marianne 581 Mäkinen, Satu-Marja 157
Ellouze, Wissem 200 Mäkipää, Marko 373, 414
Eriksson, Marja 157 Mäntymäki, Maria 36
Golik Klanac, Nataša 315 Naarmala, Jyri 107
Gregson, Geoff 710 Nan, Ning 13
Grimm, Oliver 200 Nicolai, Andrea 491
Haapalinna, Ilkka 635 Näsi, Juha 520
Haataja, Marjo 255 Oikarinen, Tuija 340
Hallikas, Jukka 142 Ojala, Mika 142
Harrison, Richard 685, 710 Okkonen, Jussi 255
Harrison, Tina 68 Oulasvirta, Lasse 118
Heinonen, Kristina 1 Paakki, Minna-Kristiina 332
Heinz, Klaus 200 Pajunen, Kalle 520
Hyvönen, Timo 118 Pekkola, Kimmo 242
Jorna, Rene 444 Pellinen, Jukka 118
Jungman, Hannu 685 Peltoniemi, Mirva 267
Järvelin, Anne-Mari 507 Pirttimäki, Virpi 385
Järvinen, Janne 118 Postma, Theo 444
Järvinen, Raija 78 Puurunen, Heidi 299
Karvonen, Iris 142 Rajaniemi, Katja 428
Kieran, Tony 131 Rantanen, Hannu 340
Kinnula, Marianne 210 Riha, Iwo 364
Kinnunen, Harri 695 Riihimaa, Jaakko 373
Koivuaho, Matti 470 Rosqvist, Tony 142
Komulainen, Hanna 590 Ruohonen, Mikko 373
Koskela, Hanna 507 Räsänen, Petri 491
Koski, Nina 23 Sackermann, Reiner 200
Kosonen, Kati-Jasmin 670 Salazar, Maria T. 68
Kujala, Johanna 534, 561 Salminen, Eeva 491
Kuusisto, Jari 282 Savaneviciene, Asta 734
Köhler, Thomas 720 Seppä, Marko 491, 685
Lattemann, Christoph 720 Sinisalo, Jaakko 590
Lehtimäki, Hanna 534 Smith, Malcolm 13
Lehtinen, Uolevi 78 Stenfors, Sari 635
Lemmetty, Riku 325 Strandvik, Tore 1


Suomala, Petri 226
Syväoja, Heli 242
Takala, Josu 299
Tanner, Leena 635
Tiainen, Tarja 480
Tuunainen, Virpi Kristiina 52
Tähtinen, Jaana 590
Ukkola, Soja 459
Ulkuniemi, Pauliina 590
Waalkens, Jan 444
Wan, Fang 13
Vehkaperä, Meri 572
Weidt, Stefan 364
Wiegand, Sven 623
Viljamaa, Anmari 282
Wong, Roman 480
Vuori, Elisa 267
Ylitalo, Jari 546, 656
Ziegler, Kirsi 546, 656
Äkkinen, Miia 52

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