Info Systems J (2007) 17, 369–389 369

E-business and organizational change:

a structurational approach
Catherine Chu* & Steve Smithson†
London School of Economics, Houghton Street, London, WC2A 2AE, UK, *email:
catherine.chu@hotmail.co.uk, and †email: s.smithson@lse.ac.uk

Abstract. Although e-business is a familiar part of the organizational landscape,

its implementation remains a problem for large traditional organizations. This
paper argues that the pervasiveness of e-business calls for the adoption of an
organizational change perspective to study its implementation. Using structuration
theory, the paper analyzes a detailed case study of the implementation of a major
e-business initiative in a traditional automotive manufacturer. It shows how a
combination of structural contradictions and unexpected consequences derailed
the initiative.

Keywords: e-business, information systems and organizational change, structura-

tion theory, case study

INTRODUCTION

It is just over 10 years since Amazon, eBay and Yahoo first opened their websites for business.
Internet-enabled e-business is now a widely accepted channel for marketing and sales,
operations and coordination across most business sectors in the West. While its defence
origins in ARPAnet and the early anarchic internet culture have been largely forgotten in
business circles, it is salutary to recall that it is only six years since the NASDAQ index peaked
and the dot-com boom turned to bust (Howcroft, 2001).
Since then, large-scale e-business development has mostly shifted to large corporations
that, lacking the agility of dot-coms, face a major problem in implementing the highly invasive
technology. Clegg et al. (2005) describe e-business as an ‘octopus’ whose tentacles can
stretch throughout the organization and along the supply chain from raw materials to the final
consumer. Such implementations are much more complex than conventional information
systems and can be classified as a technology-driven organizational change (Markus, 2004).
This study fills a gap in the literature by taking an organizational-change perspective on
e-business implementation. It provides a detailed description and analysis of an interpretive
case study of an e-business initiative within a major multinational automotive manufacturer. In
order to grasp the richness and dynamics of the case, we use structuration theory as our
conceptual framework.

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Our main research question is: ‘How does the introduction of e-business interact with the
existing structures of large established companies? Why does the introduction of e-business
pose major challenges to organizations?’ E-business here represents any business activity
where the key organizational functions take place predominantly in the internet (Castells,
2001), while our interpretation of structures is based on Giddens (1984). The research
question captures Giddens’s fundamental conception of duality with ‘interact’ referring to the
mutual interaction between the human agents’ attempts at implementing e-business and the
existing organizational structures. The second part of the question sharpens the focus by
explicitly seeking explanations for the problems.

LITERATURE REVIEW

Although there is a large literature on e-business (see the review by Wareham et al., 2005),
much falls within the well-trodden categories of business strategy (e.g. Porter, 2001), business
models (e.g. Pateli & Giaglis, 2004), website design and consumer behaviour (e.g. Winter
et al., 2003), and various issues concerning trust (e.g. Gallivan & Depledge, 2003). There are
relatively few articles on the organizational issues, such as organizational change. Exceptions
include Clegg et al. (2005), who identify the key socio-technical issues as: ‘business pro-
cesses, organisation structures and working practices, employee empowerment, new busi-
ness models, the management of change, and the need to evolve new ways of thinking,
behaving and organising’. Power (2004) demonstrates the importance of effective people
management, showing that employee participation is more effective than a reliance on training.
The relatively few detailed case studies include Butler (2003) and Phan (2003).
The pervasiveness of e-business (Clegg et al., 2005) is particularly difficult for large multi-
nationals to absorb, with their complex and rigid bureaucratic structures and ingrained culture.
Potential solutions include formal strategy development processes (Daniel & Grimshaw, 2002),
cultural changes (Boddy & Boonstra, 2000) and restructuring (Gulati & Garino, 2001). Some
organizations set up new e-business divisions, but these can be problematic. Govindarajan &
Trimble (2005) discuss the incubation of new businesses within traditional companies. They
recommend a programme of forgetting the business models and culture of the old company
and selectively borrowing resources from it. Furthermore, they emphasize the need for learn-
ing both by the new division and the core company. Pinker et al. (2002) compare the merits of
setting up a separate e-business division against leaving developments to the existing busi-
ness units in what they term a ‘weak virtual’ organization.
Chatterjee et al. (2002) use a combination of institutional theory and structuration theory to
analyze e-business strategies. They highlight the importance of senior management champi-
onship, a strategic investment rationale and a high level of coordination, but note the difficulty
in aligning the technology with the organizational structures, processes and reward schemas
(see also Boddy & Paton, 2005). Butler (2003) also adopts institutional theory to analyze an
e-business implementation, emphasizing the need for commitment. Kickul & Gundry (2001)
explore the changes in managerial roles in the e-business environment, while Zhu & Kraemer

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(2005) consider e-business from an innovation diffusion perspective, based on resource-based

theory.
Looking at adjacent literature, there is an extensive literature on the implementation of
information systems, stretching back to the 1970s (e.g. Bardach, 1977) and focusing mostly on
issues of power (e.g. Hart & Saunders, 1997) and resistance to change (Lapointe & Rivard,
2005). Much has been written about the concept of power in various literature – e.g. Gaski
(1984) discusses power within marketing channels, going back to the work of French & Raven
(1959). Most of the more recent work within information systems (e.g. Doolin, 2004) empha-
sizes the exercise of power in terms of a social field of possible actions (after Foucault, 1982)
or its role within an institutional approach to information systems (IS) adoption (e.g. Teo et al.,
2003). However, we chose to focus on organizational change because of our premise that
e-business implementation is potentially a highly pervasive and significant change that con-
stitutes a ‘technochange’ (Markus, 2004) or Swanson’s (1994) Type III innovation: those
technologies that have strategic relevance to organizations.
The IS implementation literature links closely with that of organizational behaviour
(Orlikowski & Barley, 2001), which recognizes organizational change as a long-standing
problem. Armenakis & Bedeian’s (1999) review classifies organizational change research into
four themes: content, context, process and evaluation criteria. Evaluation is beyond the scope
of our study, but the other three are familiar to IS researchers (cf. Pettigrew, 1985; Walsham,
1993).
The content approaches (e.g. Vollman, 1996) fail to address the complex dynamics of
change while the process approaches (e.g. Dawson, 1997) tend to neglect the context.
Meanwhile, researchers following a more contextual approach (e.g. Damanpour, 1991) tend to
emphasize the structural constraints, while downplaying the power of human agency. We
argue that a combination of these themes is needed to provide a comprehensive understand-
ing of the dynamics of change, and this can be found in structuration theory.

Conceptual framework: structuration theory

Structuration theory (Giddens, 1979; 1984) is a relevant approach to understand the process
of technology-driven organizational change and its interaction with the existing structures of
organizations. This theory attempts to resolve a fundamental division within the social sciences
between those researchers who give primacy to the power of human agents to influence social
phenomena (akin to a process view) and those researchers who emphasize the power of
social structures to influence those same phenomena (a context view). Rather than regarding
agency and structure as independent and conflicting, Giddens treats them as a mutually
interacting duality, whereby people draw on structures for their actions but, in so doing,
produce and reproduce these social structures. In other words, agents build, use and repro-
duce social structures through their actions, but these actions are enabled and constrained by
the structures. Structuration theory, then, is concerned with the way in which social practices
both contribute to the production and reproduction of social structures and how these practices
are themselves shaped by those structures; they are two sides of the same coin.

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In structuration theory, agency ‘refers to doing’ (Giddens, 1984, p. 10) and is equivalent to
action perpetrated by an agent. Giddens is concerned with social life and thus agency involves
interaction between actors, either face-to-face or at a distance and, in this paper, the terms
agency, action and interaction are used interchangeably. Actions include both routine actions
and those that seek to make changes. Giddens underlines the importance of routinization in
the reproduction of structures, compared to the agency required to change these structures.
Giddens also emphasizes the knowledgeable and purposive nature of agents; in other words,
actors know what they’re doing and why they are doing it. His basis for knowledgeability is
reflexive monitoring: ‘the continuous monitoring of action which human beings display and
expect others to display’ (Giddens, 1984, p. 3). Despite this knowledgeability, Giddens recog-
nizes the frequency of unanticipated consequences of actions, which he mainly attributes to
unacknowledged conditions (bounded rationality). He also accepts that material and other
constraints limit the scope of feasible action but, nevertheless, actors can always ‘act other-
wise’. For example, they can ‘opt out’ by resigning or resisting the change.
According to Giddens, structure consists of rules and resources, and exists in a manifest
form only when it is instantiated in action; otherwise, it persists only as traces in memory. In
other words, structures have only a virtual existence until they are drawn on by agents in their
interaction and thus structure is reconstituted each time a practice is reproduced, which in turn
reinforces the structure. Structure does not determine human interaction; rather, it enables and
constrains interaction, but in so doing, structure itself is produced and reproduced. Structure
can thus be changed by human interaction. It is both the medium and outcome of interaction,
and forms the other half of the duality.
Giddens’s structures are not equivalent to the classic ‘organizational structures’, but rather,
underpin their coordination, control and reporting mechanisms. Giddens would view conven-
tional structures (e.g. departments) as ‘systems’ as they represent the reproduced relations
between people that operate by drawing on Giddens’s structures but are not the same. Although
Giddens’s structures exist only in the mind, they are the means by which people actually work
and are thus more relevant, richer and up to date than (often obsolete) organizational charts.
Giddens divides structures into three dimensions: signification, legitimation and domination.
Signification concerns meaning and interpretation, legitimation encompasses norms of behav-
iour, and domination refers to power, in terms of access to resources. These resources include
both allocative resources (‘transformative capacity generating command over objects, goods,
or material phenomena’ – Giddens, 1984, p. 33) and authoritative resources (‘transformative
capacity generating commands over persons or actors’ – Giddens, 1984, p. 33). Giddens
asserts that these dimensions are only for analytical convenience and, in reality, are intimately
interlinked. These structures may contradict each other (see also Walsham, 2002) and lead to
conflict. Conflict refers to actual struggles between actors, while contradiction refers to the
potential for conflict. Conflict only arises when actors feel that they are able and motivated to
take action.
The essential principle of structuration theory is the duality of structure, whereby structure is
both the medium and outcome of human interaction. It is essential in two ways. First, it is the
key principle of the theory and, second, it implies that human interaction always involves

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structure Signification Domination Legitimation

Interpretive
(modality) Facility Norm
scheme

Figure 1. The duality of structure

interaction Communication Power Sanction
(Source: Giddens, 1984, p. 29).

structure and structure is only instantiated through human interaction. Giddens defines struc-
turation as the ‘conditions governing the continuity or transmutation of structures, and therefore
the reproduction of social systems’ (Giddens, 1984, p. 25).
Figure 1 depicts this duality, where the top row refers to structure while the bottom row
relates to interaction. Giddens divides interaction into ‘aspects’ corresponding to the dimen-
sions of structure: communication (related to signification), the exercise of power (domination)
and the notion of sanctioning (approval/disapproval – legitimation). The middle row corre-
sponds to modality, the inherent bridging mechanism between structures and interaction.
The arrows between the rows signify the recursive nature of the duality. Thus, in the
communication aspect, we draw on structures of signification through our interpretive schemes
(i.e. stocks of knowledge used to interpret events). In the exercise of power, we draw on
structures of domination, through our use of facilities, typically access to material (allocative)
resources or command over people (authoritative resource). In the sanctioning of behaviour, we
draw on structures of legitimation, through norms (i.e. rules and values governing conduct).
Similarly, the arrows between the columns signify their interlinked nature such that no dimension
exists separately from the others. For example, the operation of norms depends upon power
relationships and is deployed through symbolic and linguistic devices. While structures are
produced (and reproduced) by human action, new structures require time to become institution-
alized, but obsolete structures can linger around in memory. The concept of duality explains in
a simple yet sophisticated fashion the subtle relationship between action and structure. It
illustrates the way in which social practices both contribute to the production and reproduction
of social structures and how these practices are themselves shaped by the structures.
Structuration theory has been used by various IS researchers, centred on Walsham (e.g.;
Walsham & Sahay, 1999) and Orlikowski (e.g. Orlikowski et al., 1995). However, much of the
published work lacks the empirical depth obtainable by using it as the sole theory to examine
a complex case. A particular problem in applying the theory in information systems is Gid-
dens’s ambiguity concerning the role of technology (Monteiro & Hanseth, 1995). IS research-
ers have tried to rectify this through the structurational model of technology (Orlikowski, 1992)
and adaptive structuration theory (DeSanctis & Poole, 1994), but these attempts have been
criticized for breaching the theory’s principles (Jones, 1999). However, the practice lens model
(Orlikowski, 2000) uses Giddens’s ideas to explain how users use technology to enact
structures that shape their use of the technology – this extends the notion of duality to
encompass the use of technology. We chose to use Giddens’s original theory as we were
concerned with the implementation of e-business, rather than with its ongoing use.

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Further problems for IS researchers include the terminology, with its roots in sociology, and
the difficulties of applying a theory of society at the organizational level. Another major criticism
is Giddens’s lack of a ‘methodological scalpel’ (detailed methodology) and thus a ‘failure to
present a viable epistemology’ (Rose & Scheepers, 2001). Part of the contribution of this study
is a demonstration of the operationalization of structuration theory.

The e-business case study

Our aim was to study in depth the implementation of e-business in a large organization from
the perspective of organizational change. This led us to adopt an interpretive qualitative
approach, because of the nature of the conceptual framework, the complexity of the phenom-
enon, and the relative lack of previous research (Creswell, 1994). We chose a single case
study to allow ‘an investigation to retain the holistic and meaningful characteristics of real-life
events – such as organizational and managerial processes’ (Yin, 1994, p. 3). The study was
set in the European headquarters of a large automobile manufacturer, named here for reasons
of confidentiality as ‘Autocorp’, which had just invested heavily in e-business, and the full life
cycle (from June 2000 to December 2002) of the new e-business department (EBD) (named
here as EBD-Europe) was observed.
Data collection comprised 45 semi-structured interviews with senior and middle managers
and employees of EBD-Europe and the rest of Autocorp. These interviews were supported by
observation and the examination of internal and published documentation, to provide a level of
triangulation (Yin, 1994).
Structuration theory is a wide-ranging theory and Giddens himself (in an interview) recom-
mends that researchers do not try to apply it in its totality but rather make use of a limited
number of its concepts (Bryant & Jary, 2001). While one needs to fully accept the fundamental
principles of the theory, the lower-level techniques can be treated more like a toolbox.
The interview schedule was constructed using a mixture of structuration concepts, drawn
from Giddens (1984), the advice provided by Poole & Desanctis (2002) and other more general
socio-technical concepts, such as group cultures and power relationships. Each interview
lasted at least an hour and the questions were presented in layman’s terms and tailored to the
interviewees’ roles. The questions were augmented by asking interviewees to draw a diagram-
matic representation of situations. Interviewees were encouraged to give their own views
regarding the events unfolding in Autocorp and to explain them with examples. Subsequently,
qualitative data analysis was conducted based on the chronology of events and the themes
from structuration theory.

Findings

Prior events

Autocorp, a major American-owned multinational automotive manufacturer, had prospered for

most of its 100 years history and more recently had acquired various European brands. Since

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the 1960s, it had operated under an autonomous regional structure with Europe hosting its own
assembly plants and national headquarters. However, in the mid-1990s, the then CEO began
to reorganize the corporation on global lines, aimed at consolidating product lines and merging
the North American and European operations. This globalization would increase productivity,
through economies of scale, and raise creativity through global knowledge sharing. However,
in practice, employees resented being forced into complex global structures and global
products were often built to suit the lowest common denominator. Strategic decision-making
shifted to the US headquarters and Europe experienced an identity crisis.
However, the old CEO retired in late 1998 to be replaced by his ‘personally groomed’
successor. This was at the height of the dot-com boom and one of the new CEO’s first actions
was to commission a study of how the internet could improve Autocorp. In June 1999, the task
force offered a breathtaking vision of a company that built cars to order, dealerships that
reported problems instantly, and supplier-controlled inventories. The new CEO bought into this
vision and, aware that e-business development was currently fragmented and that the global
structure was not working, he instituted a further reorganization. This returned autonomy to the
regions and brands but also set up a new EBD at the same level as Autocorp Europe. His
vision was to use e-business to transform Autocorp from a traditional manufacturer to a
consumer-led company. Web-based technologies would reshape the firm and transform its
culture, enhancing supply chain efficiency and developing customer-centric strategies. More
prosaically, it would also increase the company’s share price as Wall Street seemed smitten
by e-business.
EBD-US was set up in 1999 to drive e-business efforts across the whole company. Given the
apparent urgency of the ‘technological and business revolution’, together with the lack of
internal expertise, the CEO recruited senior staff externally and forged partnerships and joint
ventures with new technology companies. External recruitment was very much contrary to the
longstanding tradition of internal appointments (‘Autocorp lifers’) but Autocorp’s archrival was
also promoting investment into e-business and the two were aggressively competing in online
initiatives.

Establishment of EBD Europe

While most of the company was doing well, Autocorp Europe’s dismal results necessitated the
closure of a historic UK plant with the loss of more than 2000 jobs. Nevertheless, EBD Europe
was set up in June 2000 and, like EBD-US, it was headed by an externally recruited executive
with a consultancy background. He was ‘unlike traditional engineering guys who were very
product focused rather than customer centric’ (Autocorp HR manager) and evangelized over
leading EBD Europe towards such goals as build-to-order, the ultimate in customer relation-
ships.
EBD Europe was to be the autonomous central cross-brand e-business consultant and
supplier for all the European brands, seeing itself as the ‘catalyst in transforming Autocorp’
(Head of EBD Europe). It inherited much of its strategy from EBD-US and its initial funding from
Autocorp Europe Marketing. It attracted an apparently strong team with good track records and

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an entrepreneurial spirit. Initially, it was seen ‘as a bit elitist’ but also as a promising career
move, a ‘chance to progress through this massive grey structure of Autocorp’ (EBD Europe
project manager).
EBD Europe was launched at a 3-day off-site meeting, organized by an outside consultancy,
where the new head heavily promoted the e-business strategy, arguing for the need to change
Autocorp’s operating style and culture to achieve three principal objectives:

1 drive revenue growth and increased profitability;

2 leverage the value of the business through increasing Autocorp’s market capitalization; and
3 drive business partnerships that would revolutionize Autocorp’s culture and performance.

Operation of EBD Europe

EBD Europe started off very confidently, obtaining a stylish new building (a converted gin
factory) set apart from the rest of Autocorp. It started with big agendas, replete with entrepre-
neurialism and a mission to accelerate e-business throughout the company. It was positioned
as an internal profit centre with the goal of an eventual spin-off. EBD Europe comprised
acceleration teams and joint ventures for big initiatives in business-to-consumer (B2C),
business-to-business (B2B), telematics (on-board web-enabled cars) and customer relation-
ship management. It viewed these partnerships as the best way to capture missing skills and
it gave the partners ‘carte blanche’ to do their work.
Although EBD Europe was the CEO’s ‘baby’, Autocorp’s lack of e-business experience
resulted in role confusion: was it a consultant, a full-service provider or something in-between?
EBD Europe had a broad mandate to make sweeping changes but little guidance on how to do
so. Furthermore, Autocorp Corporate did not offer financial incentives or impose a central
mandate for the brands to utilize EBD Europe’s services. With this lack of direction, EBD
Europe aimed to provide everything related to e-business. One EBD Europe manager said:

It just doesn’t make any sense. It’s very fluffy [. . .] I don’t think we, EBD Europe, know what
it wants to do . . . It’s been dreadful, awful, terrible . . . The whole thing amazes me. The
culture is very expensive. There are a lot of people. I don’t understand what we’re trying to
achieve. I don’t feel we add any value. We are supposed to be a centre of excellence and
I think we’re probably the worst provider of e-business solutions because we’re expensive
and very slow compared to outside suppliers.

EBD Europe tried to encourage a ‘no fear culture where people can express themselves’
(Head of EBD Europe), but many internal recruits were not accustomed to this, which also did
not fit well with the rest of (the hierarchical) Autocorp. This led to strained relationships. EBD
Europe managers would skip levels of management and complain to EBD-US and senior
board managers that the brands were not cooperating. EBD-US would sometimes communi-
cate directly with the European brands, leading to further estrangement as the European
brands felt that EBD-US were interfering in Europe.
Following EBD-US’s lead, EBD Europe had set up a joint venture with a new technology
partner for their B2C initiative. This quasi-autonomous company was located in expensive

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offices and the employees, drawn from EBD-Europe and the partner, were mostly young
e-business enthusiasts who were given considerable freedom. Although work began quickly,
Autocorp had little experience of joint ventures or of working in this very different culture. There
were few specifications or milestones and work was handed over verbally, vaguely defined and
lacked controls. The relationship between EBD Europe and its partner quickly deteriorated.
The partner’s staff were paid five to 10 times more than EBD Europe’s, not to mention the
additional expense of housing them in central London. The work delivered was below EBD
Europe’s expectations, leading to financial disputes. Just before the joint venture finally
collapsed into lawsuits, a Senior Autocorp IT Manager said of them:

They are the epitome of a company who over-promises and under-delivers; unprofessional;
poor value for money; they have good people, but are frustrating. They are charging a lot and
I disdain them. They’re an outsider, whose interest is not in Autocorp, and not to do business
with Autocorp. They forget the organization model, blow budget, and scope-creep issues.
We only need their niche expertise.

Following this debacle, EBD Europe’s situation improved slightly but it still lacked a clear
mandate. It had grown too quickly and lacked sufficient organization and infrastructure. It
perceived itself as having a ‘can-do’ culture, battling against uncooperative customers. Accord-
ing to one of its Acceleration Team Leaders:

I wish that customers would believe that ‘we add value’. Sometimes I feel like I am ‘selling
ice to Eskimos’. They are not incentivised to look at a bigger picture. They are under
incredible pressure for revenue growth. We look at things for the longer term. EBD Europe
seems like this hot house of ideas, but we have limited opportunity to deliver. We rely on
other people (i.e. brands) to deliver and if they are not motivated to do so, then we are sterile.

EBD Europe’s internal organization was in a constant flux, lowering staff morale and straining
relationships with the brands. One EBD middle manager, whose role and supervisor had
changed three times in six months, told us:

I never understood the role; there were no solid objectives, nothing there that was adding
value to the brands. I’m used to a very active value-adding role.

In addition, EBD Europe’s funding structure changed several times. At first, it charged at full
cost plus mark-up, but clients found this too expensive. Then, to obtain funding from EBD-US,
it had to switch to a risk and reward model, where profits were shared with EBD-US, and the
European brands had to pay variable costs plus an annual fee. However, the brands could not
pay the annual fee and so EBD Europe eventually switched back to charging at full cost plus
a smaller mark-up. All these changes, together with EBD Europe’s lack of expertise and its
aggressive selling techniques, quickly reduced its credibility with the brands and even among
its own employees.
The other European stakeholders responded to EBD Europe with mixed reactions. Autocorp
Europe Marketing was generally sympathetic but sceptical about web marketing, compared to
the traditional dealer and mass marketing model. Its provision of EBD Europe’s initial funding

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seemed to promise some leverage, but it was less happy about losing key personnel to EBD
Europe. The brands reacted in different ways. Certain brands that were not performing well,
and were dependent upon Autocorp, felt that they had no choice but to use EBD Europe.
Anyway, the cost savings from cross-brand solutions would be helpful, even if some might not
fit their luxury market (‘cracking a nut with a sledge hammer’ – brand middle manager). Some
felt pressured into using EBD Europe, even though it was expensive and lacked expertise.
They saw the relationship as a ‘forced grudging alliance.’
However, one recently acquired European brand was less happy. The brand was profitable,
confident and highly autonomous, with advanced information technology (IT) and excellent
relationships with its local IT suppliers. Its managers, still smarting from the American takeover,
doubted that EBD Europe could provide value and saw it as a threat to its autonomy. It viewed
EBD Europe staff as condescending, arrogant and unappreciative of its own established
e-business: ‘too small ears and too big a mouth’ (brand manager).
Autocorp’s IT division, a sleepy, traditional mainframe operator, saw EBD Europe as an
infringement of its turf and moved quickly to prevent further incursions by reorganizing its
operations to facilitate the development and maintenance of e-business applications. It used its
influence with Autocorp Purchasing to ensure that EBD Europe had no choice but to source its
software from Autocorp IT. This was a huge stumbling block for EBD Europe, making it very
difficult to control costs. According to an EBD Europe team leader:

Autocorp Purchase and Autocorp IT are very powerful. You can’t manage to spend a penny
without the approval of Purchase. You can have an outside supplier who provides the same
thing for $1 and Autocorp IT for $1000, but you’d still have to use Autocorp IT.

EBD Europe found that Autocorp IT could not meet its demand for fast and inexpensive IT
solutions that did not fit Autocorp IT’s mainframe mentality; ‘where things are developed slowly,
well thought through, and where risks are minimised’ (EBD Europe middle manager). In one
project, IT initially quoted £400 000; then spent 12 weeks and £100 000 analyzing the project,
and re-quoted it at £1.2 million. Conversely, IT felt that achieving alignment with business
people was ‘an absolute nightmare’ (IT senior manager). It felt under-appreciated and misun-
derstood:

[EBD Europe] just wanted products cheaper and delivered more quickly without due con-
sideration of a future when the product may have to interface with other systems [. . .] they
held an aggressive management style [. . .] just shouted and moaned about things, and less
than truthful on what they say they would deliver [. . .] they’re used to cutting deals; the price
is ‘x’, but if I beat them very hard, I can get it for ‘y’. They’re in the business of buying used
cars’ (Autocorp IT senior manager).

Termination of EBD Europe

Disaster struck EBD from unexpected quarters. In mid-2001, millions of allegedly faulty tyres
and a wave of accidents led to a massive recall of Autocorp US cars at a cost of $3 billion. At

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 E-business and organizational change 379

the same time, Autocorp suffered problems with the launch of new models amid reports of
quality problems. This compromised the CEO’s strategy of redefining Autocorp as a company
that championed consumers. Adding fuel to the flames, a new evaluation scheme caused
significant resentment from middle managers, while the dot-com bubble had well and truly
burst by this time. Hence, the CEO’s hopes of e-business providing initial public offerings and
driving up Autocorp’s share prices were shattered. As a final nail in the coffin, the shock wave
from the World Trade Center attack of September 11th sent Autocorp’s share price into further
decline. Its financial results were awful, with unit sales down 10% and a loss of $877 million,
compared to a profit of $497 million the previous year.
As a result, in October 2001 the Autocorp Board sacked the CEO, the main supporter of
EBD. The new CEO announced a ‘back-to-basics’ strategy, refocusing on manufacturing,
finance and products. He publicly apologized for the mistakes of his predecessor, many of
whose top lieutenants and external recruits were dismissed.
The head of EBD Europe ‘elected to resign’ in January 2002, blaming the politics within
Autocorp. He claimed that EBD Europe was seen as a ‘virus’ ‘under attack by the “white blood
cells” of Autocorp’. He was replaced by an ‘Autocorp lifer’ with 33 years service. With the old
CEO’s removal, EBD Europe felt that it was susceptible to attack – ‘when the cat is away, the
mice will play’ (Retiring Head of EBD Europe). Not only had EBD Europe lost top management
support, the new back-to-basics strategy regarded e-business as a non-core activity. As the
circumstances changed, and as EBD Europe learned from its early operations, its attitudes
changed. Its behaviour became:

much more conciliatory; getting a resolution, and answering each one of their queries from
each one of the stakeholders . . . realisation that we cannot be arrogant with the brands,
need to be much more subservient. (EBD Europe Acceleration Team Leader)

EBD Europe had also put its own house a little more in order with a new project management
process. It also sent a dedicated manager to its most vocal brand critic two days a week in
order to build better relations. However, there were still concerns within EBD Europe about its
value and structure:

[our] vision is to be an excellent IT implementation team and that’s it. You probably need six
project managers that manage IT implementation projects. You don’t need all this side crap.
There’s loads of people here doing all sorts of other things and I don’t know what value that
adds [. . .]. We can’t afford all these people. We’re spending a fortune on people that don’t
add to the equation. (EBD Europe middle manager)

Nine months ( June 2002) after the CEO’s dismissal, EBD-US, with its 300 employees,
closed, leaving EBD Europe even more exposed. EBD Europe tried to create an internal joint
venture with the brands, but achieved little support. By October 2002, it became apparent that
EBD Europe had no independent future. It spent its last few months transferring staff back into
Autocorp Europe Marketing (B2C), Product Development (telematics) and Purchasing (B2B).
EBD Europe finally closed at the end of 2002.

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 380 C Chu & S Smithson

EBD Europe staff felt that the closure had not been their fault; they had been fixing their
problems. They believed they had left a positive legacy in terms of expertise, processes and
techniques on which to build future e-business initiatives. They recognized that EBD Europe:

started very big and when you have a young child that is very big, it tends not to know how
to handle its size so it tends to break things. [We] started very big and quickly ended up
upsetting people. (EBD Europe Acceleration Team Leader)

Autocorp Europe Marketing felt that EBD Europe had been on track to becoming credible,
but was pleased to regain direct control of B2C e-business. One brand felt that EBD Europe
employees were ‘villains’ and not ‘victims’, and that EBD Europe had been lucky to survive as
long as it did. Others were more sympathetic and felt abandoned by the failure of the initiative.
EBD Europe’s main brand critic felt vindicated and was pleased to regain its autonomy in
e-business.

Analysis

In this section, we use structuration theory to analyze the case study and address the main
research question: how does the introduction of e-business interact with existing structures of
large established companies? Why does the introduction of e-business pose major challenges
to organizations? We trace the analysis through the three stages of EBD Europe’s life cycle;
a more comprehensive version is available elsewhere (Chu, 2004).

Establishment phase

The e-business initiative involved the explicit intervention (agency) of the CEO, as change
agent, who restructured the corporation to establish EBD Europe. To do this, he had to use the
existing structure in terms of domination, legitimation and signification and, in this, he was
successful, at least in the short term.
Through Autocorp’s resource allocation mechanism (domination dimension), he gave EBD
Europe considerable power with easy access to financial (allocative) resources and significant
autonomy (authoritative resource). However, from the beginning there were contradictions.
The finance provided by Autocorp Marketing implied constraints on EBD Europe’s autonomy
and its mission to provide cross-brand solutions contradicted the brands’ autonomy, although
some lacked the resources to offer resistance. EBD Europe also found itself trespassing on the
territory of Autocorp IT, supported by the powerful Purchasing division.
EBD Europe was legitimized by its establishment as a separate division, although this was
partly weakened by the recent history of continual reorganization. Nevertheless, it had the
strong support of the CEO, which fitted the norm of respect for his authority. It also held a
leading position within the new strategy, although this was based on the underlying premise of
changing this huge traditional manufacturing corporation into a customer-facing organization.
This massive culture change would have been difficult at the best of times (Pettigrew, 1990).
However, Autocorp’s arch rival had adopted a similar strategy, which appealed to the norm of

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 E-business and organizational change 381

rivalry (‘me too’). This helped to assuage the hasty ‘big bang’ approach, which was the
opposite of the traditionally cautious appraisal of new investments. Nevertheless, the appoint-
ment of an outsider to lead EBD Europe transgressed the traditional ‘Autocorp lifer’ norm of
internal appointments.
In terms of signification, EBD Europe seemed to offer a solution to the uncertainties of the
dot-com ‘revolution’, promising a prosperous future for the company in the ‘new economy’.
However, its massive gain of resources at the time of the closure of the traditional assembly
plant, and its location in smart new offices, seemed ominous to many employees.

Operation phase

In this phase, EBD Europe itself was the change agent as it acted (agency) to implement
e-business systems. To do this, it had to use the new structure, but this structure had not
become institutionalized and EBD Europe struggled in its relationships with the rest of the
company. Table 1 shows the mess of structural contradictions in which EBD Europe found
itself.
In terms of resources, EBD Europe had been set up as a central cross-brand provider, just
when the corporation had moved to a regional and brand structure for resource allocation. EBD
Europe was constrained by the need to contract software development to Autocorp IT while the
brands were not mandated to use its services (authoritative resource). Furthermore, resource
pressures forced EBD Europe to keep changing its business model.
These changes, together with EBD Europe’s ‘growing pains’, helped to reduce its credibility
within Autocorp and hence its legitimacy. This was further undermined by the failure of the joint
venture and its evident lack of e-business skills. The absence of ‘quick wins’, despite the heavy
use of outside consultants and external appointments, emphasized the contradiction with the
traditional norm of promoting ‘Autocorp lifers’. EBD Europe’s US-oriented entrepreneurial
approach did not fit well within Autocorp’s traditional command and control paradigm and the
complex matrix reporting arrangements. This was particularly the case with Autocorp IT, who
saw themselves as professional engineers, providing a reliable integrated infrastructure, while
they regarded EBD Europe as ‘used car salesmen’ looking for cheap solutions.
Thus, regarding signification, EBD Europe came to represent chaos and politics rather than
modernization and a secure future. The attitudes of its staff, frustrated by the lack of progress,
were perceived by the change targets as arrogance and aggression. EBD Europe’s own
internal changes produced an impression of inconsistency in the change agent that was trying
to change the rest of the organization. EBD Europe staff gave their clients the impression that
they regarded them as old-fashioned and resistant to change.
An ‘e-business gap’ developed between EBD Europe and the IT division, on one hand, and
between EBD Europe and its clients on the other. The clients regarded EBD Europe as
‘techies’, who did not understand traditional business, while IT regarded them as business
people who lacked IT skills. So, rather than bringing IT and business together, Autocorp
experienced the creation of a new gap.

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 Table 1. Summary of contradictions
Domination
Pervasiveness of • CEO allocated significant resources &
e-business autonomy to EBD, which contradicted
European recovery measures
Centralisation vs. • As a central provider, EBD contradicted
decentralisation regional & brand resource allocation
structure
• Further confused by matrix structure
Changes in EBD’s • EBD repeatedly changed business
Role & Business models due to resource pressures
Model
Operating paradigm • EBD’s entrepreneurialism & innovation
contradicted Autocorp’s command and
control mechanisms
• Joint ventures, external appointments
& use of consultants proved costly
Relationships with • EBD’s mandate to use Autocorp IT
other divisions contradicted the lack of mandate for
the brands to use EBD
EBD, e-business division.
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Legitimation
• Allocation of resources legitimized by
CEO’s support, media hype and need
to match rival but contradicted norm
of careful investment scrutiny
• EBD was an official division but this
contradicted the norm of regional
and brand autonomy
• EBD needed time to learn and evolve
• EBD’s internal changes contradicted
its role as an expert change agent
• Business models associated with
different norms
• EBD’s ‘can do’ US norms did not fit
Autocorp’s cosy European norms
• Contradicted Autocorp’s norms of
life-long employment and personal
networks
• Autocorp preference for using internal
resources
• EBD’s lack of skills contradicted the
engineering professionalism of
Autocorp IT
• EBD initially paid little attention to
relationship building with the brands or
Autocorp’s traditional norms
382
Signification
• Sudden visibility and status made it hard for
EBD to organize itself
• Customers felt confused and
bombarded with EBD’s initiatives
• EBD felt brands were unresponsive
• Separate location symbolized EBD’s apartness
• Underlined by outsider as head
C Chu & S Smithson
• Signified chaos and lack of expertise to
customers
• EBD insecure, unsure of its
contribution
• EBD initially viewed itself as a powerful
catalyst for change but only later realized its
constraints
• EBD investment perceived as taking money
from doomed assembly plant
• Some stakeholders saw EBD as greedy and
lacking expertise & understanding
• EBD viewed IT as uncompetitive & expensive,
based on mainframe mentality while IT viewed
EBD as ‘used-car salesmen’
• EBD felt brands were narrow-minded and
resistant while the brands viewed EBD as
arrogant & aggressive
• As EBD increased relationship building, staff
felt disempowered in ‘fluffy’ roles
 E-business and organizational change 383

The structural contradictions called forth responses by the change targets, who were
relatively comfortable with the traditional structures. They tended to resist any efforts of the
change agents that threatened their position. They actively tried to cut away at the autonomy
and resources of EBD Europe, as well as resisting passively. Both sets of agents reflexively
monitored their environments and acted purposively and knowledgeably to secure their best
interests.

Termination phase

The removal of the CEO meant that senior management support was lost and the deterio-
ration in Autocorp’s finances meant a huge cutback in the e-business budget (resources –
domination dimension). Furthermore, the brands offered little support for EBD Europe’s con-
tinuation. EBD Europe’s legitimacy was compromised by the new CEO’s ‘back to basics’
strategy, which regarded e-business as a costly mistake and, with the dot-com bust in full
swing, e-business no longer signified a prosperous future. Thus, in each dimension, EBD
Europe’s relationships with the rest of the corporation deteriorated dramatically and closure
became inevitable.
It is interesting to note that the old embedded structures did not die away quickly as the norms
of manufacturing industry and ‘Autocorp lifers’ were not eradicated. They lay dormant while the
reforming CEO and EBD Europe reigned but ‘bounced’ back when the new CEO took power with
his ‘back to basics’ approach. It is evidently very difficult to change people’s long-held norms and
interpretive schemes overnight. New structures need to be nurtured, allowing them to traverse
through the test of time and space before they become institutionalized.
Considering the scope and intensity of the organizational changes, it was obviously very
difficult to predict, or control, the interaction between agency and structure, and it was hardly
surprising that unintended consequences resulted. EBD Europe did not achieve its original
objectives. Instead, the unintended consequences included greater consumer dissatisfaction
and the early demise of both the CEO and EBD Europe itself. The previously-mentioned
e-business gap was another unintended consequence. At the level of EBD Europe’s projects,
some achieved their objectives (e.g. the project management method) but others failed (e.g.
the sales lead management system).

E-business implementation

This study underlines two particular issues in e-business implementation. The first concerns
whether to follow Autocorp’s ‘big bang’ approach, in implementing e-business extensively and
intensively, or to take a more leisured, incremental approach. Autocorp’s strategy, propelled
by the CEO’s enthusiasm and fuelled by the dot-com revolution, was always going to be risky.
Furthermore, the evident lack of e-business (and organizational change) competence within
EBD Europe was likely to handicap any initiative, especially a large-scale one. On the other
hand, too small an effort runs the risk of not gaining a critical mass (see Hackbarth &
Kettinger, 2004). Nevertheless, an incremental approach permits learning and allows the

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 384 C Chu & S Smithson

Table 2. Benefits and drawbacks of setting-up a separate e-business unit

Benefits Drawbacks

• Speed and flexibility • Accentuates its difference and perceived as an

• Free from traditions and obsolete processes
• Can expand and recruit quickly
• May attract young ambitious enthusiasts
and high-ranking outsiders
• Idiosyncratic individuals can be protected
• Free to organize itself
• Able to focus on e-business
• Expedites development and standardisation
• Reduces ‘reinvention of the wheel’ across the
organization
• Economies of scale in development,
investigation, implementation and R & D
• Facilitates knowledge acquisition and organizational
learning
‘outside’ threat, causing distrust and uncertainty
• Stands administratively alone and carries own
overhead costs
• High profile makes teething problems and mistakes
highly visible (can’t hide financial indiscretions)
• Need to market its services
• Need to build relationships
• Distant from other stakeholders
• Lack opportunity to secure easy projects
• ‘Last in, first out’
• Difficulty to establish centrality, non-substitutability and
ability to reduce organizational uncertainty

interaction between agency and structures to play itself out. While a ‘big bang’ might work in
simpler organizations and, even in Autocorp, it might have worked had the initiative been
better aligned with Autocorp’s structures, in terms of domination, signification and, especially,
legitimation.
Secondly, should e-business be set up as a separate division, like EBD Europe, or integrated
within the traditional organization? Table 2 summarizes the benefits and drawbacks of each
approach as found in our study (see also Pinker et al., 2002). Much depends on the structures
within the organization; for Autocorp, one could argue that the corporation was accustomed to
reorganizations, following the globalization initiative and its reversal. On the other hand,
perhaps this was one reorganization too many for the confused and disoriented staff.

CONCLUSION

This case study, by taking an organizational change approach, demonstrates various aspects
of the implementation of e-business in large traditional organizations as summarized in
Table 3.
First, the study reaffirms the tremendous pervasiveness of e-business (Clegg et al., 2005) as
demonstrated by the range of stakeholders involved in our (relatively limited) study. While we
focused on B2C, EBD Europe was engaged in simultaneous initiatives in B2B (with Autocorp
Purchasing and their suppliers); CRM (with Autocorp sales groups and call centres); and
telematics (with Autocorp Product Development, Auto Design and New Business Develop-
ment). These initiatives involved new products, new processes and changes in the relation-
ships with suppliers and customers.

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 E-business and organizational change 385

Table 3. E-business as organizational change in large organizations

E-business • Highly pervasive ‘technochange’ with considerable depth and scope

• Implementation requires explicit human intervention
• Technical issues are important but social issues may be more significant
• Change agents confront:
•Structural contradictions with traditional business and traditional IT
•Large changes may lead to conflict but small efforts achieve little
•A separate e-business unit vs. integration with traditional department

E-business initiatives • Change is ‘feasible’ but requires considerable effort and cost
as agency • Change agents
•Need sustained senior management support
•Initiate the task of changing existing organizational structures
• Change targets
•May be comfortable with traditional structures
• Tend to resist change efforts that threaten their position
• Reproduce existing structures that enable and/or constrain change
• Both change agents and targets reflexively monitor their environments and act
purposively and knowledgeably to secure their best interests
• Unintentional consequences of intentional actions may still arise

Organizational structures • Often complex and contradictory but may be deeply embedded
• Guide, facilitate and constrain working lives, yet are maintained by the people
concerned
• Dimensions of structures are closely interlinked
• Stakeholders should perceive the change as value-adding and non-contradictory
(signification)
• Widespread support allows change agents to reproduce their domination structure
but lack of support favours contradictory domination structure
• Structural contradictions
• Arise from change
• Destabilize and confuse change agents and lower their status
• May become conflicts if stakeholders have motive and opportunity
• Norms reinforced over time can be very resilient especially when organizational
homogeneity contradicts the change (legitimation)
• New structures need to be nurtured to become institutionalized

Duality of organizational • Organisational change is a complex, dynamic, recursive interaction between

change structures and actions
• It is a duality in which the change agents shaping the organization also shape
themselvs but, in so doing, create new structures that, in turn, facilitate or inhibit their
further actions and constitute their identities

This justifies the treatment of e-business as a major organizational change. The study
shows the difficulties of implementing e-business within the complex contradictory structures
exhibited by large multinational organizations like Autocorp. One can also see the effect of the
dramatically changing business context as the dot-com hype fuelled the urgency of the
initiative, leading to the risky ‘big bang’ approach, while the dot-com bust helped to seal EBD

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 386 C Chu & S Smithson

Europe’s downfall. Building on other studies (e.g. Scheepers & Damsgaard, 1997; Butler,
2003), we demonstrate that, although technical issues play a role in e-business implementa-
tion, organizational and social issues are more significant.
The theoretical framework adopted, structuration theory, proved to be useful in under-
standing the interaction between the e-business initiative (agency) and the organizational
structures. It facilitated the examination of the heterogeneous systems of meaning, power
relations and norms of the different stakeholder groups. The interaction of agency and struc-
ture was easy to apply, providing a simple yet flexible way to conceptualize a complex,
fast-moving situation. It also helped us understand the complex structures that guide,
facilitate and constrain people’s working lives while the notion of duality shows how these
structures are themselves constructed, maintained and sometimes changed by the people
concerned.
The theory allowed us to show how agents mobilize structures of domination to execute their
particular purposes and how agents refer to the structures of legitimation to make judgements
of people’s behaviour and events. Giddens’s dimensions of structure are closely interlinked;
e.g. the symbolism of EBD Europe’s prestigious location echoed the exercise of power through
the facility of resources and corresponded to the new norms of the organization. Had EBD
Europe been able to communicate better, with a more reliable resource base and with fewer
contradictions, perhaps the story would have ended differently.
However, ‘any theory illuminates some elements of particular case situations and is rela-
tively silent on others’ (Walsham, 2002) and structuration theory is no exception. It requires a
significant investment in time and effort in order to understand and apply, which is exacerbated
by the lack of a detailed methodology for empirical research. Furthermore, the different
dimensions of structure are so interwoven (Scheepers & Damsgaard, 1997), that it can be
difficult to attribute specific issues to one dimension. For example, the arrogance of EBD
Europe staff had its roots in domination but was arguably felt in signification, through its
transgression of the norms of behaviour. Furthermore, the theory does not adequately cover
the emotional aspects of change or the existence of ‘ad hoc’ personal relations.
In terms of limitations, this study suffers from the endemic problem of generalizing from a
single case study (Walsham, 1995), but it is likely that similar issues occur in other similar
organizations. Because of time limitations, we were only able to study one of the Autocorp
e-business initiatives, but we believe that the others suffered similar problems. The story of
EBD Europe unfolded relatively quickly and we only had a small window of opportunity to
capture a real-time snapshot of a complex interaction. This, together with the highly charged
political atmosphere, constrained our empirical work but did not prevent us from talking to
many key actors.
Nevertheless, the examination of this e-business change episode through Giddens’s con-
cepts provided rich insights into why e-business aroused such structural contradictions, why it
was so difficult to integrate within Autocorp, and how the context in (spectacularly violent)
motion exacerbated EBD Europe’s vulnerabilities and led to its downward spiral. We would
hope that, by operationalizing structuration theory, our case study has contributed to the further
use of the theory within information systems.

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 E-business and organizational change
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Biographies
Catherine Chu has her BSc in Management, MSc in
Analysis and Design of Management Information Systems,
and PhD in Information Systems from the London School
of Economics and Political Science. Her research interests
include change management, cultural shaping, organiza-
tional design, strategic alignment and e-business. She
© 2007 The Authors
 E-business and organizational change 389

taught Masters and undergraduate students at LSE
throughout her PhD studies and served as a researcher on
various projects in the automotive and telecommunications
industries as well as a major e-business project for the UK
Department of Trade & Industry. She is currently working
as a strategy consultant within a top 5 global management
consultancy based in London.
Steve Smithson is a Senior Lecturer in Information
Systems at the London School of Economics, where he has
researched and taught since 1984. He launched the Euro-
pean Journal of Information Systems in 1991 and remained
as Editor until 1999. He is a past President of the UK
Academy for Information Systems, the main professional
body for UK information systems academics. His research
interests lie in information systems management, the evalu-
ation of information systems, and developments in
e-business. He has published numerous journal articles
and conference papers, as well as four books. He has
supervised many PhD students and been involved with
various research projects. He has also taught information
systems on a variety of international MBA and MSc
programmes.

© 2007 The Authors

Journal compilation © 2007 Blackwell Publishing Ltd, Information Systems Journal 17, 369–389