What happens to
organizations that chase the hottest information technologies? This
study examines some of the important organizational impacts of the
fashion phenomenon in IT. An IT fashion is a transitory collective
belief that an information technology is new, efficient, and at the
forefront of practice. Using data collected from published discourse
and annual IT budgets of 109 large companies for a decade, we found
that firms whose names were associated with IT fashions in the press
did not have higher performance, but they had better reputation and
higher executive compensation in the near term. Companies investing
in IT in fashion also had higher reputation and executive pay, but
they had lower performance in the short term and then improved
performance in the long term. These results support a fashion
explanation for the middle phase diffusion of IT innovations,
illustrating that following fashion can legitimize organizations and
their leaders regardless of performance improvement. The findings
also extend institutional theory from its usual focus on
taken-for-granted practices to fashion as a novel source of social
approval. This study suggests that practitioners balance between
performance pressure and social approval when they confront whatever
is hottest in IT.
Keywords: Information
technology fashion, management fashion, innovation, diffusion,
discourse, corporate reputation, executive compensation, legitimacy,
performance