The Florida State University

THE FLORIDA STATE UNIVERSITY

COLLEGE OF COMMUNICATION

THE ADOPTION OF NEW TECHNOLOGY

AMONG SMALL CANADIAN OIL AND GAS FIRMS

DIANE MARY HOWARD

A Dissertation submitted to the

College of Communication

in partial fulfillment of the

requirements for the degree of

Doctor of Philosophy

Degree Awarded:

Fall Semester, 1999

Diane Mary Howard

The members of the Committee approve the dissertation of

Diane Mary Howard defended on July 14th, 1999.

John K. Mayo

Professor Directing Dissertation

Dan J. Montgomery

Committee Member

C. Edward Wotring

Committee Member

Jay D. Rayburn

Committee Member

Kathleen M. Burnett

School of Information Studies

Outside Committee Member

Approved:

Donna Marie Nudd, Chairperson, Department of Communication

John K. Mayo, Dean, College of Communication

"A journey of a thousand miles begins with but a single step".

This work is dedicated to my husband Daryl, who always has faith in me,

my father, who gave me an appreciation of school,

Aunt Mary and Uncle Tom, who made the end possible,

and to Brianne and Drew and future grandchildren,

may you follow your dreams……as I have.

ACKNOWLEDGEMENTS

The doctoral program and subsequent completion of the dissertation have been the most challenging projects I have ever undertaken. The task was further complicated by personal hurdles and many relocations which, I am happy to say, I have overcome. A complicated life with the demands of a new teaching post at the University of Calgary and new marriage, along with the normal demands of everyday life and raising two small children seemed to constantly pull me away from this study.

I want to thank my husband Daryl, for helping me complete this work by leaving me alone in my office, especially after our honeymoon. He was not only honorable in putting up with my constant tapping on the keyboard during key vacations in Tucson and Cranbrook, but generously contributed emotional support in order for me to make this project a success. I also would like to thank my father for giving me the opportunity and encouragement to follow my dreams, and my mother, for passing on her sense of optimism and style. I would also like to thank my Aunt Mary and Uncle Tom for their financial contribution at the very end, when I was going through some financial difficulty.

To Dr. John Mayo, Dean of College of Communication and Chairman of my dissertation committee, I would like to express my sincerest gratitude. Dr. Mayo has been very supportive throughout my post-graduate school career, challenging me to pursue high standards of academic excellence. This work greatly benefited from the many hours of laborious proof reading, revisions, and his overall attention and faith in me to complete it.

I would like to thank the members of my dissertation committee, Dr. Dan J. Montgomery, Dr. C. Edward Wotring, Dr. Jay D. Rayburn, and Dr. Kathleen M. Burnett from the School of Information Studies. Dr. Sapolsky, former Chairman of the FSU Department of Communications, was especially kind in awarding me numerous teaching assistantships during my stay in Tallahassee. Dr. Nudd was supportive throughout my two year stay at Florida State University, counseling me from abroad, before I even commenced the program. Also a special thank you to the staff at Florida State University, specifically Diane Maxwell, who helped me to overcome daily personal, teaching and scheduling problems during my two year program of studies at FSU.

I am also grateful to Lorne Fugimoto, the vendor at DigiRule, who gave me inside leads to track the innovation in this research project, the portable digitizer. A special note of thanks to my good friends and colleagues, Dr. Greg Viggiano and Dr. Michael Chamberlain, who both encouraged me to change my personal life and finish my dissertation. I can not believe it took the whole five years to complete.

Lastly, I would also like to say a heartfelt thank you to Bruce Puffer, who really tried to support me throughout the doctoral process. Bruce, I am truly sorry we did not make it.

TABLE OF CONTENTS

LIST OF TABLES xi

LIST OF FIGURES xii

ABSTRACT xiii

CHAPTER I 1

INTRODUCTION 1

Background 2

Significance of the Study 3

Justification on Practical Grounds 5

Problem Statement 8

Definitions 10

Scope and Limitations of the Study 13

Research Presentation Overview 15

CHAPTER II 16

LITERATURE REVIEW 16

The Innovation-Decision Process 16

Knowledge Stage 18

Persuasion Stage 21

Decision Stage 22

The Technology Innovation Process 22

Technology Strategy Plan 24

Implementation 26

User Perceptions and Experiences 27

Relative Advantage 28

Compatibility 29

Complexity 30

Trialability 31

Observability 32

Champions 33

Confirmation, Discontinuance, Re-invention 34

Information Technology Issues in Small Firms 36

Summary 44

CHAPTER III 47

METHODOLOGY 47

Case Study 47

Research Design 49

Criteria for Quality of Research Design 51

Instrumentation 55

Research Questions 56

Sample 58

Sample Criteria 60

Selection Criteria 62

Data Sources 65

Interviews 66

Document Analysis 68

Interim Case Summary Outlines 70

CHAPTER IV 82

Case Analysis Adoption/Trialability 82

CASE STUDY # 1- ADOPTION - Probe Exploration 83

CASE STUDY # 2- ADOPTION - Trinity Energy 85

CASE STUDY # 3 - ADOPTION - Petrel Robertson 88

CASE STUDY # 4 - ADOPTION - Canadian Petroleum Engineering 91

CASE STUDY # 5 - ADOPTION - Star Oil and Gas 93

Case Analysis Discontinuance/Rejection 95

CASE STUDY # 6 - REJECTION - Founders 96

CASE STUDY # 7 - DISCONTINUANCE - Capella Exploration 99

CASE STUDY # 8 - REJECTION - Jordan 101

CASE STUDY # 9 - REJECTION - Summit Resources 104

CASE STUDY # 10 -DISCONTINUANCE - Pan East Petroleum 106

CHAPTER V 110

CROSS-CASE ANALYSIS TRIALABILITY/ADOPTION 110

Market Opportunities 111

Requirements and Problems 116

Knowledge Development 122

Technologies 126

Decision-Making 127

CROSS-CASE ANALYSIS DISCONTINUANCE/REJECTION 132

Market Opportunities 134

Requirements and Problems 137

Knowledge Development 140

Technologies 141

Decision-Making 142

Conclusions 143

AREAS FOR FUTURE RESEARCH 152

APPENDICES 155

APPENDIX A. THE PORTABLE DIGITIZER 156

APPENDIX B. RESPONDENT QUESTIONNAIRE 158

APPENDIX C. RESEARCH TIME FRAME 160

REFERENCES 161

BIOGRAPHICAL SKETCH 180

LIST OF TABLES

TABLE PAGE

Table 1 Small US Firms Information Systems Concerns Ranking 39

Table 2 US MIS Executive Information Systems Issue Ranking 40

Table 3 Case Study Tactics for Quality of Research Design 52

Table 4 Characteristics of Field Study Sample Cases 1-10 61

Table 5 Sampling Parameters 62

Table 6 Matrix of Categorized Respondents Interviewed 63

Table 7 Table of Categorized Corporate Documents 69

Table 8 Case Analysis Trialability/Adoption 83

Table 9 Case Analysis Discontinuance/Rejection 96

Table 10 Rental in the Technology Innovation Process 130

LIST OF FIGURES

FIGURE PAGE

Figure 1 The Stages in the Innovation-Decision Process 18 Figure 2 The Technology Innovation Process 23 Figure 3 Factors in Implementation and Adoption 26 Figure 4 Organizational Chart - Probe Exploration 71 Figure 5 Organizational Chart - Trinity Energy 72 Figure 6 Organizational Chart -Petrel Robertson 73 Figure 7 Organizational Chart - Canadian Petroleum 74

Figure 8 Organizational Chart - Star Oil and Gas 75 Figure 9 Organizational Chart - Founders 76 Figure 10 Organizational Chart - Capella Exploration 77 Figure 11 Organizational Chart - Jordan 78 Figure 12 Organizational Chart - Summit Resources 79 Figure 13 Organizational Chart – Pan East Petroleum 80

ABSTRACT

One of the critical determinants of success for many small-sized enterprises has been the management of technological change. It is therefore increasingly relevant for scholars to understand more fully how small sized enterprises try, adopt, discontinue or reject new technologies.

This study examines the innovation decision process among small oil and gas firms. It does so by explaining the technology adoption decision process so as to identify the factors influencing the trialability, adoption, discontinuance or rejection of new information technologies among small oil and gas firms.

Background conditions and forces that bear on the adoption or rejection of new technology in small firms include market opportunities, requirements and problems, the knowledge development or users' motivation and skill, the relative advantage of the technology and the decision-making process. These factors are identified and illustrated through ten highly focused case studies. The sample was purposive, rather than random. Small oil and gas firms with less than 100 employees were selected on the basis of having had recent contact with a vendor involved in demonstrating the portable digitizer. Adopter category 'stages' were identified, stratifying small firms into clusters representing the trialability and adoption, or discontinuance and rejection stages of the innovation process as set out by Rogers (1995). The technology-innovation process model was used as a template to examine the decision-making process influencing adoption or rejection of the portable digitizer, which is a device used to digitize geological and geophysical information.

Adopting firms went through a trialability stage before adopting and purchasing the portable digitizer. Adopters experienced a 'performance gap' between actual and desired results involving missed opportunities in the marketplac

e, and knew how to apply the innovation to the problems at hand. Adopting firms were faced with new requirements, in the form of new projects, mainly in the international marketplace, where geological data needed to be digitized. Adopting firms also wanted to reduce expensive and time-consuming out-sourcing costs and found the ‘portability' of the innovation to be a relative advantage.

Two of the rejecting firms went through a trialability stage before discontinuing the use of the portable digitizer. Five of the ten firms studied ultimately rejected the innovation. Rejecters did not need to digitize, as most pursued market opportunities in the North American domestic market where geological and geophysical information has already been digitized. Rejecting firms saw no need to adopt the innovation and could not identify any 'performance gaps' between actual and desired results involving competitors’ practices or unmet customer expectations. Users who discontinued or rejected the innovation had far more vendor contact; however, all were unanimous in their poor evaluation of the vendor's demonstration of the software component of the innovation.

In summary, market opportunities seemed remarkably different for the two populations. Adopters were more involved in the international arena, extending market opportunities through exploration and development. Rejecters were more involved in acquiring other firms in a 'financial play' to extend market opportunities. The two populations also had different technology uses and needs. Adopters used the innovation to digitize data for new international projects. Rejecters used more traditional tools to produce and display their product.

In terms of knowledge development, adopting firms had strong internal championing processes, both formal and informal. Rejecters had no championing. Users in adopting firms had heard of, or used, or had knowledge of the prototype of the portable digitizer. In contrast, rejecters had no knowledge of the innovation, had never heard of the prototype and knew few colleagues using the innovation.

The difference between adopters and rejecters is that adopters appeared sufficiently motivated to try a new technology with the hope of improving the quality of their work. Rejecters appeared to be more accepting of technological limitations and were more willing to tolerate traditional methods to process their work.

CHAPTER I

INTRODUCTION

Research on the adoption of new technologies by small and medium-sized enterprises (SMEs) in recent years has increased, including research on both 'hard' technologies (e.g., robotics), and 'soft' technologies, for example, computer-aided design (Raymond, Julien, Carriere and Lachance, 1996). However, we have less knowledge on how technological change occurs in SMEs, and specifically on the process by which these firms manage the adoption and implementation of new information technologies (Raymond, et al., 1996). SMEs generally have fewer resources and less expertise to devote to the management of technology.

Understanding why people accept or reject a new information technology is an important issue because the adoption of information technology by knowledge workers is an integral component of organizational computing. The adoption of information technologies by individuals and organizations is part of the process of information systems (IS) implementation, a research area that has received substantial attention during the past 25 years (Kwon and Zmud, 1987). Understanding how to implement IT successfully is still one of the most questioned issues facing the IS field (Swanson 1988; Brancheau and Wetherbe 1990). Research findings to date have been mixed and inconclusive (Moore and Benbasat, 1991).

Judging by the wealth of problems reported in the literature, information systems and general managers are not sure how to manage the introduction of new information technology (Brancheau and Wetherbe, 1990). One step toward providing sound management guidelines is to improve understanding of the social forces which affect the introduction and diffusion process of new technologies within organizations (Brancheau and Wetherbe, 1990). This study extends the present body of literature by examining adoption within the context of the technology-innovation model through use of a paradigm put forth by Hackett, Mirvis and Sales (1991).

For the purpose of this study, adopter category 'stages' were identified by stratifying small firms into clusters representing the trialability, adoption, and discontinuance and rejection stages of the innovation process as explicated by Rogers (1995). The technology-innovation process model was used as a template to examine the decision-making process influencing adoption or rejection of the portable digitizer, a device used to digitize geological and geophysical information. The author followed the technology-innovation process using a set of common constructs such as market opportunities, requirements and problems, knowledge development, operator skill and motivation, technology usage, and decision-making.

Background

In the study of Management Information Systems, the adoption of computing innovations by organizations is associated with both environmental and organizational factors. Though studies of computer use tend to focus on the individual as the unit of analysis, individual responses are sometimes aggregated to obtain a measure of utilization for an organization as a whole. In such instances, findings can be summarized with regard to the level or extensiveness of use ( Kraemer and Dutton, 1991). It has been found that the level of use is related to the degree of training users receive. The greater the training, the greater the ability to use the system and, subsequently, the greater the use of the system (Nelson and Cheney, 1987).