IMPACT OF INFORMATION AND COMMUNICATION ON COOPERATE PERFORMANCE 1.1) Introduction

IMPACT OF INFORMATION AND COMMUNICATION ON COOPERATE PERFORMANCE 1.1) Introduction Nowadays, people have no doubt about the profound impacts of information and communications technologies (ICT) on their social life and the economic structure of their country. Whether the impact of ICT application is big or small, the final result will depend upon the environment in which ICTs are applied and the attitudes of the authorities who implement them. The real challenge is how to make use of internet and other ICTs to ensure that their potentials are used to create better economic opportunities and to reduce poverty. There is no doubt that, when used in a productive sphere, ICTs are most likely to improve the living standard of people, by affecting different business and service sectors. (UNCTAD , 2002). Today, most service sectors, especially insurance , employ different forms of ICTs to facilitate their processes. ICTs/e-commerce are mainly applied in insurance industry for information purposes, application submission, proposal preparation and online contract conclusion, notification of claims, probable address changes, access to customer and contract data. (e-business watch report 2002). According to e-business watch report 2003, the insurance sector (including general and credit insurance) has the highest e-business/ICT application rate among other sectors. It also has the highest penetration of Internet access, the second highest level of extranet use, the third highest level of intranet and WAN application use in comparison to other sectors. With this rate of ICT application, insurance sector has had the highest rate of IT specialist employment. Firms in any business and sector (whether an insurance company or its customers) benefit from the positives impacts of ICT application and also may be unable to make a complete use of ICTs due to certain barriers. There is no doubt that knowing the probable impacts of ICTs application by firms and the barriers to be faced, will encourage firms to invest more on e-commerce and ICTs application and lift the probable obstacles which may exist before them. The aim of the present research is, therefore, to know the benefits of ICTs application by the Export Guarantee Fund of Iran (EGFI) as a credit insurer and its customers and the barriers they may face in complete ICT application. 1.2) Problem /problem area Before discussing the problem, a distinction must be made between the general and credit insurance in the insurance industry: General Insurance is an insurance we buy to cover ourselves against risks in our daily life. General insurance may be of different types the major types of which are Fire, Cargo, Accident, Motor(P.D), Motor(T.P.L), Health, Hull, Aviation, Engineering, Liability, Credit, Oil & Energy and Life insurance. Credit insurance or trade credit insurance is an insurance which covers the non- repayment risk of a trader's receivables from a local or foreign buyers resulting from political risks (which are not controllable by the buyer or the seller) and commercial risks( which are pertinent to the buyer) [http://en.wikipedia.org/wiki/Credit_insurance]. Unlike the past, most insurance products in developed countries are nowadays delivered via internet. But the Iranian insurance companies are laggards in making their processes electronically and are still distributing their products via traditional distribution channel. The application of ICTs by Iranian service sector, especially Insurance is in the very initial stage. Being largely based on information, the insurance business can be impacted largely by ICT application. Increased revenue and transparency, decreased costs, increased productivity and better marketing, are among benefits the insurers and their customers can embrace by applying ICTs in their interaction. (Bromideh & Arabi, 2006). The effects of e-commerce and ICT are the subjects of intense debate in general Impacts of ICT application on the insurer & its customers and major obstacles to be faced 12     Chapter Two: Literature Review Chapter 2 2-1) Information and communication technologies / E-commerce 2.1.1) Definitions: Definition of Impact/obstacle: Dictionary.com defines "impact", as influence, effect and force exerted by a new idea, concept, technology, or ideology. Merriem -Webster online dictionary defines the word as a forceful contact or onset and a force of impression of one thing on another: a significant or major effect (e.g. the impact of science on our society).The word "impact" is defined by Thesarus online dictionary as effect, effectiveness, strength, significance and benefit. The first synonym given by the said three sources for the word "obstacle" is the word " barrier" , therefore, for the sake of easier search in this research, the keywords "benefits" and " barriers" were used as a substitute of the words " impacts " and " obstacles". Definition of ICT: We can define Information and telecommunication technologies (ICT) as any technology we use to facilitate processing ,gathering, distribution and use of information.( Beckinsale and Ram, 2006). According to Nicole (2003), ICT is classified into information, telecommunications and networking technologies. ICT includes all forms of technologies such as internet, computers, websites , telephones, mobiles, wireless devices, networks (Manueli, Latu and Koh, 2007) and hardware, software and telecommunication equipment (Kaiser, 2004). Factors affecting ICT adoption by firms: The characteristics of the firm and its owner/manager and the cost/benefit analysis (return on investment) affect ICT adoption by firms ( Akkeren & Cavaye,1999) . Thatcher & Foster (2002) classify such factors affecting e-commerce and ICT adoption into two main categories: Inter Organizational (size, management and readiness) and Extra-Organizational (industrial, governmental and cultural). Price of technology, availability of networks, firm characteristics (size, age, ownership) and learning are quoted by Crespi et al (2004) as factors affecting ICT or e-commerce application. Competition levels and supplier-buyer relations are also among important factors (e-business watch report 2008).In addition, Manueli et al., 2007; Van Akkeren and Cavaye1999 have identified Customer supplier/dependency, Organizational readiness, structural sophistication of the firm, assertiveness, perceived benefits, perceived control lack of time, computer literacy, subjective norm, mistrust of IT industry, external pressure to adopt, Size, sector, status , the manager's age and experience and information intensity as factors affecting any ICT or e-commerce adoption decisions. The firms whose managers and employees have ICT literacy, skill and expertise as well as access to internal and external support from ICT experts, will have more tendency to adopt ICT and e-commerce (Windrum and de Berranger, 2002). The age and experience of the manager/owner and access to ICT experts within a business are also influential. Certain cultural traits, beliefs and values attached to resources, size of the firm and its social structures , nature of social links and contract may also influence ICT adoption in several different ways (Beckinsale and Ram, 2006; Clayton, et al. 2003).According to Luque,(2000) ;Helpman, (1998); Breshnahan and Trajtenberg,(1995); Impact of ICT on Corporate performance There is no doubt that there are a lot of factors that influence the performance of a firm which include: the market structure in which a firm operates; the market share, size , human resourses, managerial and organizational structure of the of the firm(Dunne et al., 1988, 1989).The impact of ICT adoption on corporate performance is subject to debate because the impacts were not the same in different firms (Kohli and Devaraj, 2003; Chan, 2000,). some researchers believe that ICT has positive impact on business performance (Stratopoulos, 2000; Barua, 1995;), but others consider the impacts insignificant (Yosri, 1992; Strassmann, 1990) or even negative (Setzekorn, 1998; Holland, 1997;Brynjolfsson, 1995). In any way, if one is to understand the impacts of ICT on firm performance , he/she should consider ICT as an enabler of innovation (Koellinger 2005). ICT may have positive impact on productivity in one firm and have less impacts on profit in the same company (Brynjolfsson and Hitt, 1996). Moreover, the benefits associated with ICT application will be dependent on sector-specific effects and can not be found equally in all sectors. (Dirk Pilat and Andrew Wyckoff ,2003). Firm-Internal Factors Firm-specific resources Appropriation tactic • Secrecy • Lead-time • Patents • Sales and service efforts • Complementary assests Technology • Investment • Adoption Innovation • Process • Product/service Performance • Profitability • Growth • Survival Market reaction • Competitors • Customers • Suppliers Firm-External Factors Relation between technology, innovation and firm performance Philipp Koellinger (2008,p27), Some ICT technologies may be more influential on the firm performance than others. For example Computer networks may be particularly important, because they enable a firm to have closer relations with suppliers and buyers (Atrostic and Nguyen, 2002).