Does the Perception of Red Tape Constrain IT Innovativeness in Organizations? Unexpected Results from a Simultaneous Equation Model and Implications

This study posits a theoretical model in which both red tape and information technology (IT) innovativeness have reciprocal causal effects on one another. The primary model suggests that perceived red tape is not necessarily a constraining factor to IT innovativeness but could be a facilitating factor. High levels of perceived red tape might lead organizations toward innovative solutions to their organizational problems through information technology. This study also finds that top managers' risk-taking propensity (entrepreneurial leadership) and organizational capacity are positively associated with IT innovativeness. An additional finding suggests that IT innovativeness helps organizations reduce the level of red tape. These specific empirical results only emerge when a two-stage least squares model is estimated to account for the endogenous relationship between red tape and IT innovativeness.