The Impact of Contingencies on Information System Development

Three tests of contingency theory are presented. The central hypothesis is that information system development is determined by contingencies. Data relate to the period 1994-98 for a sample of new Scottish micro firms. Contingency theory is tested by correlation, cluster and regression analysis. First, correlation analysis is applied to the timing of information system development and the timing of: severe cashflow crises; severe shortfalls of finance which seriously restrict strategic investment; and significant innovations. Second, cluster analysis is used to test the morphology suggested by contingency theory, of adaptive, running blind, and stagnant small firms. Third, regression analysis is used to test contingency theory in two forms. One explains a new weighted headcount measure of organizational form, and the other explains information system complexity. The three statistical methods used are generally supportive of contingency theory, suitably modified to a small firm context.