The leveraging influence of strategic alignment on IT investment: An empirical examination

Businesses have invested enormous sums in information technology (IT). The challenge now is to optimize these investments. We empirically examined the influence of the alignment between IS strategy and business strategy (strategic alignment) on the payoff of IT investment. Many studies have been performed on the value of IT investment and strategic alignment separately, in the past, but here we combined them by investigating the moderating affect of strategic alignment on the relationship between IT investment and firm performance for a group of manufacturing firms. The results indicated that there is a synergistic coupling between strategic alignment and IT investment with firm performance. Firms that have aligned IT and business strategies can invest in additional IT resources with some assurance that they will be leveraged substantially. One of our main contributions was in the examination of four differing perspectives of strategic alignment and their relationship with the payoff of IT investment.     

The impact of IT-business strategic alignment on firm performance in a developing country setting: exploring moderating roles of environmental uncertainty and strategic orientation

Aligning information technology (IT) strategy with business strategy has been one of the top concerns of practitioners and scholars for decades. Although numerous studies have documented positive effects of IT-business alignment on organizational performance, our knowledge about this relationship is still limited due to the complexity of contingent factors. The extant literature is largely based on research in the context of developed countries and few studies have explicitly considered the effects of contextual factors such as market environment and competitive strategy on this relationship. In this study, we attempt to fill these gaps by testing the alignment–performance relationship in a developing country setting and investigating the moderating roles of environmental uncertainty and strategic orientation on the performance effects of strategic alignment using survey data collected in Turkey. Our analyses show that this positive effect is statistically significant in highly uncertain environments and varies across performance measures. Our results also show that the strategic alignment between IT and business has a significant impact on performance across all choices of strategic orientation – defender, prospector, or analyzer. Theoretical and practical implications are discussed and future research directions are explored.     

Information technology,the organizational capability of proactive corporate environmental strategy and firm performance: a resource-based analysis

The study of the relationships between information technology (IT), environmental organizational issues and firm performance is a cutting-edge research topic for the information systems (IS) community. However, at present we know very little about these relationships. Drawing on the perspective of IT-enabled organizational capabilities and the literature on organizations and the natural environment, our study introduces conceptually the construct organizational capability of proactive corporate environmental strategy to the IS field. We propose that IT capability may enable the implementation of a proactive environmental strategy and that this strategy could play a significant role in determining the business value of IT. Using structural equations modeling with data collected from 63 firms, we find that IT capability is an enabler of proactive environmental strategy and that this strategy plays a significant role in mediating the effects of IT on firm performance. Our study provides initial evidence on the role of IT in the implementation of proactive environmental practices. Our results suggest to IT executives that their decisions matter in shaping environmental sustainability, which in turn will generate business value from IT.     

The role of information governance in big data analytics driven innovation

The age of big data analytics is now here, with companies increasingly investing in big data initiatives to foster innovation and outperform competition. Nevertheless, while researchers and practitioners started to examine the shifts that these technologies entail and their overall business value, it is still unclear whether and under what conditions they drive innovation. To address this gap, this study draws on the resource-based view (RBV) of the firm and information governance theory to explore the interplay between a firm’s big data analytics capabilities (BDACs) and their information governance practices in shaping innovation capabilities. We argue that a firm’s BDAC helps enhance two distinct types of innovative capabilities, incremental and radical capabilities, and that information governance positively moderates this relationship. To examine our research model, we analyzed survey data collected from 175 IT and business managers. Results from partial least squares structural equation modelling analysis reveal that BDACs have a positive and significant effect on both incremental and radical innovative capabilities. Our analysis also highlights the important role of information governance, as it positively moderates the relationship between BDAC’s and a firm’s radical innovative capability, while there is a nonsignificant moderating effect for incremental innovation capabilities. Finally, we examine the effect of environmental uncertainty conditions in our model and find that information governance and BDACs have amplified effects under conditions of high environmental dynamism.     

The impact of information technology on financial performance: the importance of strategic choice

Information technology (IT) may not automatically improve firm profitability. It is an essential tool, but not sufficient in itself, and should therefore be coupled with organisational factors such as business strategies. A firm can maximise the value from its IT investments by aligning them with business strategies because IT improves scope economies and coordination. This paper examines empirically the contribution of IT to financial performance as measured by net profit, ROA, and ROE by focusing on the alignment of IT with business strategies such as vertical disintegration and diversification. Empirical analysis shows that IT does not directly improve financial performance. In conjunction with vertical disintegration and diversification, however, it does improve financial performance as measured by net profit. Financial performance ratios such as ROA and ROE, however, are not correlated with the alignment (or interaction) factor of IT with vertical disintegration and diversification. The results indicate that increased IT spending improves net profit, but not performance ratios such as ROA and ROE, of firms with decreased vertical integration and higher diversification.     

Aligning the IT portfolio with business strategy: Evidence for complementarity of corporate and business unit alignment

Research on alignment between business strategy and information technology (IT) strategy has generated extensive insights over the last three decades. That research has focused primarily on the fit between business and IT strategies, while cross-domain alignment, i.e., alignment between business strategy and IT infrastructure components, has received far less attention. Further, previous studies have focused on the implications of alignment for firm performance while the effects of cross-domain alignment on business unit performance in multi-business organizations (MBOs) are yet to be examined. This issue is important as IT infrastructures are evolving rapidly. Specifically, MBOs are increasingly turning to corporate IT platforms to support a common set of shared IT needs, while still allowing individual business units to manage unique aspects of their own IT needs through local IT applications. Extending prior research, this study proposes that performance of business units in MBOs is influenced by two complementary forms of cross-domain alignment, viz., alignment between the corporate IT platform and the corporate business strategy, and alignment between the business unit’s portfolio of IT applications and its business strategy. Using data from a global survey of 120 organizations, we find evidence that complementarity between these two forms of cross-domain alignment creates a joint positive effect on business unit performance. We also find that this effect varies with the extent of process digitization within business units. Implications for theory and practice are discussed.     

A Valuation Model For Information Technology Capability-Enabled Firm Value

Although the measurement of IT-enabled growth opportunities is an important issue in IT value field, few studies have examined this relationship. Based on the firm valuation theory, we develop a firm value model that includes firm performance and growth opportunities in order to measure the effects of IT capabilities on firm value. It is considered that this model is a more comprehensive and appropriate means to capture IT value. InformationWeek’s IT rankings are used as the database in this study. The findings show that IT contributes to both elements (i.e., firm performance and growth opportunities) of firm value.     

IT capability and organizational performance: the roles of business process agility and environmental factors

The business value of information technology (IT) has been one of the top concerns of both practitioners and scholars for decades. Numerous studies have documented the positive effects of IT capability on organizational performance but our knowledge of the processes through which such gains are achieved remains limited due to a lack of focus on the business environment. Such a linkage therefore remains the subject of debate in the information systems literature. In this study, we fill this gap by investigating the mediating role of business process agility and the moderating roles of environmental factors. On the basis of matched survey data obtained from 214 IT and business executives from manufacturing firms in China, our analyses show that even though firm-wide IT capability presents the characteristics of rarity, appropriability, non-reproducibility, and non-substitutability, its impact on organizational performance is fully mediated by business process agility. Our results also show that the impact of the environment is multifaceted and nuanced. In particular, environmental hostility weakens the effect of IT capability on business process agility, while environmental complexity strengthens it. The theoretical and practical implications of this study, and its limitations, are also discussed.     

Relating agility and electronic integration: The role of knowledge and process coordination mechanisms

Current competitive environments necessitate that firms pursue electronic integration in parallel to agility. However, most research to date has examined integration and agility relatively independently and has overlooked the relationship between them. Using coordination theory, this paper suggests that integration enables the two capabilities of agility (i.e., sensing and responding). Results from a study of 303 business unit operations of manufacturing organizations show that integration within business units and with outside partners is positively associated with process coupling of the value chain, both internally and externally. Further, both types of integration are positively associated with knowledge flow within and outside the business unit. In turn, both lead to higher capability to sense change in the business environment and respond to it with agility. This research helps us understand the integration-agility relation better by investigating the role of the knowledge and process capabilities.     

Positioning strategic competitiveness of green business innovation capabilities using hybrid method

There are intensive studies on the issues of environment practice and business innovation capability, have been dealt with extensively from practitioners and academicians, however, studies on the evaluation of green business innovation capabilities (GBICs) are few. This study tackles the evaluation assessment using fuzzy set theory, analytical network process and importance–performance analysis. Specifically, this study is using the theoretical framework of GBICs and proposed hybrid approach, which are new in the theoretical and empirical literatures. An expert group was empirical assessment to the perception on PWB sector and a manufacturing firm is evaluated. The analytical results indicated that this proposed hybrid method is a suitable and effective method for identifying and analyzing the strategic competitiveness of GBICs at case firm, especially when evaluation criteria are dependent in uncertainty.     

Performance, interdependence and coordination in business‐to‐business electronic commerce and supply chain management

After discovering the inadequacy of traditional relationships across the value‐chain, many organizations today are establishing new forms of interorganizational systems with their suppliers and customers in an effort to improve total channel performance. Electronic commerce linkages are being created between independent organizations in multiple industries, including manufacturing, financial services, transportation, and retailing. Efforts to improve channel efficiency using business‐to‐business electronic commerce systems generally require increased interdependence and expanded coordination between independent firms to capture the potential benefits enabled by tighter interorganizational integration of operations. Participating firms can gain dramatic benefits from establishing electronic linkage only when the system is used to increase interdependence and to expand coordination between firms involved in the new interorganizational relationship. Drawing on theoretical and empirical research on electronic communications and inter‐firm designs, we develop and test a model for the relationship between performance, interdependence and coordination of firms involved in interorganizational relations within the US grocery channel. The research design includes qualitative case study analysis and quantitative survey data analysis to validate the key case study findings. Both qualitative and quantitative findings indicate that channel performance, interdependence, and coordination are closely related for firms in interorganizational relationships. This revised version was published online in July 2006 with corrections to the Cover Date.     

The impact of AMT practices on firm performance in manufacturing SMEs

This research deals with the use of advanced manufacturing technology (AMT) in small and medium-sized enterprises (SMEs). The main purpose of this study is to find out the types of AMT to adopt to improve the manufacturing parameters that have significant impact on firm performance. In the research firstly, the current situation in AMT use in SMEs is examined. Secondly, the relationship between manufacturing parameters and firm performance is investigated. Finally, the relationship between the types of AMT and manufacturing parameters is investigated. The sampling pool includes 102 manufacturing SMEs that introduced AMTs. Our findings show that local area network, computer-aided design, and computer-aided manufacturing technologies are the most commonly used and automated storage, robotics, and wide area network technologies are the least commonly used AMTs in SMEs. In addition, the statistical association between manufacturing parameters and firm performance indicate that product design performance, fixture utilization, setup and production planning performance have positive impact, while capacity utilization and finished product inventory need have negative impact on firm performance.     

A contingency model for creating value from RFID supply chain network projects in logistics and manufacturing environments

In the growing literature on RFID and other network technologies, the importance of organizational transformation at the supply chain level has been recognized. However, the literature lacks conceptual model development and salient mechanisms for achieving the level of organizational transformation required for stakeholders to realize the full business benefits from RFID projects. Furthermore, the RFID adoption, use, and impact studies to date largely focus on a single firm setting and on the retail sector. Therefore, this study intends to fill this knowledge gap in the literature, and develops a contingency model for creating value from RFID supply chain projects in logistics and manufacturing environments. For our model development, we draw upon extant diverse literatures, particularly the framework for IT-enabled business transformation, and leadership and organizational learning. The framework postulates a positive relationship between the level of organizational transformation effected by the use of information technology (IT) and the level of business benefits realized from IT. The contingency model draws on the framework, and explicates five contingency factors influencing value creation from RFID supply chain projects: environmental upheaval; leadership; second-order organizational learning; resources commitment; and organizational transformation. Using the contingency model as a conceptual guide, we also perform an analysis of longitudinal real-world case data from a Canadian third-party logistics service firm's seven-layer supply chain RFID projects. The case study analysis provides evidence for the imperative of the contingency factors identified in the model for creating value from the RFID projects. Furthermore, it also reveals the differential costs for the focal firm and the up-stream manufacturing as a key barrier to realizing the full RFID benefits at the supply chain level.     

The impact of information technology on the financial performance of diversified firms

Diversification may increase economic benefits through more efficient utilization of business resources across multiple markets. However, the benefits of these scope economies are often not realized due to costs of coordinating resources in multiple markets. Information technology (IT) is widely used to achieve more efficient coordination by reducing the costs of coordinating business resources across multiple markets. Because of the need for coordination of business resources across multiple markets, diversification can increase the demand for IT. But does increased use of IT improve the performance of diversified firms? This research tackles this question by undertaking an empirical study of the impact of IT on the financial performance resulting from diversification by focusing on the strategic direction chosen by different firms. The empirical aspects of this subject have received little attention from previous information systems (IS) and economics research. This research also sheds light on the business value of IT by showing the importance of complementarity between IT and strategy in firm performance, a subject which has also received limited attention in prior IS research.     

The effect of strategic alignment on the use of IS-based resources for competitive advantage

Persuasive evidence has described the strategic use of information resources in organizations. As a result, IS researchers have sought empirically to link that use to improved organizational performance. However, this alignment-performance relationship has been difficult to confirm.The current study contributes by distinguishing the alignment of the information systems plan with the business plan (ISP–BP) and the reciprocal alignment (BP–ISP). The study used 107 matched pairs of IS executives and other senior executives. Analysis showed that for IS executives both ISP–BP and BP–ISP alignment predicted the use of IS-based resources for competitive advantage. However, for other senior executives, only ISP–BP alignment predicted it. Study results suggest both groups of subjects share an understanding of the role of ISP–BP in creating competitive advantage from their information systems investments. However, the lack of a shared understanding of BP–ISP alignment may prevent organizations from achieving that advantage.     

管理控制论在协作绩效分析中应用研究

研究在环境不确定条件下,企业间协作以及组织间信息系统匹配度对企业间协作绩效影响的问题.以管理控制论为理论基础,以制造行业企业间协作问题为研究对象,应用必要的变数定律及活性系统模型,对汽车制造企业进行了实证分析.研究结果表明,环境不确定性、企业间协作以及信息系统交互影响对企业间协作绩效影响显著;在环境不确定性强的条件下,采用紧密协作及频繁使用组织间信息系统支持的方式协作绩效好;初步证实了管理控制论可作为组织管理研究领域中应用的理论基础.对企业所面临的组织环境不确定性条件下企业间协作问题,以及信息系统应用也具有一定的指导意义.     

Matching information technology and organizational structure: an empirical study with implications for performance

In information systems and organization theory research, the alignment or fit between information technology (IT) and organizational structure has long been hypothesised to be a sine qua non for success. However, few solid results have been found linking this relationship to enterprise level performance, as problems abound in defining and measuring IT, performance and the fit between technology and structure. In view of this, an empirical study was conducted among 108 small and medium-sized manufacturing firms, using a comprehensive instrument to measure overall IT sophistication along two dimensions, namely IT usage and IT management. Taking organizational size and environmental uncertainty into account, it was found that IT sophistication is positively related to structural sophistication, IT usage is positively related to organizational performance, and the relationship between IT management and structural sophistication is stronger among the better-performing firms than among the worst-performing firms.     

The effects of business systems leveraging on supply chain performance: Process innovation and uncertainty as moderators

Rooted in the profit-seeking motives of social exchange theory, this study aims to investigate the factors that facilitate leverages of firm’s business systems and their sharing of information with group members, as well as the impacts of business systems leveraging (BSL) on information sharing and supply chain performance. Simultaneously, the moderating effects of uncertainty and the degree of process innovation on the relationship between BSL and supply chain performance are also estimated. The analytical results indicated that proactive technological orientation, information technology (IT) connectivity, supply chain member pressure, and member relationship quality encourage firms to combine their business systems with those of other business partners. Interestingly, in a situation where there is high demand and an uncertain supply, the impact of BSL on supply chain performance is low, while the moderating effect of process innovation on the relationship between BSL and supply chain performance is significant. Finally, it is suggested that firms implementing BSL work to upgrade their technology maintain tight relationships with supply chain partners and create innovation in all aspects of their business processes in order to survive in the highly competitive IT environment.     

External Web content and its influence on organizational performance

Research into the Internet has experienced a tremendous growth within the field of information systems. In this sense, the recent literature focuses on more complex research topics. However, there is a need to further investigate into the more basic and primary use of Internet, the external Web site to interact with stakeholders. By external, we mean publicly accessible contents. This paper develops a framework that allows evaluation of external Web content of business Web sites and examines the influence on firm performance. Here, external Web content is studied according to three Web orientations: e-information, e-communication, and e-transaction. In addition, differences in external Web content are analysed according to two contingency factors: business size and business industry. To achieve these goals, a sample comprising 288 Spanish SMEs firms was employed. The results show a positive relationship between external Web content and firm performance. Furthermore, this research indicates the existence of complementarities among the Web orientations. Thus, existing e-information was found as critical for enabling e-transaction to impact upon firm performance. Additionally, e-information and e-communication (jointly considered) were found to mutually reinforce the impact of e-transaction on firm performance. The results also confirm that external Web content is not related to business size and differs slightly by business industry.     

How Should a Small Company Interact in Its Business Network to Sustain Its Exchange Effectiveness?

In this paper we followed the dynamic alignment between networking approaches and business development of a small firm in the printing industry, with the aim of investigating how a small firm embedded in its network can deal with networking paradoxes when developing its business, such that it efficiently maintains its existing business and keeps its flexibility to develop new business. The empirical contribution of this paper lies in the use of a longitudinal case study that enables us to show the intermediary functions of counterparts along the path of a small firm's business and network development. Three mediating functions of counterparts are introduced: the relating, joining and insulating functions. In the study we saw that joining functions of intermediaries were especially used in opportunity creation, while insulating functions of intermediaries were especially used in opportunity exploitation. The case study indicates an evolution into an efficient sales network with an important partner who is not willing to develop new business with Atlas. An explanation for the unwillingness to see the focal firm as a development partner might be found in its network position, reflected in the moderate technological and business integration of their product in customer applications, the weak contact of focal firm with end users, and the insulating function of distributors and original equipment manufacturers, who isolated the focal firm from end users. Managerial implications are drawn and will be investigated in further research.