Does it pay to align a firm’s competitive strategy with its industry IT strategic role?

While researchers have increasingly recognized the importance of information technology (IT) in leveraging a firm’s competitive strategy for achieving superior firm performance, our understanding of the nature of how a firm’s competitive strategy aligns with its industry IT strategic role and how such alignment influences firm performance remains limited. Drawing upon strategic alignment perspective, this study aims to theorize and empirically test how the firm’s competitive strategy (i.e., cost leadership, differentiation, and dual strategy) aligns with its industry IT strategic role to improve firm performance. Based on the data of Chinese publicly listed firms during 2009–2015, our results indicate that different competitive strategy aligns with different industry IT strategic roles for achieving superior performance. Specifically, cost leadership strategy aligns with automate IT strategic role, dual strategy aligns with informate IT strategic role, and differentiation strategy aligns with transform IT strategic role in generating superior firm performance. We also discuss the theoretical and practical implications of the current study.     

A methodology of constructing a decision path for IT investment

Information Technology (IT) may be used for organizational efficiency, but should also be flexible to adapt to the rapidly changing competitive business environment. In competitive business circumstances, management continually asks: (1) How flexible must the firm be in investing in IT in order to meet unknown business needs in the future? At the same time, how efficient must the firm be in order to meet current business needs?; (2) How well must the firm align its business strategy with IT investment in order for it to support its strategic goals?; (3) how to construct a decision path for IT investments with respect to flexibility, efficiency and alignment between business strategy and IT investments?Although many researchers have struggled to answer these questions, they generally provide no means for incorporating these factors into the IT investment decision process.This paper suggests a method that identifies the degree of flexibility required (α-value), and accounts for and incorporates the α-value in making IT investments. The proposed method is based on a product development method called Quality Function Deployment (QFD). It will be applied to a real case of the “H-company” in Korea to validate and evaluate the proposed methodology.     

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.     

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.     

Does IT pay to focus? An analysis of IT business value under single and multi-focused business strategies

Previous research finds that firm performance is highest when firms maintain a singular strategic focus as opposed to a multi-focused strategy. Yet, from an IT perspective, there is still some debate as to whether IT business value or the contribution of IT to firm performance is also maximized when firms maintain a single-focused strategy. Using the notion of value disciplines to model strategic foci, we find in a matched survey of executives in 241 firms that IT business value is highest in firms with a multi-focused business strategy and lowest in those with a single focus. We also find a relationship between strategic foci and the primary locus of IT value within the value chain for all focus-types except those emphasizing operational excellence. If all firms are using IT to reduce operating expenses, operationally excellent firms may find it increasingly difficult to sustain a low-cost advantage over time through IT.     

Ideal patterns of strategic alignment and business performance

Strategic alignment or “fit” is a notion that is deemed crucial in understanding how organizations can translate their deployment of information technology (IT) into actual increases in performance. While previous theoretical and methodological works have provided foundations for identifying the dimensions and performance impacts of the strategic alignment between IT, strategy, and structure, few attempts have been made to test the proposed theory empirically and operationalize fit systemically. Based on a gestalt perspective of fit and theory-based ideal coalignment patterns, an operational model of strategic alignment is proposed and empirically validated through a mail survey of 110 small firms. Using cluster analysis, it was found that low-performance firms exhibited a conflictual coalignment pattern of business strategy, business structure, IT strategy, and IT structure that distinguished them from other firms.     

Effects of strategic alignment on IS success: the mediation role of IS investment in Korea

The purpose of this research is to develop a comprehensive information system (IS) evaluation model for IS success linked to organizational performance. The primary focus of this research is to investigate the role of IT investment in business values by means of a group survey of about 300 business executives in Korea. We used the contingency theory to discover the mediation effect of IS investment on strategic alignment and IS success. In contrast to previous research, this study expanded the test scope to IS architecture and organizational structure at the operational level. The results from 273 business executives in Korea indicated that strategy integration with IT is positively related to IT investment, and IT investment is a critical antecedent of IS success. Thus, the implications of the findings are that right-directional IT investment has played an important role in the success of IT companies in Korea.     

The strategic value of IT insourcing: An IT-enabled business process perspective

Although research on the business impact of IT outsourcing abounds, little is known about the relative strategic value of IT outsourcing and IT insourcing. Drawing upon the knowledge-based view of the firm, this study postulates that, compared with IT outsourcing, IT insourcing is more effective for developing IT-enabled business processes (IEBP), which subsequently lead to superior firm performance. Our analysis of the data from InformationWeek and Compustat shows that IT insourcing is positively associated with IEBP, while the relationship between IT outsourcing and IEBP is not statistically significant. We also find that IEBP have a significant influence on firm performance. Finally, the effect of IT sourcing mechanisms on IEBP and the effect of IEBP on firm performance are both moderated by the type of innovation related to IEBP. The results suggest that in order to improve their performance firms should consider IT an integral part of their strategic core and should be proactively involved in the internal development of IT resources. We conclude with managerial implications and directions for future research.     

Causality in the alignment of information technology and business strategy

The need for a link between information technology (IT) use and organizational strategy has been identified and discussed for a number of years. The thrust of this work argues that the motives for investment in IT should derive from firm objectives and, more particularly, from the strategic plan which the organization wishes to pursue. This paper argues that, often, mere lip service is paid to the strategic nature of IT. Further, strategy justification has become a tool for securing investment in IT by circumventing established organizational policy on investments. Many IT investments labelled ‘strategic’ appear to be operational in nature. This paper discusses the nature and evaluation of strategy and relates it to the literature on IT as a strategic tool. The extent to which the relationship between IT and strategy has altered over recent years is subsequently investigated. The implementation process is investigated and evidence of IT investment activities and the returns available to investing organizations are reviewed. The paper argues that there are a number of alternative views on the IT-strategy relationship, some of which are organizationally detrimental.     

IT基础设施与信息系统战略对应模型

IT基础设施是IT组合的基础,其在组织范围内为IT应用和核心业务提供可靠的共享服务。IT基础设施能力关系到企业战略及BPR的成功与否。IT基础设施与信息系统战略之间的对应是战略对应的一项基本问题。该文建立了基础设施与信息系统战略之间的对应模型,并根据该模型采用多目标规划方法和AHP方法解决信息系统规划中的基础设施规划问题,建立了IT基础设施的多目标决策模型。     

Mixed results in strategic IT alignment research: a synthesis and empirical study

The alignment of business strategy and IT has been a top managerial concern for decades. Yet despite much investigation, the effect of strategic IT alignment on organizational performance remains unclear, with mixed results reported in the literature. The purpose of this paper is to advance our understanding of mixed findings in IT alignment research. We first examine inconsistent findings reported in two streams of alignment research: the traditional firm-level IT alignment literature and the emerging literature into process-level IT alignment. We then empirically investigate whether firm- and process-level conceptualizations of IT alignment lead to different conclusions about the effect of alignment on performance. Using data from a survey of 120 firms, we show that firm-level IT alignment and process-level IT alignment yield different conclusions when testing the same theory under the same conditions. We also show that differences in firms’ strategic orientations can help explain these results. This research provides evidence that firm- and process-level conceptualizations of IT alignment are not interchangeable and that the choice of conceptualization can mean the difference between accepting and rejecting a theory.     

基于战略匹配和IT能力的企业IT项目决策

为将战略匹配思想和IT能力对1T项目的影响转化为量化模型,支持企业更科学地进行IT决策,引入网络层次分析法模拟企业战略与IT战略之间双向对应和协同关系,分别借助Porter的战略理论和Henderson的战略匹配模型来代表企业战略和IT战略。考虑各种IT能力对IT战略和IT项目的影响,提出基于战略匹配和IT能力的IT项目决策模型,并以实例说明该模型的使用方法和有效性。     

From IT deployment capabilities to competitive advantage: An exploratory study in China

As more and more companies are deploying, or plan to deploy, information systems, the organizational capabilities to effectively deploy information technologies to support and shape businesses become increasingly important. While many studies have focused on how to acquire state-of-the-art information technologies and on how to effectively utilize implemented information technologies, more studies are still needed to investigate how a company can successfully deploy acquired information technologies to support and shape businesses strategies and value chain activities. IT deployment capabilities are defined as the organizational capabilities to configure and reconfigure a company’s information system by adding new IT components or by adapting the existing information systems in order to make the whole information system available to support and shape businesses. This study identifies and investigates the three building blocks of IT deployment capabilities: strategic IT flexibility, business–IT partnership, and business–IT alignment. Using the resource-based view, we propose a framework to explain the relationship between IT deployment capabilities and competitive advantage. The research model is tested on data collected in China. Results show that strategic IT flexibility and business–IT partnership have direct impacts on competitive advantage, while business–IT alignment has an indirect impact on competitive advantage. The effect of business–IT alignment on competitive advantage is fully mediated by strategic IT flexibility and business–IT partnership. The results provide support for the relationship between IT deployment capabilities and competitive advantage. The study presents implications for how to develop IT deployment capabilities and how to generate business value from IT investment.     

The impact of industry contextual factors on IT focus and the use of IT for competitive advantage

Only limited empirical evidence has confirmed the effectiveness of strategic information systems planning (SISP) and there is no evidence that investment in mission-critical systems leads to improved performance under conditions of environmental uncertainty and information intensity. This study tests the extent to which such contextual factors impact business dependence on IT and two SISP practices: IT participation in business planning and the alignment between the IT and the business plans. It also examines the influence of IT dependence and SISP on the use of IT for competitive advantage. Using structural equation modeling on postal survey data from 161 firms, it found a positive and significant impact of the contextual factors on business dependence on IT and the two SISP practices and between these factors and the use of IT for competitive advantage. Data also revealed significant differences between industry types and environmental uncertainty but not information intensity. Implications are discussed.     

A structural equation model for analyzing the impact of ERP on SCM

Enterprise resource planning (ERP) and supply chain management (SCM) represent important information technology investment options for operation or IT managers, and have been acclaimed in the practitioner and academic literature for their potential to improve business performance. The purpose of this article is to provide further insights into the adoption of ERP systems and the impacts on firm competence in SCM. We propose a model featuring ERP benefits to firm competences in supply chain management. We also hypothesize that three constructs of ERP benefits positively impact firm competences in SCM. To clarify the relationships among these constructs, structural equation model (SEM) is conducted to examine the model fit and nine hypotheses. The SEM results clearly demonstrate that there exist close interrelations among the benefits of implementing ERP systems and firm competences in SCM. The data from Taiwanese IT firms was collected through interviewing of experts and surveys. The results provide empirical evidence that the beneficial impacts of ERP on the supply chain do lead to better overall SCM competence. That evidence confirms that operational benefits, business process and management benefits, and strategic IT planning benefits of ERP in turn enhance firm competences of SCM in operational process integration, customer and relationship integration, and planning and control process integration.     

Green practices-IS alignment and environmental performance: The mediating effects of coordination

The problem of environmental sustainability has been growing in recent years with an interest from both researchers and practitioners. A major gap that exists is the absence of empirical studies that addressed business value of green IS (information systems). Thus, drawing on the resource-based view of the firm and IT (information technology) business value literature, this study aims to develop a comprehensive research model of green practice-IS alignment, the key cross-functional coordination of green practices with manufacturing and marketing functions, and firm performance. The study provides a better understanding of the relationship between green practice-manufacturing coordination and green practice-marketing coordination, and how both variables mediated the relationship between green practices-IS alignment and environmental performance. The data used in this study were collected from manufacturing firms. The results show that a firm’s green practices-IS alignment had a positive effect on both green practices-manufacturing coordination and green practices-marketing coordination. In turn, both green practices-manufacturing coordination and green practices-marketing coordination are the significant predictors of environmental performance. Meanwhile, green practices-IS alignment had an indirect effect on environmental performance via both green practices-manufacturing coordination and green practices-marketing coordination. Moreover, the findings of this study show that environmental performance is an important predictor of economic performance.     

B-SCP: A requirements analysis framework for validating strategic alignment of organizational IT based on strategy,context, and process

Ensuring that organizational IT is in alignment with and provides support for an organization's business strategy is critical to business success. Despite this, business strategy and strategic alignment issues are all but ignored in the requirements engineering research literature. We present B-SCP, a requirements engineering framework for organizational IT that directly addresses an organization's business strategy and the alignment of IT requirements with that strategy. B-SCP integrates the three themes of strategy, context, and process using a requirements engineering notation for each theme. We demonstrate a means of cross-referencing and integrating the notations with each other, enabling explicit traceability between business processes and business strategy. In addition, we show a means of defining requirements problem scope as a Jackson problem diagram by applying a business modeling framework. Our approach is illustrated via application to an exemplar. The case example demonstrates the feasibility of B-SCP, and we present a comparison with other approaches.     

Business–IT alignment maturity of companies in China

Business–IT alignment has been consistently ranked as the number one concern of IT and business executives. Maintaining the alignment has been found to lead to stronger business performance, higher perceived value of IT and improved IS strategic planning; therefore addressing the issue is both important and timely. The economic growth in China in the last decade has led to greater availability of IT and its widespread use as a critical resource. Despite the increasing interest in Chinese IS issues by both researchers and practitioners, empirical research focusing on human- and organization-related IS issues in China is scarce. Using data collected from 130 business and IT executives from 22 companies in China, 11 of which were multinationals operating in China, we explored several questions in the area of business–IT alignment. An instrument designed to measure the six dimensions of business–IT alignment maturity was cross-validated using a sample of companies in China. Then, the instrument was refined to develop a measurement method that offered better reliability and validity in the context of Chinese companies. The relationship between the alignment maturity dimensions and IS strategic alignment was then examined. Finally, the alignment maturity of companies in China was assessed to provide a snapshot of business–IT alignment in China. A comparison between the 11 Chinese domestic companies and 11 multinational operating in China provided insight into the different IT practices of the two types of companies. Implications for researchers and practitioners are discussed.     

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.     

Relation of CIO background,IT infrastructure,and economic performance

The literature of the past three decades has not provided a consistent picture of payback for IT investment. Firm strategies and infrastructure play a part in determining return on investment and, in recent years, chief information officer (CIO) characteristics have been cited as essential factors in ensuring economic returns for IT investment. In our study we related CIO background and attitude toward IT investment to the objective measures of a firm's performance. The financial measures tended to be higher when the CIO was from IT rather than general management, however, an IT manager in a firm that had a strategic orientation to IT rather than a utilitarian one was more likely to have higher financial performance. Thus, although a CIO should have a technological background, the CIO who has a strategic rather than utilitarian orientation is more likely to help in forming a highly profitable company.