In recent years, chief information officers have begun to report exponential increases in the amounts of raw data captured and retained across the organization. Managing extreme amounts of data can be complex and challenging at a time when information is increasingly viewed as a strategic resource. Since the dominant focus of the information technology (IT) governance literature has been on how firms govern physical IT artifacts (hardware, software, networks), the goal of this study is to extend the theory of IT governance by uncovering the structures and practices used to govern information artifacts. Through detailed interviews with 37 executives in 30 organizations across 17 industries, we discover a range of structural, procedural, and relational practices used to govern information within a nomological net that includes the antecedents of these practices and their effects on firm performance. While some antecedents enable the speedy adoption of information governance, others can delay or limit the adoption of information governance practices. Once adopted, however, information governance can help to boost firm performance. By incorporating these results into an extended theory of IT governance, we note how information governance practices can unlock value from the ever-expanding mountains of data currently held within organizations.
The alignment of information technology (IT) and business strategy is a perennial challenge for corporate executives. While earlier studies confirm the value of alignment, there is still some question as to how alignment creates value and the level at which value is created. In this research, we use a series of theoretical arguments based on the interconnected structure of the value chain to consider the extended effects of alignment at the process level. Since processes are often linked to create a complex chain of activities, the absence or presence of alignment in any process could have implications for business performance elsewhere in the value chain. Minimally aligned processes can not only disrupt performance within the focal process, but their effects may also be felt further downstream in the form of bottlenecks and a diminution in the business value of IT. Using a simplified form of the value chain and data from matched surveys of business and IT executives at 317 U.S. and EU firms, we examine how the effects of alignment on a given process spill over into processes further downstream, creating higher IT business value in those downstream processes. We also show that these spillover effects continue along the length of the value chain and do not diminish based on distance from the focal process. Our results reinforce the call for firms to improve the fit between business and IT strategy by showing how efforts to improve alignment in a given process can deliver a stream of benefits along the value chain. This research provides a fresh perspective on the value of alignment, facilitating a deeper understanding and appreciation of the link between strategic IT alignment and firm performance.
Strategic information technology alignment remains a top priority for business and IT executives. Yet with a recent rise in environmental volatility, firms are asking how to be more agile in identifying and responding to market-based threats and opportunities. Whether alignment helps or hurts agility is an unresolved issue. This paper presents a variety of arguments from the literature that alternately predict a positive or negative relationship between alignment and agility. This relationship is then tested using a model in which agility mediates the link between alignment and firm performance under varying conditions of IT infrastructure flexibility and environmental volatility. Using data from a matched survey of IT and business executives in 241 firms, we uncover a positive and significant link between alignment and agility and between agility and firm performance. We also show that the effect of alignment on performance is fully mediated by agility, that environmental volatility positively moderates the link between agility and firm performance, and that agility has a greater impact on firm performance in more volatile markets. While IT infrastructure flexibility does not moderate the link between alignment and agility, except in a volatile environment, we reveal that IT infrastructure flexibility has a positive and significant main effect on agility. In fact, the effect of IT infrastructure flexibility on agility is as strong as the effect of alignment on agility. This research extends and integrates the literature on strategic IT alignment and organizational agility at a time when both alignment and agility are recognized as critical and concurrent organizational goals.
With the move to an information-based economy, financial services has become a key contributor to the U.S. gross domestic product. Even as consolidation reduces the number of banks, small banks with under $100 million in assets continue to report higher profit margins than large banks with over $100 million in assets. Lacking scale, small banks employ a service-oriented business strategy (customer intimacy), whereas large banks focus on productivity and throughput (operational excellence). Information technology (IT) plays a key role in applying each strategy, but as banks move toward customer intimacy in general, the challenge is to grow without undermining service quality. Using a balanced panel data set from 43 U.S. banks, this paper finds that banking strategies are becoming more customer focused. Yet for large banks in particular, IT remains resolutely operations focused. This misalignment could restrict future banking performance. In this way, this paper contributes to the service science literature by using size to dissect banking strategies and performance.
Although research has made significant strides in recent years in evaluating the performance impacts from information technology (IT), a dearth of easily accessible objective measures, particularly at the process level, continues to limit IT research. Suggestions that researchers use perceptual measures instead are met with claims that the biased nature of perceptions renders them imperfect proxies for the true extent of IT impacts. In this paper, we use sensemaking theory to explore this claim. We outline a model relating what executives notice about process-level IT impacts with sensemaking-based perceptions of IT impacts at the firm level, and firm performance as the ultimate arbiter of perceptual accuracy. Estimating the model with survey data from executives in 196 firms, we find that executives' perceptions are more fact than fiction. While perceptions are not a perfect proxy for hard-to-find objective measures, perceptual accuracy should stimulate greater consideration of executives' perceptions in future IT business value research.
Even after a decade of research and discussion, strategic alignment, denoting the fit between information technology (IT) and business strategy, remains an enduring challenge for firms worldwide. In this paper, we go beyond the dominant firm-level alignment paradigm by utilizing a value disciplines perspective on strategic foci to conceptualize alignment at the process level. Theory would then suggest that alignment should be tightest in processes that are considered critical to each firm's strategic focus. Using data from matched surveys of IT and business executives at 241 firms, we detect support for this locus of alignment argument when alignment is identified using profile deviation or moderation. We also find a positive link between alignment and perceived IT business value in each of five primary processes in the value chain. By bringing a process-level view to the study of alignment and its impacts, we go beyond a discussion on the extent of fit--a cornerstone of the literature--to whether firms are pursuing the right type of fit for the particular mix of processes underlying their strategy. In this way, a process-level perspective can foster a deeper and more meaningful understanding of how alignment affects firm performance. Our results also show a need for managers to reconsider the steps taken to align IT and business strategy by looking more closely at how IT can support individual processes rather than at how IT can support an entire strategy.
Despite significant progress in evaluating the productivity payoffs from information technology (IT), the inability of traditional firm-level economic analysis to account fully for the intangible impacts of IT has led to calls for a more inclusive and comprehensive approach to measuring IT business value. In response to this call, the authors develop a process-oriented model to assess the impacts of IT on critical business activities within the value chain. Their model incorporates corporate goals for IT and management practices as key determinants of realized IT payoffs. Using survey data from 304 business executives worldwide, they found that corporate goals for IT can be classified into one of four types: unfocused, operations focus, market focus, and dual focus. Their analysis confirms that these goals are useful indicators of payoffs from IT in that executives in firms with more focused goals for IT perceive greater payoffs from IT across the value chain. In addition, the authors found that management practices such as strategic alignment and IT investment evaluation contribute to higher perceived levels of IT business value.