Testing a model of the relationships among organizational performance, IT-business alignment and IT governance.

Abstract

Information Technology (IT) is often viewed as a resource that is capable of enhancing organizational performance. However, it is difficult for organizations to measure the actual contribution of IT investments. Despite an abundance of literature, there is an insufficiency of generally applicable frameworks and instruments to help organizations definitively assess the relationship among organizational performance, IT-business alignment, and IT governance. Previous studies have emphasized IT-business alignment as an important enabler of organizational effectiveness; however, the direct and indirect effects of IT governance have not been incorporated into these studies. The purpose of this study was (1) to propose a new model that defines the relationships among IT governance, IT-business alignment, and organizational performance, (2) to develop and validate measures for the IT governance and IT-business alignment constructs, and (3) to test this IT Governance-Alignment-Performance or "IT GAP" model. This study made some novel contributions to the understanding of the factors affecting organizational performance. The quest for IT-business alignment in the MIS literature has been based on the presumption that IT contributes directly to organizational performance. However, this study found that although IT-business alignment does contribute to organizational performance, IT governance is an important antecedent of both IT-business alignment and organizational performance. The major contributions of this work are the development and validation of uni-dimensional scales for both IT-business alignment and IT governance, and the confirmation of the validity of the IT GAP model to explain the hypothesized relationships among the three constructs. Future studies may improve upon this research by using different organizations settings, industries, and stakeholders. This study indicates that in order for organizations to improve the value, contribution, and alignment of IT investments they first need to improve the ways in which they govern their IT activities and the processes and mechanisms by which IT decisions are made.

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