Article2014

How Social Capital Among Information Technology and Business Units Drives Operational Alignment and IT Business Value

Heinz‐Theo Wagner · Daniel Beimborn · Tim Weitzel

166 citations0/0 files storedJournal of Management Information Systems

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Information Technology Governance and Strategy Information Systems Education and Curriculum Development Information Systems Theories and Implementation

Abstract

It is widely acknowledged that information technology (IT) and business resources need to be well aligned to achieve organizational goals. Yet, year after year, chief information officers still name business-IT alignment a key challenge for IT executives. While alignment research has matured, we still lack a sound theoretical foundation for alignment. Transcending the predominantly strategic executive-level focus, we develop a model of "operational alignment" and IT business value that combines a social perspective of IT and business linkage with a view of interaction between business and IT at nonstrategic levels, such as in daily business operations involving regular staff. Drawing on social capital theory to explain how alignment affects organizational performance, we examine why common suggestions such as "communicate more" are insufficient to strengthen alignment and disclose how social capital between IT and business units drives alignment and ultimately IT business value. Empirical data from 136 firms confirms the profound impact of operational business-IT alignment, composed of social capital and business understanding of IT, on IT flexibility, IT utilization, and organizational performance. The results show that social capital theory is a useful theoretical foundation for understanding how business IT alignment works. The findings suggest that operational alignment is at least as important as strategic alignment for IT service quality; that managers need to focus on operational aspects of alignment beyond communication by fostering knowledge, trust, and respect; and that IT utilization and flexibility are appropriate intermediate goals for business-IT alignment governance.

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References

1981Evaluating Structural Equation Models with Unobservable Variables and Measurement Error 1988On the Evaluation of Structural Equation Models 1998Social Capital, Intellectual Capital, and the Organizational Advantage 2000Structural Equation Modeling and Regression: Guidelines for Research Practice 1998SOCIAL CAPITAL AND VALUE CREATION: THE ROLE OF INTRAFIRM NETWORKS.1996Prospering in Dynamically-Competitive Environments: Organizational Capability as Knowledge Integration 1999Strategic alignment: Leveraging information technology for transforming organizations 2004Review: Information Technology and Organizational Performance: An Integrative Model of IT Business Value1

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