IT Investments, Alignment and Firm Performance: Evidence from an Emerging Economy

Abstract

This study presents and tests a model in which the effect of IT investments on firm revenues is associated with the dimensions of IT-business alignment in an emerging market context. We disaggregate firms’ IT-business alignment into three dimensions: (1) IT investment-business strategy alignment, (2) IT delivery-business priority alignment, and (3) IT change-business change alignment. Using a secondary data set comprising more than two hundred Indian companies, we find that IT delivery-business priority alignment and IT change-business change alignment more strongly moderate the relationship between IT investments and firm revenues. Specifically, firms with IT change-business change alignment and IT delivery-business priority alignment have higher revenue at higher levels of IT investment than firms that display IT investment-business strategy alignment. Our additional exploratory analyses demonstrate firms with IT change-business change alignment outperform firms that show alignment at other dimensions of IT-business alignment at the high levels of software and service investments

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