How Information Technology Governance Me

RESEARCH NOTE
HOW INFORMATION TECHNOLOGY GOVERNANCE

MECHANISMS AND STRATEGIC ALIGNMENT INFLUENCE
ORGANIZATIONAL PERFORMANCE: INSIGHTS FROM A
MATCHED SURVEY OF BUSINESS AND IT MANAGERS1
Shelly Ping-Ju Wu
Electronic Commerce Research Center, National Sun Yat-Sen University, 70 Lien-Hai Road,
Kaohsiung 804 TAIWAN {ceci.wu@gmail.com} and
Computer Information Systems, Georgia State University, Atlanta, GA 30302 U.S.A.
Detmar W. Straub
Fox School of Business, Temple University, 1801 Liacouras Walk, Philadelphia, PA 19122 U.S.A.
and Korea University Business School, Seoul, KOREA {straubdetmar@gmail.com}
Ting-Peng Liang
Department of Management Information Systems, National Chengchi University, Taipei 11605 TAIWAN
and National Sun-Yat Sen University, Kaohsiung TAIWAN {is.tpliang@gmail.com}
Previous research has proposed different types for and contingency factors affecting information technology
governance. Yet, in spite of this valuable work, it is still unclear through what mechanisms IT governance
affects organizational performance. We make a detailed argument for the mediation of strategic alignment in
this process. Strategic alignment remains a top priority for business and IT executives, but theory-based
empirical research on the relative importance of the factors affecting strategic alignment is still lagging. By
consolidating strategic alignment and IT governance models, this research proposes a nomological model
showing how organizational value is created through IT governance mechanisms. Our research model draws
upon the resource-based view of the firm and provides guidance on how strategic alignment can mediate the
effectiveness of IT governance on organizational performance. As such, it contributes to the knowledge bases
of both alignment and IT governance literatures. Using dyadic data collected from 131 Taiwanese companies
(cross-validated with archival data from 72 firms), we uncover a positive, significant, and impactful linkage
between IT governance mechanisms and strategic alignment and, further, between strategic alignment and
organizational performance. We also show that the effect of IT governance mechanisms on organizational
performance is fully mediated by strategic alignment. Besides making contributions to construct and measure
items in this domain, this research contributes to the theory base by integrating and extending the literature
on IT governance and strategic alignment, both of which have long been recognized as critical for achieving
organizational goals.
1
Keywords: IT governance mechanisms, strategic alignment, organizational performance, degree-symmetric

measures
1
Rajiv Kohli was the accepting senior editor for this paper. Sid Huff served as the associate editor.
The appendices for this paper are located in the “Online Supplements” section of the MIS Quarterly’s website (http://www.misq.org).
MIS Quarterly Vol. 39 No. 2, pp. 497-518/June 2015 497

Wu et al./Influence of IT Governance Mechanisms & Strategic Alignment
Introduction authority for resources and the responsibility for IT are shared
between business partners, IT management, and service
That information technology (IT) enhances the ability of providers (Weill 2004; Weill and Ross 2004, 2005). To
enterprises to survive in the highly competitive global implement IT governance effectively, a set of IT governance
marketplace of the 21st century has become more and more mechanisms is required to encourage the congruence with the
evident. The effective use of information technology, how- organizational mission, strategy, values, norms, and culture
ever, relies heavily on good IT governance. When IT and (Ali and Green 2012; De Haes and Van Grembergen 2005,
corporate governance go awry, the results can be devastating. 2008, 2009; Herz et al. 2012; Huang et al. 2010), which in
The bankruptcy of Enron in 2001 and the enactment in the turn promotes desirable IT behaviors and governance
United States of the Sarbanes-Oxley Act in 2002 are manifes- outcomes (Weill and Ross 2004). Hence, an organization’s
tations of the simple truth of this viewpoint and these events IT governance mechanisms are often indicative of the sophis-
from the past have today elevated IT governance to a high tication of its management (both IT and business) capability
position of relevance within business and IT management (Bradley et al. 2012; Karimi et al. 2000).
research.
Recently, researchers have started to identify key governance
Demonstrating the value of IT investment is fundamental to mechanisms contributing to effective IT governance such as
the contribution of the information systems discipline, as structural mechanisms (Ali and Green 2012; Bowen et al.
noted by Agarwal and Lucas (2005). In particular, IT 2007; Huang et al. 2010; Karimi et al. 2000; Prasad et al.
governance is critically important because of its substantial 2012) and relational mechanisms (e.g., Ali and Green 2012;
impact on the value generated by the investment in IT. In Bradley et al. 2012). Whereas organizations sense that IT
fact, Weill and Ross (2004, pp. 3-4) argue that “effective IT governance is very important to the enterprise, they are
governance is the single most important predictor of the value uncertain about how IT should be strategically aligned with
an organization generates from IT.” Indeed, Weill and Ross’s corporate objectives (ITGI 2009). Although most IT-related
(2004, 2005) research shows that top-performing firms gener- activities still rely heavily on IT professionals, non-IT CEOs
ate returns on their IT investments up to 40 percent higher may just now be coming to the realization of the criticality of
than their competitors because companies can get more value IT alignment. This realization has long been the case in the
from IT by well designing and communicating IT governance IT profession, on the part of both academics and practitioners.
processes. In other words, business value can be created by Given that the desirable outcome of effective IT governance
implementing an effective IT governance framework (Kearns is to achieve the congruence between IT strategies and
and Sabherwal 2007). corporate objectives, however, few research papers have
theoretically and empirically examined the effect of IT
The impact of IT governance on firm performance have been governance mechanisms on strategic alignment.
well established in previous studies, yet there still remains a
gap explaining exactly how IT governance influences firm Strategic alignment and planning have been a top managerial
performance. Different perspectives have been adopted with concern since the beginning of the IS profession (Luftman and
regard to the relationship between IT governance and firm Kempaiah 2008; Taylor et al. 2010) and its positive impacts
performance. For example, Tanriverdi (2006) studied how IT on firm performance have been well established in previous
governance moderates the influence of IT relatedness on firm research (Chan et al. 1997; Chan et al. 2006; Oh and Pinson-
performance. Lazic et al. (2011) found that IT governance is neault 2007; Preston and Karahanna 2009; Tallon 2008;
positively related to business performance through IT related- Tallon and Pinsonneault 2011). Strategic alignment can be
ness and business process relatedness. Prasad et al. (2012) classified along two dimensions (Reich and Benbasat 2000):
suggest that IT governance structures contribute to firm (1) the intellectual and (2) the social. Studies on the intellec-
performance through IT-related capabilities which improve tual dimension concentrate on the content of plans and
the effectiveness and efficiency of the internal business pro- planning methodologies while those dealing with the social
cesses. Yet, among these few works on the governance– dimension focus on the people involved in the creation of
performance link, there is no consensus as to exactly how IT alignment (Reich and Benbasat 1996). By focusing on the
governance enhances performance and it is still unclear by intellectual dimension (alignment of strategy, plans, opera-
which precise mechanisms IT governance exerts its effects on tions, or processes) rather than the social dimension, the
firm performance. causal link between strategic alignment and performance has
been supported in studies such as Tallon and Pinsonneault
In the literature, IT governance is said to be concerned with (2011). Studies on the social dimension, on the other hand,
IT project selection and prioritization issues and how the tend to investigate the antecedents of social dimension of
498 MIS Quarterly Vol. 39 No. 2/June 2015

alignment and the relationship between the social dimension Theoretical Development
and the intellectual dimension (e.g., Preston and Karahanna
2009; Reich and Benbasat 2000), but these works have not Our basic research model, sans indications of how constructs
extended their impacts to downstream performance. To fill were measured, appears as Figure 1.
this research gap, we formulate a nomological network to
connect together IT governance, strategic alignment, and firm By way of preview, the overall rationale for the model is that
performance. the implementation of IT governance mechanisms can facili-
tate the alignment between IT strategy and business strategy,
Despite a considerable body of work on IT governance and which thereby leads to higher organizational performance.
strategic alignment, solid empirical evidence is needed to Although the relationships between these three constructs
demonstrate their interrelationship. Exactly what are the have been discussed and tested pairwise in previous studies,
mechanisms through which the business–IT strategic align- all three have rarely been simultaneously examined and
ment and IT governance have a downstream effect (if they do) validated. One of the earliest research works to conceptualize
on organizational performance? We believe that strategic the link between IS strategic alignment and business
alignment can be achieved via implementing well-designed IT performance, for example, was Henderson and Venkatraman
governance mechanisms. As noted by Huang et al. (2010, p. (1993), with the authors arguing that the lack of alignment
288), “well-designed and orchestrated IT governance mech- between business and IT strategies undermines the realization
anisms are expected to produce IT-related decisions, actions of value from IT investments. Chan et al. (1997) provided
and assets that are more tightly aligned with an organization’s empirical evidence to support such a relationship and further
strategic and tactical intentions.” Drawing upon De Haes and highlighted the importance of realized IS strategy (strategy
Van Grembergen’s (2009) study, which explores the impact evident in IS deployments, in contrast to planned strategy).
of IT governance implementations on strategic alignment, we Consistent with Chan et al., we examine the fit between
formulate a nomological network to connect together IT business strategic orientation and IS strategic orientation in
governance, strategic alignment, and firm performance. terms of the support that information systems provide for
Because strategic alignment and IT governance mechanisms realized business strategies. That is, when IT supports and
have rarely been studied together, their causal relationship in enables business strategy, the organization is better able to
promoting firm performance remains theoretically under- achieve its goals, thus resulting in improved organizational
performance. However, neither Henderson and Venkatraman
developed. In other words, our understanding of how IT
nor Chan et al. provide a practical framework for the realiza-
governance influences firm performance through strategic
tion of IS strategic alignment. Although IT governance has
alignment, and the mechanisms through which business and
been identified as one potential enabler of strategic alignment,
IT strategies align, is embryonic. These gaps are also of
few attempts have ever been made to empirically test the
considerable practical significance because they address
proposed theory.
necessary governance practices that impact the ability of IT to
sustain strategic alignment. As strategic alignment requires
The relationship between IT governance and strategic align-
integration between IT and business units, understanding the
ment was not established until De Haes and Van Grember-
mechanisms implemented to facilitate the relationship be-
gen’s (2009) exploratory study of IT governance mechanisms
tween these two parties becomes salient. The objective of this for a better alignment between business and IT. Van Grem-
paper, thus, is to address these persisting gaps. bergen and De Haes (2012) further indicate that the imple-
mentation of processes, structures, and relational mechanisms
The remainder of this paper is arranged as follows. We first “enable both business and IT people to execute their respon-
review the theoretical foundations of our model, synthesizing sibilities in support of business/IT alignment and the creation
a diverse body of literature to present supporting perspectives of business value from IT enabled investments” (pp. 2-3).2
on the link between IT governance mechanisms, strategic
alignment, and organizational performance. Next, we intro- To better illustrate the proposed relationships of our research
duce our methodology and data, drawn from a matched model in a nomological network, we adopt the resource-based
survey of IS managers and business executives in 131 view (RBV) of the firm to explain the impact of IT govern-
Taiwanese organizations and discuss the archival data
gathered from 72 firms to cross-validate the sample and
2
results. After discussing our results and their implications for Their original proposition is presented in Van Grembergen and De Haes
(2009, p. 6) as Enterprise Governance of IT (enables)  Business/IT
IS research and practice, we conclude with research findings
Alignment (enables)  Business Value from IT Investments, which provides
and contributions. a conceptual foundation for our research model.
MIS Quarterly Vol. 39 No. 2/June 2015 499

Figure 1. Conceptual Model of Our Research
ance on IS strategic alignment. From a resource complemen- Therefore, we posit that an organization’s alignment between
tarity perspective, IT capabilities are the routines or practices core business strategy and IT strategy is likely to mediate the
that complement IT to deliver its value to firms (Aral and impact of IT governance mechanisms on firm performance.
Weill 2007; Melville et al. 2004; Ravichandran and Lert- We next provide theoretical arguments for the hypothesized
wongsatien 2005). As IT governance is the capacity exer- relationships.
cised by the board, executives, and IT management to control
the implementation of IT strategy (Van Grembergen 2002) IT Governance Mechanisms
and to govern the use of the key assets of the organization
using mechanisms that enable business and IT executives to Research on IT governance started with studies dealing with
formulate aligning policies and procedures (Weill and Broad- the forms of IT governance (e.g., Brown 1997; Brown and
bent 1998; Weill and Ross 2004), we consider IT governance Magill 1994) and contingencies for IT governance (e.g.,
mechanisms to be human IT resources,3 and furthermore, they Sambamurthy and Zmud 1999). More recently, researchers
complement IT in delivering value to organizations. Ac- have begun to investigate the impact of specific governance
cording to the RBV, firm resources are the main predictors of mechanisms on the overall effectiveness of IT governance
firm performance (Barney 1991; Grant 1991; Hall 1992; (Ali and Green 2012; Bowen et al. 2007; Bradley et al. 2012;
Wernerfelt 1984) and IT resources can bring about differen- De Haes and Van Grembergen 2009; Huang et al 2010; Herz
tiation in firm strategies (Bharadwaj 2000). If these resources et al. 2012; Prasad et al. 2012; Prasad et al. 2010) and identify
are hard to replicate and are not perfectly mobile, they have coordination governance mechanisms in federated IT organi-
the potential for providing sustainable competitive advantages zations (Williams and Karahanna 2013). Table 1 summarizes
(Mata et al. 1995). Thus, organizations should foster mech- recent research on IT governance mechanisms. Two main
anisms that can create inimitable synergy between IT and observations emerge from Table 1. First, despite differences
business to leverage core resources. IT governance mech- in the definition of IT governance, IT governance mechanisms
anisms are unique to the organization in that they provide the in general consist of structures, processes, and relational
contextual setting for business and IT people to be involved mechanisms to enhance business/IT alignment, and the
in IT decision making and share knowledge in order to research upholds positive associations between IT governance
mechanisms and IT governance performance.
enhance IT support for business objectives.
Second, only the relationships of certain IT governance
3
According to Aral and Weill (2007, p. 765), IT resources are “combinations mechanisms with IT governance performance have been
of investment allocations and a mutually reinforcing system of competencies examined. More complete and solid empirical support for the
and practices”; thus IT governance mechanisms can be considered to be IT three types of governance mechanisms identified and their
resources. Therefore, our research model actually is consistent with the
concept of human IT resources defined in Bharadwaj (2000) and reflects the
relationship with strategic alignment is still missing from the
schematic relationship of IT Investments  Mediating Factors  IT-Based literature. For example, Huang et al. (2010) found that
Value as illustrated in Kohli and Grover (2008, p. 27). employing formal IT steering committees was associated with

Table 1. Summary of Prior Research on IT Governance Mechanisms

Study Research Questions/Purpose Definition of IT Governance Research Findings
Bowen et al. To examine the factors that IT governance is “the IT related decision Effective IT governance is positively
(2007) influence IT governance making structure and methodologies associated with a shared understanding
structures, processes, and implemented to plan, organize, and of business and IT, active involvement
outcome metrics. control IT activities” (p.194). of IT steering committees, a balance of
business and IT people for IT decision
making, and well-communicated IT
strategies and policies.
De Haes and Van “(1) How are organizations IT governance “consists of the There is a positive relationship between
Grembergen implementing IT governance?” leadership and organizational structures the use of IT governance practices and
(2009) (p. 123). (2) “What is the and processes that ensure that the business/IT alignment. Highly aligned
relationship between IT organization’s IT sustains and extends organizations leverage more mature IT
governance and business/IT the organization’s strategy and governance practices.
alignment?” (p. 124). objectives” (p. 123).
Huang et al. To better understand the nature The goal of IT governance is “to direct IT steering committees comprised of
(2010) of effective IT steering and oversee an organization’s IT-related executive-level participants adopted a
committees. decisions and actions such that desired broader, longer-term orientation. The
behaviors and outcomes are realized” SMEs with broadly-disseminated and
(p. 289). easily-accessed IT governance policies
had greater success in IT use.
Prasad et al. “To obtain a deeper under- “IT governance specifies the decision IT steering committee is positively
(2010) standing of the effectiveness of rights and accountability framework to related to the level of IT-related
firm’s IT governance initiatives” encourage desirable behavior in the use capabilities.
(p. 215). of IT (Weill and Ross 2004). It also
includes the foundational mechanisms in
the form of the leadership, and
organizational structures and processes
that ensure that the organization’s IT
sustains and extends the organization’s
strategies and objectives” (p. 216).
Ali and Green “What individual IT governance “A structure of relationships and The existence of governance
(2012) mechanisms impact significantly processes to control the enterprise in mechanisms such as: (1) a culture of
a higher perceived level of order to achieve the enterprise’s goals compliance in IT; (2) corporate
overall effective IT by adding value while balancing risk communication systems support; (3)
governance?” (p. 180). versus return over IT and its processes” involvement of senior management on a
(p. 180). regular basis; and (4) a corporate
performance measurement system
significantly impact the level of effective
IT governance.
Bradley et al. “(1) What are some of the IT governance is “the capacity of top Structural and relational mechanisms
(2012) antecedent factors to IT management to control the formulation such as CIO structural power, IT-
governance in hospitals? and implementation of the IT strategy via business mutual participation, and an
(2) What are some of the impor- organizational structures and processes entrepreneurial culture on IT
tant consequent variables that that produce desirable behaviors, which governance can positively affect IT
are affected by IT governance will ensure that IT initiatives sustain and governance and indirectly, IT value
in hospitals?” (p. 157). extend the organization’s strategy and creation.
objectives” (p. 157).
Chong and Tan “(1) How do collaborative net- IT governance is regarded as “a Socio-technical factors such as an
(2012) works establish effective IT framework in specifying the allocation of active involvement of a governing body,
governance? (2) What socio- IT related decision making rights and a coordinated communication process
technical factors are essential to responsibilities to the right organizational and the presence of relational culture
the effectiveness of IT Gover- group and deploying relational and attitudinal commitment are essential
nance in a collaborative mechanisms to support the alignment to the effectiveness of IT governance in
network? How do these factors between business objectives and IT” (p. a collaborative network.
influence IT Governance 34).
structures, processes and
relational mechanisms?” (p. 36).

Table 1. Summary of Prior Research on IT Governance Mechanisms (Continued)

Study Research Questions/Purpose Definition of IT Governance Research Findings
Herz et al. (2012) “(1) What are relevant IT IT governance is “integral part of Multisourcing governance mechanisms
governance mechanisms based corporate governance”, which in a business group were determined to
on the current body of knowl- “addresses the definition and implemen- be either company-internal mechanisms
edge? (2) Which mechanisms tation of processes, structures and or supplier-related mechanisms.
could a multisourcing Gover- relational mechanisms in the Structures, processes and relational
nance framework in a business organization that enable both business mechanism can be configured to match
group encompass?” (p. 5033). and IT people to execute their different relationships of multisourcing
responsibilities in support of business/ IT between the business groups.
alignment and the creation of business
value from IT-enabled business
investments” (p. 5036).
Prasad et al. “(1) What are the effective IT “IT governance essentially places Organizational IT governance structures
(2012) governance structures for structure around how organizations IT provide the platform for better under-
collaborative organizational strategy aligns with business strategy. standing and effective use of the newly
structures? (2) How do we This IT-business alignment will ensure acquired IT resources.
evaluate the effectiveness of that organizations continue to achieve
these IT governance their strategies and goals, and
structures?” (p. 200). implementing ways to evaluate its
performance” (p. 201).
higher success in IT use. More recently, Ali and Green sible for making IT decisions. Alignment processes are
(2012) suggest significant positive relationships between the formal processes such as IT investment proposals and evalua-
overall level of effective IT governance and the involvement tions that ensure IT alignment with organizational policies.
of senior management in IT, the existence of an ethic or a Communication approaches4 are announcements and channels
culture of compliance in IT, as well as corporate communi- that spread principles and policies of IT governance and
cation systems. Despite these efforts, it is still unclear how IT decision-making outcomes. Weill and Ross argue that effec-
governance mechanisms increase firm performance and the tive governance deploys these three mechanisms, which in
role strategic alignment plays in such a relationship. turn promote desirable IT behaviors and lead to desired
performance goals.
Before proceeding to look at the linkages between IT Gover-
nance mechanisms and IS strategic alignment, it is helpful to In the present study, we chose not to focus on the relationship
have a working definition. To delineate the necessary ele- between the principal stakeholders. Instead, we focus on the
ments of an IT governance framework, Peterson (2004), Van effect of building proper communication channels to dissem-
Grembergen et al. (2004), and Weill and Woodham (2002) inate IT principles. Hence communication approaches is the
propose that IT governance can be deployed via a mix of term of choice for one of the antecedents to IS strategic align-
structures, processes, and relational mechanisms. Structures ment rather than relational mechanisms. Based on De Haes
involve clearly defined roles and responsibilities and a set of and Van Grembergen (2009) and Weill and Ross, our
IT/business committees such as IT steering committees and decomposition of IT governance mechanisms consists of three
business strategy committees. Processes refer to formal pro- major governance mechanisms: (1) decision-making struc-
cesses of strategic decision making, planning, and monitoring
for ensuring that IT policies are consistent with business
needs (Van Grembergen et al. 2004). Finally, relational
mechanisms, which include business/IT interaction and shared
learning and communication, are crucial to the IT governance 4
According to Weill and Ross, communication approaches are intended to
framework. “spread the word about IT governance decisions and processes and related
desirable behaviors throughout the enterprise” (p. 104). Hence, better
Similarly, Weill and Ross (2004, p. 85) propose that “effec- communications actually provide the necessary contextual setting for social
tive IT governance deploys three different types of mech- alignment (the shared understanding between the CIO and the top manage-
anisms: decision-making structures, alignment processes, ment team about the role of IS in the organization), which focuses on the
shared knowledge, mutual understanding, and commitment among IS and
and communication approaches.” In their scheme, decision-
business people about mission, objectives, and plans as to the ways in which
making structures are organizational units such as com- IS contributes to business success (Martin et al. 2005; Preston and Karahanna
mittees, executive teams, and business/IT managers respon- 2009; Reich and Benbasat 1996, 2000).

tures, (2) formal processes,5 and (3) communication ap- herwal and Chan 2001; Tallon 2008; Tallon et al. 2000;
proaches. In this research, we argue that the inclusive models Tallon and Pinsonneault 2011); (2) alignment of plans (e.g.,
of IS strategic alignment should embrace critical aspects of IT Hirschheim and Sabherwal 2001; Kearns and Sabherwal
governance mechanisms. We provide our theoretical rea- 2007; Reich and Benbasat 1996); and (3) alignment of infra-
soning next. structure and processes (Henderson and Venkatraman 1993).
Although antecedents of the intellectual dimension of stra-

The Influence of IT Governance Mechanisms tegic alignment have been studied to some degree by prior
on IS Strategic Alignment researchers, substantive research on IT governance as a
critical predictor of alignment has not been forthcoming.
IS Strategic Alignment Based on prior empirical research on alignment, Chan et al.
(2006) posited five antecedent factors affecting alignment
In the strategy literature, alignment has been seen both as a between business and IS strategies. These factors are shared
construct to be measured at a single point in time (e.g., in a domain knowledge, IS/business planning sophistication, prior
cross-sectional study using a variance or factor model) and as IS success, environmental uncertainty, and organization size.
a process to be understood over time. In this research, we Other antecedents recognized in prior research include senior
focus on factor models highlighting antecedents or drivers of executive support for IT, well-prioritized IT projects,
alignment. Therefore, unlike other researchers focusing on business–IT partnerships, and CIO characteristics, attributes,
the process aspects of strategic alignment (e.g., Chan et al. abilities, and leadership (Baker 2004; Luftman et al. 1999);
1997; Chan et al. 2006; Sabherwal and Chan 2001; Tallon CIO-TMT (top management team) communication, partici-
2008), our research focuses on the content of alignment in pation, and planning (Chan et al. 2006; Hussin et al. 2002;
Luftman et al. 1999; Reich and Benbasat 2000); IT
that we explore how well the content of the realized business
sophistication and external IT expertise (Chan et al. 2006;
strategy matches the content of the realized IT strategy. By
Hussin et al. 2002); information intensity of the value chain
this definition, IS strategic alignment is conceptualized as a
(Kearns and Lederer 2003); a track record for the IS
state or an outcome of its antecedents (Chan et al. 1997).
department/CIO (Chan et al. 2006; Luftman et al. 1999); and
Determinants of alignment are likely to be mechanisms that
shared CIO–TMT understanding (Preston and Karahanna
drive alignment (for example, communication and planning).
2009; Tan and Gallupe 2006). Despite such substantive
This perspective better describes how IS strategic alignment
efforts, no one has investigated antecedents that deal with IT
is realized through IT governance mechanisms and which
governance having a critical impact on the alignment between
component of strategic alignment contributes more to
IT and business at the strategic level.
organizational competitiveness.
Social alignment, especially shared understanding, has been
IS strategic alignment includes different dimensions. Reich identified as an important antecedent of intellectual IS
and Benbasat (2000) defined the well-known social– strategic alignment (Armstrong and Sambamurthy 1999; Chan
intellectual dichotomy. The social dimension focuses on the 2002; Preston and Karahanna 2009; Tan and Gallupe 2006).
values, communications, and mutual understanding of the Preston and Karahanna (2009) developed a nomological
actors in the organization while the intellectual dimension network in which the shared understanding (which captures
examines the strategy, structure, and planning methodologies. important aspects of the social dimension of IS strategic
alignment) between the chief information officers (CIOs) and
Given that our research focuses on the alignment between top management team (TMT) about the role of IS in the
business and IT strategies, the term IS strategic alignment in organization is posited to be a proximal antecedent of the
this paper, as in many other studies (e.g., Chan et al. 1997; intellectual dimension of IS strategic alignment. Shared
Luftman and Brier 1999; Preston and Karahanna 2009; understanding is enabled by increasing the respective level of
Sabherwal and Chan 2001; Tallon 2008; Tallon et al. 2000; business and IS knowledge of the CIO and TMT (Preston and
Tallon and Pinsonneault 2011), refers to the intellectual Karahanna 2009) and it is developed through knowledge
dimension of strategic alignment. Prior research on intellec- integration between the CIO and CEO (Armstrong and
tual alignment includes work on: (1) alignment of strategy Sambamurthy 1999; Kearns and Lederer 2003). The literature
(Chan et al. 1997; Henderson and Venkatraman 1993; has identified two key components for knowledge integration
Luftman and Brier 1999; Oh and Pinsonneault 2007; Sab- (Armstrong and Sambamurthy 1999): systems of knowing and
objective knowledge (business knowledge and IS knowledge).
5 Systems of knowing refer to “organizational arrangements
To distinguish from IS strategic alignment, we change the original term
alignment processes into formal processes; however, the operational
that enable interaction among team members for sharing their
definition remains the same. perspectives, pooling knowledge, and developing shared

understanding” (Preston and Karahanna 2009, p. 164). Ac- part of the executive team, the level at which most strategy
cording to Armstrong and Sambamurthy (1999), objective discussions occur. This enables the CIO to obtain a global
knowledge includes the explicit and visible domain knowl- and holistic perspective on the organization, its goals and
edge of the CIO and TMT. While Preston and Karahanna’s strategies, and enhances the CIO’s understanding of the
study provides some useful guidance for clarifying the rela- TMT’s vision of the organization. These structural mech-
tionship between the social dimension and the intellectual anisms influence IS strategic alignment by enabling access to
dimension of IS strategic alignment, empirical research to both IT and business units for knowledge exchange and
more exactly specify (1) the relationship between IT Gover- activity participation (Karahanna and Preston 2013).
nance mechanisms and IS strategic alignment and (2) its
effect on organizational performance in a nuanced causal Formal processes for strategic information systems planning
structure is still missing. and project/portfolio governance ensure that the CIO first
understands the business needs, next prompts the CIO and
The following section explains how IT governance mech- TMT to reach common organizational goals and objectives
anisms enable IS strategic alignment by providing the through better organizational planning, and finally facilitates
institutionalized contexts (i.e., organizational arrangements) the alignment of the organization’s IS strategy with its busi-
for CIO and TMT domain knowledge integration. ness strategy. For IT governance to be effective, IT policies
have to be communicated throughout the enterprise. Commu-
nication approaches allow the IT and business executive
IT Governance Mechanisms Enable management to communicate and make sure that their roles
IS Strategic Alignment and responsibilities are clearly understood by each other.
Communication mechanisms in this study include situations
IT governance mechanisms help achieve the intellectual IS where the CIO serves on executive committees and discusses
strategic alignment in that the implemented governance mech- IT issues via the established agenda. These conditions enable
anisms clarify the roles and responsibilities of the involved the CIO to interact with the TMT about how IS can add value
parties and how the authority for IT is shared between and support business strategies. Through this communication
business partners, IT management, and service providers mechanism, business knowledge can also be transferred back
(Weill 2004; Weill and Ross 2004, 2005); thus, they can be to the CIO. At the same time, the CIO is able to articulate a
considered to be organizational arrangements that enable vision of IT’s role, which helps the TMT understand the role
shared understanding among team members. First, IT steering of IS within the organization, in turn enabling the transfer of
committees are one of the “effective governance mechanisms IS knowledge to the business executives. For shared under-
for aligning IT-related decisions and actions with an organi- standing to develop, the CIO needs business knowledge and
zation’s strategic and operational priorities” (Huang et al. the TMT needs some strategic IS knowledge. The CIO’s
2010, p. 289). Steering committees are comprised of high- business knowledge and the TMT’s strategic IS knowledge
level representatives who are ensured with the task of linking enable the “IT and business executives, at a deep level, to
IT strategy with business strategy by matching corporate understand and be able to participate in the others’ key pro-
concerns with IT support (Nolan 1982). Indeed, steering cesses and to respect each others’ unique contribution and
committees are invaluable in establishing the tone of challenges” (Reich and Benbasat 2000, p. 86). Thus, shared
business–IT relationships (Ross et al. 1996). The presence of knowledge enables the CIO and TMT to create a shared
IT steering committees provides the visibility of IT initiatives, understanding of how IS can be applied to enhance organi-
an essential tool for top management to appreciate IT in the zational performance, which is a critical and indispensable
organization (Prasad et al. 2010). Moreover, having a antecedent to IS strategic alignment.
steering committee composed of both business unit leaders
and CIOs can help ensure close coordination of business and
IT in the organization and hence the strategic alignment IS Strategic Alignment as Mediator
(Bowen et al. 2007). Finally, structures that allow the CIO to
directly report to the CEO and/or the COO6 ensure that IT is Business value can be achieved through IT by implementing
an effective IT governance framework (Kearns and Sabherwal
2007). IT governance mechanisms serve as organizational
6
A firm’s reporting structure has been closely tied to strategy and perfor- arrangements that allow CIOs and business executives to
mance (Chandler 1962). CIOs may report to C-level executives other than
better contribute their domain knowledge, interact with each
the CEO and the CFO, such as the COO (Stephens et al. 1992). According
to Luftman (2003), companies with CIOs reporting to CEOs or COOs have other to share perspectives, and enable the transfer of business
better IT/business alignment. Although having the CIO report to the COO is knowledge and strategic IS knowledge between these two
not very common (Banker et al. 2011), in our sample, some companies do groups. For example, Xue et al. (2013) posit that the allo-
have a reporting structure in which the CIO reports to both the CEO and the
COO. cation of decision rights to the IT unit allows IT managers to

use more of their IT domain knowledge in strategic decision Research Methodology

making and help other functional managers identify potential
risk-mitigating solutions which they may not be able to In order to empirically validate our research model, a field
identify themselves. Thus IT governance mechanisms bridge study was conducted. For data collection, a research instru-
IT and business units to promote a shared understanding of ment was created to adapt existing validated questions wher-
each other and to enhance the strategic fit between these two ever possible. Past literature was reviewed to specify a set of
units for common organizational goals (Karimi et al. 2000). items that ensured content validity and to achieve minimal
Shared understanding of business and IT objectives and well- overlap between constructs (Kerlinger 1986; Straub,
Boudreau, and Gefen 2004). Items associated with these
communicated IT strategies and policies lead to effective IT
constructs were assessed using a five-point Likert type scale.
governance performance (Bowen et al. 2007). Therefore, the
ultimate goal of increased business value can be achieved by
For purposes of content validity, semi-structured interviews
setting up an IT governance framework with well-designed with firm-matched CIOs and CEOs were conducted to
implementation of these three types of mechanisms (De Haes evaluate the appropriateness of language and content of the
and Van Grembergen 2009; Weill and Ross 2004). measurement items for IT governance. Some of the content
was modified and then recast by two experienced IS scholars.
Strategic alignment is one of the mediating factors considered
to be important and necessary conditions in the chain of IT All items were further refined using a small-scale pre-test of
value creation (Kohli and Grover 2008). It enables companies the questionnaire (Straub, Boudreau, and Gefen 2004)
to maximize IT investments by achieving the congruence conducted with 36 Executive MBA students with business
between IT and business strategies and plans, leading to and IT backgrounds attending a large Taiwanese university.
greater profitability (Papp 1999). Without ensuring that IT The purpose of this exercise was to assess logical consistency,
strategies are well aligned with business strategies, superior ease of understanding, sequencing of items, and contextual
performance can never be assured. While the intellectual relevance. By so doing, we trust that measurement error was
strategic alignment is the subsequent outcome of the level of reduced and the downstream internal validity of the study
mutual understanding between CIOs and TMTs, IT Gover- improved. In addition, we collected data from both IT and
nance mechanisms actually provide necessary conditions for business respondents. The purpose was twofold: first, effec-
such shared understanding to occur. This is because IS tive IT governance and strategic alignment need to be posi-
intellectual alignment can be viewed as an “knowledge inte- tioned as an “end-to-end” responsibility of both business and
gration outcome” resulting from the integration of the IT; second, the use of paired responses can avoid the possible
business and IS strategies (Karahanna and Preston 2013; bias in single-sided self-reported data. For example, CIOs
Kearns and Sabherwal 2007). As such, IT governance mech- might tend to overestimate the quality of their governance
anisms such as joint committees and process teams with IT structures, and, incidentally, CEOs may also overestimate
memberships can facilitate business and IT professionals’ business performance.
collaboration on business-oriented IT decisions, thus bringing
about a fusion of business and IT thinking, which is, To meet these two requirements, we collected matched
accordingly, a key determinant to top governance perfor- responses and calculated the degree-symmetric values
mance (Weill and Ross 2004). Therefore, to achieve superior (Straub, Rai, and Klein 2004) from both sides of the dyad as
governance, it is necessary to evaluate and ensure the quality indicators for validation of our research model. The degree-
of the implemented governance mechanisms. Once the symmetric metric focuses on the extent to which the business
governance mechanisms have been implemented, critical and IT key informants are harmonious as well as the level or
business strategies and IT strategies have to be aligned for degree of the overall agreement. In short, this metric captures
both the extent to which the dyad agrees and the extent of that
subsequent improved firm performance. Taken together, we
overall agreement, assuming that agreeing at a high degree of
posit that
strategic alignment is superior in impacting downstream
variables to agreeing at a low degree of alignment. The final
Hypothesis: IS intellectual strategic alignment
operationalization of each construct is described next.
mediates the positive impact of IT governance
mechanisms on organizational performance.7
Constructs
7
We focus on this single hypothesis because the relationships between IT
IT Governance Mechanisms
governance and intellectual strategic alignment and between intellectual
strategic alignment and performance have been well tested separately in
previous research. As noted below, we too found strong support for these Items for measuring IT governance focus on the degree to
links even though they are not being hypothesized. which an organization implements necessary and well-

balanced governance mechanisms. To explore how organi- realized business strategy and realized IT strategy (Chan
zations are implementing IT governance to achieve a better 1992). Furthermore, while some researchers have focused on
fusion of business and IT goals, De Haes and Van Grem- the process of achieving alignment (e.g., Chan et al. 1997;
bergen (2006, 2009) proposed a set of best IT governance Chan et al. 2006; Sabherwal and Chan 2001; Tallon 2008),
practices. These are based on the now-standard framework of others have focused on the content, that is, how well firms
governance structures, processes, and relational mechanisms. have actually demonstrated alignment of IS with organi-
They argue that each of these practices serve specific or zational strategy (Hussin et al. 2002). Using a content
multiple goals in the challenges offered by complex IT Gover- approach, Hussin et al. (2002) propose nine items dealing
nance. Using a Delphi approach to assure adequate content with product-oriented, market-oriented, and quality-oriented
validity, they interviewed 22 senior IT and business business strategies and then nine parallel IT strategies to align
professionals, and subsequently proposed the top 10 most with each of these nine business strategies. Product-oriented
important IT governance practices.8 They proffer these as a strategy deals with product differentiation and new product
minimum baseline for an IT governance mix of measures. strategy; market-oriented strategy includes new market and
intensive marketing strategy; and quality-oriented strategy
Similarly, Weill and Ross (2004) proposed three mechanisms consists of service quality, product quality, and production
through which enterprises implement their governance efficiency.
arrangements: structures, processes, and communication ap-
proaches. By examining and comparing the definitions and In a departure from prior research focusing on the process of
items from De Haes and Van Grembergen (2009) and Weill achieving alignment, we operationalize how well firms
and Ross, we adapted items for structural mechanisms and actually demonstrate alignment of IS with organizational
formal processes from both studies. Based on these two strategy (i.e., the content approach) because this better cap-
studies, once organizations established governance decision- tures our argument that IS strategic alignment in this research
making units such as committees and executive teams as well is the realized state achieved by implementing IT governance
as formal processes for monitoring activities related to mechanisms. The degree of the realized strategic alignment
established IT policies, the alignment of IT and business is influenced by the degree of the implemented IT governance
strategy can be better ensured. Although De Haes and Van mechanisms. In addition, while many researchers (e.g.,
Grembergen’s concept of relational mechanisms is quite Tallon and Pinsonneault 2011) have treated strategic align-
similar to Weill and Ross’ communication approaches, our ment as a reflective construct, we model it as formative,
research focuses on the effect of building proper commu- consisting of three types of strategies that associate with firm
nication and channels to disseminate IT principles, and so we performance.9 Why? First, in terms of the effect on
selected Weill and Ross’ communication approaches as the increasing organizational competitiveness, we considered
third dimension of IT governance mechanisms. The commu- these three dimensions appropriate for assessing IS strategic
nication approaches include having the CIO hold membership alignment. Many IT studies have simply posed a question
on the executive committee as a proper channel to report and such as: “On a scale of 1 to 5, how do you rate strategic
discuss IT-related issues via established agendas and having alignment in your organization?” While this can be helpful as
the CIO or a similar role articulate a vision of IT’s role. a single indicator of overall alignment, more detailed scales
offer greater means of testing measurement validity (Chan and
Reich 2007). In addition, our three dimensions (product,
IS Strategic Alignment market, and quality) encompass the major business strategies
that most companies employ, and they contribute inde-
In the IS literature, the term fit has often been used to refer pendently to organizational performance, which is assessed in
specifically to the measurement of alignment (e.g., Bergeron our study as customer perspective, operational excellence, and
et al. 2001). The strategic alignment literature suggests that financial returns. In short, elements of our mediating variable
alignment can be examined from many points of view, alignment map well with our dependent variable performance,
including planned and realized strategies. Because our focus as suggested by Burton-Jones and Straub (2006) for stronger
is on the realized strategies of the organization, we adopt the nomologies. For example, a better alignment of IS to support
definition of fit to be the degree of coherence between new market strategies may possibly increase financial returns
in the future but not necessarily increase operational excel-
lence at the same time.
8
We adopted the 10 best practices from De Haes and Van Grembergen (2009)
as questionnaire items for IT governance mechanisms. Matching them with
9
the three types of mechanisms followed the original classification of De Haes These three types of strategies do not necessarily covary, as argued in the
and Van Grembergen (2009) and definitions provided by Weill and Ross methodological literature on formatively measured constructs (Diamanto-
(2004). poulos and Siguaw 2006; Jarvis et al. 2003).

As for measurement of the degree of alignment, Venkatraman revenue per annum). Hence, we used ROE, ROI, and ROA
(1989) offers six interpretations of fit, two of which are as the formative elements of financial performance.
appropriate for this research: the matching and the
moderation perspectives. Although both approaches have The customer perspective is comprised of product leadership,
been widely used in previous research (e.g., Chan et al. 1997; customer satisfaction, and Wrm image, all of which were
Hussin et al. 2002), neither has dealt with the measurement measured by the customer view of a firm’s products and ser-
challenge where different combinations can yield the same vices, their overall satisfaction level, and how they perceive
alignment score.10 To avoid a measurement approach that the firm image (Kaplan and Norton 2004). Reflecting
might jeopardize the validity of our analytical results, we customer requirements, these components are key to building
adopted the mathematical formulations calculating the degree- good relationships with customers and increasing loyalty
symmetric value from Straub, Rai, and Klein (2004, p. 99).11 (Hayes 2008), which, in turn, leads to long-term profitability
and business success (Reichheld et al. 2000). To access the
performance of internal business processes, we use opera-
Organizational Performance tional excellence, defined as a focal firm’s responsiveness to
customers and improvements in productivity relative to its
To measure organizational performance, we believe, consis- competition (Rai et al. 2006). We use self-reported measures
tent with Rai et al. (2006), that organizational aggregate since they have been widely used in organizational research
performance is best measured relative to competition. Thus, and it is believed that senior managers have reasonable
we adopt three dimensions of performance from the balanced information and perspective about organizational performance
scorecard (Kaplan and Norton 1992): (1) financial perfor- (Dess 1987; Powell 1992). However, in order to cross-check
mance, (2) customer perspective, and (3) internal business the validity of the self-reported measures of performance, we
processes. Because of the scorecard articulation of the collected archival data with accounting-based measures of
linkages between performance measures and business stra- performance from public sources for a subset of firms in our
tegy, Banker et al. (2004) argue that “by combining these sample. The cross-validation of our self-report data is
different perspectives, the balanced scorecard helps managers described in the next section.
understand the interrelationships and tradeoffs between
alternative performance dimensions and leads to improved Table C1 in Appendix C summarizes the definitions and
decision making and problem solving” (p. 423). Notably, we references for the constructs and subconstructs with the
did not include items for the balanced scorecard’s learning indicators associated with each subconstruct. The complete
and growth dimension since it was less likely that our questions used for measuring each construct are enumerated
respondents could rank their own employees’ learning skills in Appendix A.
and innovative potentials relative to their competitors. In
addition, based on Rai et al., we concur that these three
dimensions are sufficient and appropriate. Control Variables
For assessing financial performance, financial metrics Not all research has concluded that strategic alignment has a
covering the major categories were required. Weill and Ross direct or positive impact on performance and these incon-
(2004) identify three different dimensions: profit (surrogates sistent results are perhaps due to a lack of control variables in
being return on equity [ROE], return on investment [ROI], the analyses (Chan and Reich 2007). Chan et al. (2006)
and percent profit margin); asset utilization (measured by found, for example, organizational size is associated with
return on assets [ROA]); and growth (percent change in strategic alignment. While firm size is usually treated as one
of the antecedents to organizational performance, we model
it as a control variable directly affecting strategic alignment
10
For example, in the matching approach, (5 – 5) = (1 – 1); in the moderation in that our main focus is the mediation effect of IS strategic
approach, (4 × 1) = (2 × 2). In either case, the interpretation of alignment can alignment. We were trying to rule out rival explanations of
be totally different but the resulting scores are the same.
alignment other than IT governance.12 Since it is easier for
11 workers to communicate and coordinate with each other in
For example, if business strategy value is 2 and IT strategy value is 3 on a
five-point scale, the degree value (DV), defined as the summated index of the
very small firms, small-sized firms may tend to be relatively
IT and business strategy values of the construct, is calculated as better aligned while medium-sized firms may show less evi-
(2/5 + 3/5)/2 = 0.5; then the symmetry value (SV), the ratio of the IT strategy
value to the business strategy value, is 2/3 = 0.66. Finally, the degree-
12
symmetric value (DSV), defined as the extent to which the IT and business To be complete, we also tested the effects of firm size on organizational
informants actually accord with each other (as to the overall agreement), is performance and industry type on strategic alignment and no significant
computed as (DV + SV)/2 = (0.5 + 0.66)/2 = 0.58. results were found.

dence of strategic alignment (Chan and Reich 2007). In both business and IT departments in medium- to large-sized
addition, important antecedents to alignment were contingent organizations.13 For a sampling frame of working adults, we
on the industry in which the organization operated (Chan et contacted EMBA programs from different Taiwanese univer-
al. 2006). Xue et al. (2012) also found that the impact of IT sities and their related professional and school associations
asset portfolio on organizational efficiency varies in different such as the University–Industry Cooperation Center and
industry environments. For example, IT asset portfolio is alumni associations for volunteer participants. We collected
associated with a greater increase in operational efficiency in essential data via mail, e-mail, and online questionnaires. In
less dynamic industry environments. In that our sample was that we needed to collect dyadic data from both top IT and
collected from medium- to large-sized firms across different business managers, we eliminated responses with single
industry types, we specified firm size and industry type as respondents and those with incomplete values. In the data
control variables for ruling out alternative explanations in our analysis, we achieved matched responses from a total of 136
research model. Total number of full-time equivalent em- organizations14 to validate the proposed research model,
ployees was used as a proxy of firm size. As for the industry resulting in a response rate of 71 percent,15 a rate that is
type, Tan (1995) found that IT is more responsive to busi- considerably higher than matched surveys found elsewhere in
nesses emphasizing innovation in their product and market the alignment literature using a similar approach for data
strategies. As such, IT industry may have higher performance collection (e.g., Karahanna and Preston 2013).
attributed by IT supporting business strategies compared to
other industries. We thus categorized the industry type into The majority of the respondents (more than 70 percent) were
two groups: IT versus non-IT. high to middle level managers or executives from business
units and IT departments, persons who held positions that are
well suited with the subject matter of this investigation and
Data Collection were likely to be informed about strategies and other
decisions within their firms. The mean age of respondents
Our study employed a matched-pair design, which helped to was 47 and average work experience was 12.5 years. More
limit common method bias (CMB) between those variables than 66 percent had a Master’s or a higher educational degree.
preceding performance in the model (i.e., IT governance Participating organizations represented a variety of industries
mechanisms and strategic alignment) and the dependent including manufacturing, services, IT, and others, and 70 per-
variable organizational performance. The fact that these cent of the organizations had more than 1000 employees.
dyadic data were gathered from distinct and independent
sources (Podsakoff et al. 2003) and were subsequently trans- Nonresponse bias was tested through t-tests on the indepen-
formed into degree-symmetric values greatly reduces the dent variables. Assuming that the last group of respondents
chances of CMB. In addition, this dyadic design allows is most similar to non-respondents, a comparison of the first
researchers to use items that are suitable to each respondent’s and last timed quartile of respondents provides a test of
domain knowledge (Tallon and Pinsoneault 2011). In our response bias in the sample (Armstrong and Overton 1977;
design, we asked executives or senior managers from both IT Bailey 1978). The first and last quartiles were compared on
and business departments to answer governance- and key study variables and there were no significant response
alignment-related questions. These questions require respon-
dents with sufficient management knowledge from both
business and IT domains and cover responsibilities of both 13
Since the participating organizations in this study were medium to large in
sides. In addition, since the use of paired responses can avoid size and the three industries included account for over 90% of the 1,000
the possible bias in single-sided self-reported data (e.g., CEOs largest firms in Taiwan, as identified in the 2007 directory published by
may overestimate business performance), we also asked IT China Credit Information Services, Ltd., we considered them an appropriate
managers to answer the performance questions and we target population for this study.
calculated the degree-symmetric values for data analysis. 14
After the cross-validation process using archival financial data, five firms
from the same financial industry were dropped. This resulted in 131 firms for
The research instrument targeted high-level business and IT our final data analysis.
executives (such as CEOs and CIOs) or senior managers
ranging from mid-sized (with more than 100 employees) to 15
We employed a dual-stage strategy for data collection. We first contacted
large (with more than 1000 employees) firms in Taiwan. volunteers, and then we asked them to help recruit another respondent (top
Since IT governance is practiced more often in larger executives) from the same organization (snowballing); therefore, the response
companies and strategic level decisions should involve higher rate actually represented the return rate with complete matched instruments
per organization. That is, two complete instruments from the business and
level managers/executives, we concluded that the most
IT departments from the same organization were required for every dyadic
suitable respondents would be the most senior managers from sample.

biases across these variables (decision-making structure, t = In order to estimate the significance of the indicator weights
0.349; formal process, t = 0.768; communication approach, (Gefen et al. 2000), a bootstrapping technique with 500 re-
t = 0.179; product-oriented alignment, t = 0.263; quality- samples was used. No minimum threshold values for second-
oriented alignment, t = 1.482; market-oriented alignment, order indicator weights have been established and so none
t = 1.04). were dropped, consistent with the suggestions of Petter et al.
(2007). We determined that the instrument was conceptually
In addition, since it is virtually impossible to get information coherent and that construct validity was sufficient to proceed
about the whole population, in this case, comparison (χ²) tests to the structural tests of the model. All measurement valida-
of the characteristics (firm size and industry type) between the tion procedures and tests for the formative measurement
first and last quartile were utilized and these found no signi- model are described in detail in Appendix C.
ficant differences (p = 0.228 for firm size and 0.110 for
industry type). The comparison results indicated that non-
response bias was not a pervasive threat in this research. The
Test of Structural Model
descriptive statistics of the sample characteristics can be
found in Appendix B.
Figure 2 shows graphically the results of the tests of the
structural model. The hypothesis was tested by examining the
size and significance of the paths in the model and the
Data Validation and Analysis explained variance or R2 values (Barclay et al. 1995; Chin and
Gopal 1995). Based on a review of the prior literature, we
included firm size as a control variable for IS strategic align-
Measurement Validation
ment, and industry type (IT versus non-IT) for organizational
performance.
The instrument was validated via partial least squares (PLS)
using SmartPLS 2.0 (Ringle et al. 2005). PLS is well suited
for our study because our research model employs formative We calculated the a priori statistical power of our sample for
indicators (Chin 1998). After purification (MacKenzie et al. each of the two dependent variables (IS strategic alignment
2011), the psychometric properties of the instrument were and organizational performance) in our structural model to
assessed. As shown in Appendix C, the research measures ensure that any nonsignificant effects would be interpretable.
are all multidimensional, second-order formative/first order The statistical power to detect significant effects for each
formative (Jarvis et al. 2003). According to Jarvis et al. dependent variable (given the number of predictors, explained
(2003), constructs should be modeled as formative if the variance, sample size, and a significance level of 0.05) was
following decision rules hold: (1) the direction of causality is 0.99, which exceeded the recommended guideline of 0.80
from indicators to constructs, (2) the indicators are not (Cohen 1988), suggesting that our sample offers sufficient
interchangeable, (3) covariation among indicators is or is not statistical power for testing the research model.
present; and (4) the nomological net (antecedents and
consequences) of indicators differs. These four decision rules The results in Figure 2 indicate that all weights and paths
suggest that both first-order and second-order constructs in were significant at the .05 alpha protection level and that the
our research model can only be modeled as formative. For model explains 30.3 percent of the variance in organizational
example, while the formative conceptualization of IT performance and 27 percent of the variance in IS strategic
governance mechanisms was based on the logic that increases alignment. The standardized path coefficient from IT Gover-
in decision-making structures, formal processes, and nance mechanisms to IS strategic alignment is 0.520 and the
communication approaches increase the degree of IT effect of IS strategic alignment on organizational performance
governance mechanisms, these three aspects of governance is 0.551, both significant at an alpha protection level of
are certainly not interchangeable and do not necessarily 0.05—and both of sufficient magnitude that it is clear that the
covary. Similarly, organizational performance was assessed effects are substantive.
by three different dimensions—financial returns, customer
perspectives, and operational excellence—the sum of which
we believe sufficient to represent an organization’s overall Archival Data Cross-Validation
performance. Not only do these three aspects not necessarily of Self-Report Data
covary, but they are also not interchangeable. As Jarvis et al.
argue, an increase of any of these three formative indicators To triangulate on these self-report results, we collected avail-
can increase the degree of the overall performance, but not able archival data on firm performance from public sources
necessarily increase the level of the other two indicators. (mainly from the Market Observation Post System website in

Figure 2. Results of Initial Path Analysis
Taiwan). This collation process resulted in a dataset with two and organizational performance, we first performed a Sobel
additional financial measures (ROA and ROE) for a total of test (Baron and Kenny 1986; Kenny 2012; Sobel 1982). This
77 firms. We then conducted multiple cross-validations to technique examines the path coefficients and the standard
assess the quality of the self-report data used to assess perfor- errors of the direct paths between IT governance mechanisms
mance and further exercise the model. In true triangulation (independent variable), strategic alignment (mediating vari-
form, validation of one method (self-reports) also validates able), and organizational performance (dependent variable).
the other, in this case archival method (Campbell 1960), so The indirect effect of IT governance mechanisms on
the ultimate goal of our triangulation was to test for and organizational performance is significant as indicated by this
hopefully find similar outcomes. First, after correlation Sobel test (5.789, p < 0.001).
analysis, five organizations from the financial sector were
removed (from both this dataset and the initial dataset) To determine whether strategic alignment completely or
because the self-report responses were highly inconsistent partially mediates the link between IT governance mech-
with the archival financial reports. We then computed a anisms and organizational performance (Kenny 2012), the
three-year (2009–2011) mean value of the two ROA and ROE direct effect is examined when the mediator is removed from
financial performance measures and reevaluated the research the model. When we remove strategic alignment from the
model via PLS. Significant paths are indeed highly similar model, the direct effect of IT governance mechanisms on firm
(strategic alignment ÷ organizational performance with path performance changes from insignificant to positive and signi-
coefficients of 0.551 using self-reported financial data of 72 ficant (β = 0.408, p < 0.001). This means that IT governance
firms and 0.597 using archival data). Of the variance in mechanisms are positively associated with performance but
organizational performance, the structural models explain only insofar as IT governance mechanisms influence IS
30.3 percent with self-report data and 35.7 percent with archi- strategic alignment. It is only subsequent to this that IS stra-
val data. This cross-validation analysis provides additional tegic alignment contributes to higher organizational perfor-
support for the overall validity of our empirical findings. mance. Thus, the analysis suggests that IS strategic alignment
fully mediates the linkage between IT governance mech-
anisms and organizational performance.
Testing the Main Hypothesis: The Mediating
Effect of IS Strategic Alignment
Discussion and Implications
To assess the significance of the mediating effect of IS
strategic alignment and determine whether it partially or fully Overall, our model suggests, at about 27 percent and 30 per-
mediates the relationship between IT governance mechanisms cent explained variance levels and substantive path coeffi-

cients, that IT governance mechanisms enable IS strategic Implications for Practice

alignment, which itself increases organizational performance,
especially operational excellence and customer attentiveness. The research findings also provide certain implications for
These findings have substantive implications for organiza- practice. First, placing CIOs on executive committees is an
tions implementing IT governance practices in as much as IT effective mechanism for promotion of IT/business alignment.
governance needs to be focused and leveraged in order to While shared understanding (i.e., social alignment) is a criti-
create superior strategic alignment. cal predictor that leads to strengthening the intellectual
dimension of IS strategic alignment (Preston and Karahanna
The magnitude of the significant weights can be used to deter- 2009), our results support the argument that structural
mine the relative importance of indicators in forming a latent governance mechanisms provide the institutionalized context
construct according to Cenfetelli and Basselier (2009). for CIOs and TMTs to participate in the decision-making
Because PLS estimates the measurement model and the process. Together these parties can and should interact with
relationships between constructs simultaneously, the “item each other and share domain knowledge. Moreover, direct
weights of formative constructs display the importance of reporting structures to the CEO enable direct CIO–CEO
their impact” on the dependent variable or the corresponding interactions and hence promote shared understanding which,
latent construct (Chwelos et al. 2001, p. 312). Thus, the in turn, leads to IS-business intellectual alignment. While our
weights on the subconstructs reveal their relative importance results seem to support the effectiveness of such centralized
in determining the latent construct. These weights can be governance structures,16 this may be because hierarchical
interpreted similarly to the estimated beta coefficients from a cultures (such as in Taiwan) are more likely to adopt cen-
multiple regression analysis (Chwelos et al. 2001). That is, tralized governance structures (Sambamurthy and Zmud
for formative indicators, one examines item weights, which 1999) and tend to depend on vertical communication
can be interpreted as a beta coefficient in a standard regres- (Martinsons and Davison 2007).
sion. Since the model was run using standardized construct
values, the beta values can be interpreted directly. Some Banker et al. (2011) also argue that firms that align their CIO
detailed observations regarding the relationships between IT reporting structure with their strategic positioning (e.g., a
governance mechanisms, strategic alignment, and organiza- differentiation strategy with a CIO–CEO reporting structure)
tional performance are called for. First, while the weights will earn superior rents. This finding is consistent with
associated with the three formative indicators of IT Gover- Kearns and Sabherwal (2007) who argue that centralization of
nance mechanisms (i.e., decision-making structure, formal IT decisions affects top managers’ knowledge of IT. This
process, and communication approach) are similar (weights of facilitates business managers’ participation in strategic IT
.404, .398, and .374, respectively), we conclude that these planning and IT managers’ participation in business planning
three mechanisms contribute fairly equally to the intellectual and both of these planning behaviors enhance business–IT
alignment between IT and business strategy. This is consis- strategic alignment.
tent with the IT governance literature that well-balanced
mechanisms lead to effective IT governance (e.g., Weill and In addition, as IT decisions made by steering committees and
Ross 2004). CEO/CIO (corporate level) tend to be a centralized gover-
nance structure, a higher degree of IT governance structural
Second, product-oriented alignment (weight = .545) is more mechanisms heralds at the same time a quite centralized
heavily affected by IT governance mechanisms than quality governance structure. This mechanism design allocates
and market alignment (.283 and .357 weights, respectively). strategic decisions (at the corporate level) to their natural
This seems to imply that the more IT strategy aligns with organizational owners (the CEO, CIO, and top management
business strategy in terms of supporting new product develop- team) and can lead to better fit between business and IT
ment, product diversification, and differentiation strategies, capabilities to create synergies across different units in multi-
the better the overall performance. Market-oriented strategic business organizations (Reynolds et al. 2010).
alignment, which includes alignment in intensive marketing
and new market exploration, occupies the second position. Secondly, the importance of communication approaches can
Finally, the strong effect of strategic alignment on organiza- be explained through the alignment benefits that come from
tional performance suggests that strategic alignment may also
improve organizational performance, especially when it helps 16
organizations to improve how they are being perceived by We found that the majority (more than 65%) of the survey responses for
governance structures answered 4 or 5 on a 1–5 scale, while 3% answered 1
customers (the customer perspective), which is a critical and 12% answered 2, all of which indicates, overall, a fairly centralized
success factor in today’s competitive marketplace. governance arrangement in the sampled Taiwanese firms.

knowledge sharing among IT and business executives and a Contributions to Research

shared understanding of the role and capabilities of IT
(Preston and Karahanna 2009). This shared understanding Our theoretically significant findings show that (1) IT
and knowledge between IT and business executives can best governance mechanisms (decision-making structures, formal
be achieved by more conscious communication. Enjoining processes, and communication approaches) are important
proper communication channels, IT and business managers antecedents of the intellectual dimension of IS strategic
are more apt to sense market opportunities or threats and to alignment, and (2) the intellectual dimension of IS strategic
build a consensus around particular strategies. Therefore, alignment fully mediates the impact of IT governance mech-
communication mechanisms can strengthen IT support of anisms on organizational performance. While previous
business strategies, especially in market-related strategies. At studies have shown that IT governance can have a direct
the same time, knowledge sharing, which involves the sharing effect on organizational performance (e.g., Brown and Magill
of information and expertise, can help decision making and 1994; Sambamurthy and Zmud 1999; Weill and Ross 2004),
strategies for cocreating new or better products (Dyer and we instead formulate an alternative nomology in which
Hatch 2006), hence leading to better alignment in product- strategic alignment fully mediates the link between IT Gover-
oriented strategies. To our surprise, the relatively lower nance mechanisms and organizational performance. Prior
weight in the quality-oriented strategy alignment suggests that research has considered the effects of strategic alignment in
the current IT strategy support for achieving product quality terms of historical measures of financial performance
and service quality strategies is not the primary source of (Croteau and Bergeron 2001; Oh and Pinsonneault 2007;
competitive advantage, at least as seen in our sample. While Tallon and Pinsonneault 2011), whereas this research employs
prior studies have only considered quality improvement to more comprehensive performance measures that identify the
reflect key strategic orientations of firms (e.g., Oh and
larger impact of strategic IT alignment and our results show
Pinsonneault 2007), we instead adopt a more complete
that strategic alignment may contribute more to other key
approach to include all relevant dimensions, in terms of
indicators such as gaining a customer focus.
business strategies, that can reflect the relative contributions
of each alignment.
This study adds to the theoretical bases of the IT governance
and strategic alignment literature in three ways. First, we
What is heartening in these results is that firm performance
propose and empirically validate IT governance mechanisms
does improve with good strategic alignment. The perfor-
as a construct that captures crucial IT governance practices,
mance elements that are most affected by good IT–business
which provides an institutionalized context within which
alignment are, in reverse order of impact, operational excel-
social alignment occurs and later leads to intellectual
lence (weight = .333), financial returns (weight = .342), and
customer focus (weight = .540). These results reify the dimension of IS strategic alignment. We base this on the
earlier inferences that good governance and alignment affect implementation frameworks of De Haes and Van Grembergen
customers in the most dramatic way. (2009) and Weill and Ross (2004), but our modeling of the
construct is unique in the literature. Second, we propose a
Overall, the findings of performance elements hint that intan- mediated research model that postulates a causal link between
gibles such as more responsiveness to customers do not IT governance mechanisms, strategic alignment, and organi-
always impact the balance sheet directly or immediately, but zational performance and thus conceptually links these two
do help meet customer demands. Conventional measures key antecedents to organizational performance. Third, we
such as financial metrics are thus seen as inadequate in them- identify and empirically test strategic alignment as fully
selves to fully capture corporate performance (Banker et al. mediating the positive impact of IT governance mechanisms
2001). To survive and compete in the information age, it is on organizational performance.
necessary for companies to use measurement systems derived
from their strategies and capabilities (Kaplan and Norton Apart from the nomological contribution, this study also
1996). When managers get excessively focused on short-term provides support for previous governance research in that
Wnancial performance metrics, activities such as process although the three governance structures, mechanisms tend to
improvements and customer and market development, both of undergird a centralized mode, in fact some contingency
which bring in long-term beneWts, will be traded off for factors have to be taken into consideration such as the types
quarterly proWtability. Nevertheless, we close by pointing out of IT decisions (Weill and Ross 2004) and IT activities
that the impact of alignment on financial performance was (Sambamurthy and Zmud 1999) as well as the organization’s
significant and substantial enough in our findings to draw the strategic direction (Weill and Ross 2004). Our findings
attention of managers. suggest the following.

First, in our research, steering committees at the executive or Second, given that we used cross-sectional data to evaluate
senior management level are responsible for determining IT the impact of IT governance mechanisms on strategic align-
development prioritization and investment, which are ment and performance implications of strategic alignment as
suggested by as Sambamurthy and Zmud’s (1999) study and a critical mediator, it would be useful to conduct longitudinal
Weill and Ross’ (2004, 2005) governance arrangement research on key antecedents of effective IT governance and its
matrix. IT decisions regarding IT principles, IT prioritization, consequences. Such research could provide valuable insights
and investment should be made by a business monarchy at the into the lagged influence of governance antecedents and
corporate level (as our results also demonstrate) in order to strategic alignment on organizational performance over time.
get higher performance.
Third, our research was limited to one country, Taiwan,
Second, the reason for more effective governance practices thereby limiting the generalizability across borders. However,
tending to be centralized is that a centralized IT governance as the results suggest, a centralized governance structure is
structure can better promote efficient IT use (Huang et al. effective in promoting the intellectual IS strategic alignment
2010). It also eases the decision-making process that and this may be in part due to the high power distance culture
encapsulates IT/business alignment. The effectiveness of IT of Taiwan. Applying Weill and Ross’s (2004) archetypes of
governance can smooth the way for IT to facilitate enterprise IT governance decision-making structures (i.e., business
strategy, which should be evident in business–performance monarchy, IT monarchy, IT/business duopoly, federal, and
metrics. Weill and Ross (2005, p. 29) found that “the most feudal),Wang (2010) also found that the vast majority of
profitable companies tend to be centralized in their approach Chinese companies employed only the IT monarchy and busi-
to IT governance” as “their strategies emphasize efficient ness monarchy governance modes. This pattern of centraliza-
operations.” Our assumption that centralized IT governance tion implies a potential cultural influence in the adoption of IT
may encourage a high degree of standardization in the pursuit governance structures. That is to say, individual dimensions
of profitability and operational excellence is based on their of IT governance mechanisms can be dramatically influenced
research findings using ROE, ROI, and ROA to measure firm by national culture. If this assumption is true, it is very
profits, and this assumption seems to be borne out in our possible that our results could be generalizable to other Asian
overall results. countries with high power distance. To prove this specula-
tion, data collected in other Asian and Pacific Rim countries
Finally, this research suggests that IT governance mechanisms should be compared with those from the Western Hemisphere,
serve as an institutionalized context for promoting IT– Europe, the Middle East, and Africa. There could be
business shared understanding (i.e., social alignment). In that interesting cultural effects being played out across these
IT–business partnerships can be regarded as one kind of IS regions. In these cases, more sophisticated analyses of the
resource, distinguished from IT assets by their intangible possible moderating impacts caused by cultural differences
nature (Nevo and Wade 2010), our research also confirms could evaluate the relationships among IT decision-making
previous empirical findings to support the notion that IS structures and strategic alignment.
resources can contribute to organizational performance (e.g.,
Rai et al. 2006; Tanriverdi 2006). Fourth, our focus in this study was on the intellectual dimen-
sion of strategic alignment, as in much of the previous
literature. While we did not directly measure the social
Limitations and Future Research alignment dimension (that is, cognitive elements that result in
a shared understanding between CIOs and TMTs), future
There are limitations to this study to guide future research. research can add this construct as an outcome of IT Gover-
First, our research findings relied on perceptual dyadic data nance mechanisms. Furthermore, because our conceptualiza-
from two key informants in the business units and IT depart- tion of communication mechanisms was limited to those
ments of each organization. The use of a single informant formal approaches which Preston and Karahanna (2009)
from each department was due to accessibility issues, but we considered to be more effective, further research can add
tried to reduce bias by using a dyadic design utilizing informal communications in that they may be important in
responses from both senior business and IT executives and trust-forming relationships. We also had a novel approach in
degree-symmetric metrics. Measures of all key variables of modeling the intellectual dimension of IS strategic alignment
IT governance mechanisms and strategic alignment may have as a formative construct, which represents a departure from
higher reliability when answered by numerous members of the conventional alignment literature. The use of formative
senior management from the same organization (Klein et al. construct may suffer from issues of confounds in interpre-
1994). tation as noted in Tan et al. (2013).

To check whether interpretational confounding existed in this Acknowledgments

research, we conducted a post hoc test to assess the formative
constructs. We ran two models as suggested by Kim et al. This research was supported by the MOE Grant for Pursuing
(2010): one with IS strategic alignment as the sole dependent Research Excellence and National Science Council Grants (No. 99-
variable and another with organizational performance as the 2410-H-110-036, 100-2917-I-110-007 & 101-2420-H-110-011-DR).
sole dependent variable. The weights of all of the formative The authors thank Yi-Chieh Chiu for his involvement in a pilot
indicators remain consistent across the two models, indicating project and help in data collection, the senior editor, an anonymous
that interpretational confounding is unlikely to be a major associate editor, and three anonymous reviewers whose comments
concern in this study. However, formative constructs have helped improve this paper considerably. The first author is
also grateful to the faculty of the CIS department at Georgia State
developed in this study should be verified in future studies
University for providing valuable feedback during her symposium
with MIMIC models recommended by Jarvis et al. (2003) and
presentation. Special thanks to Dr. Arun Rai for his helpful
Kim et al. (2010).
comments and to Dr. Sandra Slaughter for her insightful suggestion
at the first Atlanta-Athens Conference on Research in Information
Finally, this study uses only quantitative data to support the Systems.
hypothesized relationships. Chan et al. (2006) suggest that a
logical extension of the alignment research stream would be
to adopt both quantitative and qualitative approaches. Future References
research should use both quantitative and qualitative data and
perhaps mixed methods studies to contribute deeper insights. Agarwal, R., and Lucas, H. C. 2005. “The Information Systems
Identity Crisis: Focusing on High-Visibility and High-Impact
Research,” MIS Quarterly (29:3), pp. 381-398.
Ali, S., and Green, P. 2012. “Effective Information Technology
Conclusion (IT) Governance Mechanisms: An IT Outsourcing Perspective,”
Information Systems Frontiers (142), pp. 179-193.
IT governance is still a neglected—but crucial—area of IS Aral, S., and Weill P. 2007. “IT Assets, Organizational Capa-
study, one that has fortunately gained greater attention bilities, and Firm Performance: How Resource Allocations and
recently. However, empirical studies in this field are still Organizational Differences Explain Performance Variation,”
scarce. The main purpose of this research has been to investi- Organization Science (18:5), pp. 763-780.
gate this important research domain by consolidating Armstrong, J., and Overton, T. 1977. “Estimating Non-Response
knowledge about IT governance, proposing a nomological Bias in Mail Surveys,” Journal of Marketing Research (14:3), pp.
model to interpret how organizational value is created through 396-402.
IT governance mechanisms, and provide more guidance on Armstrong, C. P., and Sambamurthy, V. 1999. “Information Tech-
how strategic alignment can better enhance the effectiveness nology Assimilation in Firms: The InXuence of Senior Leader-
of IT governance mechanisms on organizational performance. ship and IT Infrastructures,” Information Systems Research
Dyadic data collected from 131 Taiwanese companies was (10:4), pp. 304-328.
used to empirically validate the theoretical relationships pro- Bagozzi, R. P., and Fornell, C. 1982. “Theoretical Concepts,
Measurement, and Meaning,” in A Second Generation of
posed in the research model. Our findings, cross-validated
Multivariate Analysis, Volume 2, C. Fornell (ed.), New York:
with archival data from 72 firms, provide a better under-
Praeger, pp. 5-23.
standing of the positive impact of IT governance mechanisms
Bailey, K. D. 1978. Methods of Social Science Research, New
on organizational performance and the mediating role York: The Free Press.
strategic alignment plays in influencing this impact. Baker, E. H. 2004. “Leading Alignment,” CIO Insight (1:45), pp.
19-20.
Our work reveals that IT governance structures, processes, Banker, R. D., Chang, H., Janakiraman, S. N., and Konstans, C.
and communications are effective mechanisms in promoting 2004. “A Balanced Scorecard Analysis of Performance Metrics,”
the intellectual dimension of IS strategic alignment in that European Journal of Operational Research (154:2), pp. 423-436.
they provide an institutionalized context that also enables Banker, R. D., Hu, N., Pavlou, P. A., and Luftman, J. 2011. “CIO
shared understanding (i.e., social alignment) between Reporting Structure, Strategic Positioning, and Firm Perfor-
corporate-level business and IT executives (such as CEOs and mance,” MIS Quarterly (35:2), pp. 487-504.
CIOs) and the top management team. The research theo- Banker, R. D., Janakiraman, S., and Konstans, C. 2001. “Balanced
retically proposes and empirically validates a nomological Scorecard: Linking Strategy to Performance,” Financial Execu-
model which links three important themes of organizational tives Research Foundation, Morristown, NJ.
and IT research: IT governance, strategic alignment, and Barclay, D., Higgins, C., and Thomson, R. 1995. “The Partial
organizational performance. Least Squares Approach to Causal Modeling, Personal Computer

Adoption and Use as an Illustration,” Technology Studies (2:2), Chan, Y. E., Sabherwal, R., and Thatcher, J. B. 2006. “Antecedents
pp. 285-309. and Outcomes of Strategic IS Alignment: An Empirical
Barney, J. B. 1991. “Firm Resources and Sustained Competitive Investigation,” IEEE Transactions on Engineering Management
Advantage,” Journal of Management (17:1), pp. 99-120. (53:1), pp. 27-47.
Baron, R. M., and Kenny, D. A. 1986. “The Moderator-Mediator Chandler, A. D. 1962. Strategy and Structure: Chapters in History
Variable Distinction in Social Psychological Research: of Industrial Enterprise, Cambridge, MA: MIT Press.
Conceptual, Strategic, and Statistical Considerations,” Journal of Chin, W. W. 1998. “Issues and Opinion on Structural Equation
Personality and Social Psychology (51:6), pp. 1173-1182. Modeling,” MIS Quarterly (22:1), pp. vii-xvi.
Bergeron, F., Raymond, L., and Rivard, S. 2001. “Fit in Strategic Chin, W. W., and Gopal, A. 1995. “Adoption Intention in GSS:
Information Technology Management Research: An Empirical Relative Importance of Beliefs,” The Data Base for Advances in
Comparison of Perspectives,” The International Journal of Information Systems (26:2), pp. 42-63.
Management Science (29:2), pp. 125-142. Chong, J. L. L., and Tan, F. B. 2012. “IT Governance in Col-
Bharadwaj, A.S. 2000. “A Resource-Based Perspective on Infor- laborative Networks: A Socio-Technical Perspective,” Pacific
mation Technology Capabilities and Firm Performance: An Asia Journal of the Association for Information Systems (4:2), pp.
Empirical Investigation,” MIS Quarterly (24:1), pp. 169-196. 31-48.
Bowen, P. L, Cheung, M-Y. D., and Rohde, F. H. 2007. “En- Chwelos, P., Benbasat, I., and Dexter, A. S. 2001. “Research
hancing IT Governance Practices: a Model and Case Study of an Report: Empirical Test of an EDI Adoption Model,” Information
Organization's Efforts,” International Journal of Accounting Systems Research (12:3), pp. 304-321.
Information Systems (8:3), pp. 191-221. Cohen, J. Statistical Power Analysis for the Behavioral Sciences,
Bradley, R. V., Byrd, T. A., Pridmore, J. L., Thrasher, E., Pratt, R. Hillsdale, NJ: Lawrence Erlbaum, 1988.
M., and Mbarika, V. W. 2012. “An Empirical Examination of Croteau, A., and Bergeron, F. 2001. “An Information Technology
Antecedents and Consequences of IT Governance in U.S. Hos- Trilogy: Business Strategy, Technological Deployment and
pitals,” Journal of Information Technology (27:2), pp. 156-177. Organizational Performance,” Journal of Strategic Information
Brown, A. E., and Grant, G. G. 2005. “Framing the Frameworks: Systems (10:2), pp. 77-99.
A Review of IT Governance Research,” Communications of the De Haes, S., and Van Grembergen, W. 2005. “IT Governance
AIS (15:Article 38), pp. 696-712. Structures, Processes and Relational Mechanisms: Achieving
Brown, C. V. 1997. “Examining the Emergence of Hybrid Gover- IT/Business Alignment in a Major Belgian Financial Group,” in
nance Solutions: Evidence from A Single Case Site,” Proceedings of the 38th Hawaii International Conference on
Information Systems Research, (8:1), pp. 69-94. System Sciences, Los Alamitos, CA: IEEE Computer Society
Brown, C. V., and Magill, S. L. 1994. “Alignment of the IS Func- Press.
tions with the Enterprise: Toward a Model of Antecedents,” MIS De Haes, S., and Van Grembergen, W. 2006. “Information Tech-
Quarterly (18:4), pp. 371-404. nology Governance Best Practices in Belgian Organizations,” in
Burton-Jones, A., and Straub, D. W. 2006. “Reconceptualizing Proceedings of the 39th Hawaii International Conference on
System Usage,” Information Systems Research (17:3), pp. System Sciences, Los Alamitos, CA: IEEE Computer Society
228-246. Press.
Campbell, D. T. 1960. “Recommendations for APA Test Standards De Haes, S., and Van Grembergen, W. 2008. “Analyzing the
Regarding Construct, Trait, Discriminant Validity,” American Relationship between IT Governance and Business/IT Alignment
Psychologist (15:8), pp. 546-553. Maturity,” in Proceedings of the 41st Hawaii International
Cenfetelli, R. T., and Bassellier, G. 2009. “Interpretation of Conference on System Sciences, Los Alamitos, CA: IEEE
Formative Measurement in Information Systems Research,” MIS Computer Society Press.
Quarterly (33:4), pp. 689-708. De Haes, S., and Van Grembergen, W. 2009. “An Exploratory
Chan, Y. E. 1992. Business Strategy, Information Systems Strategy, Study into IT Governance Implementations and Its Impact on
and Strategic Fit: Measurement and Performance Impacts, Business/IT Alignment,” Information Systems Management
Unpublished Doctor of Philosophy Thesis, University of Western (26:2), pp. 123-137.
Ontario. Dess, G. 1987. “Consensus on Strategy Formulation and Organi-
Chan, Y. 2002. “Why Haven’t We Mastered Alignment? The zational Performance: Competitors in a Fragmented Industry,”
Importance of the Informal Organization Structure,” MIS Strategic Management Journal (8:3), pp. 259-277.
Quarterly Executive (1:2), pp. 97-112. Diamantopoulos, A., and Siguaw, J. A. 2006. “Formative Versus
Chan, Y. E., Huff, S. L., Barclay, D. W., and Copeland, D. G. 1997. Reflective Indicators in Organizational Measure Development:
“Business Strategic Orientation, Information Systems Strategic A Comparison and Empirical Illustration,” British Journal of
Orientation and Strategic Alignment,” Information Systems Management (17), pp. 263-282.
Research (8:2), pp. 125-150. Dyer, J. H., and Hatch, N. W. 2006. “Relation-Specific Capa-
Chan, Y. E., and Reich, B. H. 2007. “IT Alignment: What Have bilities and Barriers to Knowledge Transfers: Creating Advan-
We Learned?,” Journal of Information Technology (22), pp. tage Through Network Relationships,” Strategic Management
297-315. Journal (27:8), pp. 701-719.

Gefen, D., Straub, D. W., and Boudreau, M. 2000. “Structural Kerlinger, F. N. 1986. Foundations of Behavioral Research, New
Equation Modeling and Regression: Guidelines for Research York: Rinehart & Winston.
Practice,” Communications of the AIS (4:7), pp. 1-77. Kearns, G. S., and Lederer, A. L. 2003. “A Resource-Based View
Grant, R. M. 1991. “The Resource-Based Theory of Competitive of Strategic IT Alignment: How Knowledge Sharing Creates
Advantage: Implications for Strategy Formulation,” California Competitive Advantage,” Decision Sciences (34:1), pp. 1-27.
Management Review (33:3), pp. 114-135. Kearns, G. S., and Sabherwal, R. 2007. “Strategic Alignment
Hall, R. 1992. “The Strategic Analysis of Intangible Resources,” between Business and Information Technology: A Knowledge-
Strategic Management Journal (13:2), pp. 135-144. Based View of Behaviors, Outcome, and Consequences,” Journal
Hayes, B. E. 2008. Measuring Customer Satisfaction and Loyalty of Management Information Systems (23:3), pp. 129-162.
(3rd ed.), Milwaukee, WI: ASQ Quality Press. Kim, G., Shin, B., and Grover, V. 2010. “Investigating Two
Henderson, J. C., and Venkatraman, N. 1993. “Strategic Align- Contradictory Views of Formative Measurement in Information
ment: A Model for Organizational Transformation through Systems Research,” MIS Quarterly (34:2), pp. 345-365.
Information Technology,” IBM Systems Journal (32:1), pp. 4-16. Klein, K. J., Dansereau, F., and Hall, R. J. 1994. “Levels Issues in
Herz, T. P., Hamel, F., Uebernickel, F., and Brenner, W. 2012. “IT Theory Development, Data Collection, and Analysis,” Academy
Governance Mechanisms in Multisourcing: A Business Group of Management (19:2), pp. 195-229.
Perspective,” in Proceedings for the 45th Hawaii International Klein, R., Rai, A., and Straub, D. W. 2007. “Competitive and
Conference on System Sciences, Los Alamitos, CA: IEEE Cooperative Positioning in Supply Chain Logistics Relation-
Computer Society Press, pp. 5033-5042. ships,” Decision Sciences (38:4), pp. 611-646.
Hirschheim, R., and Sabherwal, R. 2001. “Detours in the Path Kohli, R., and Grover, V. 2008. “Business Value of IT: An Essay
toward Strategic Information Systems Alignment,” California on Expanding Research Directions to Keep Up with the Times,”
Management Review (44:1), pp. 87-108. Journal of the Association for Information Systems (9:1), pp.
Huang, R., Zmud, R. W., and Price, R. L. 2010. “Influencing the 23-39.
Effectiveness of IT Governance Practices through Steering Lazic, M., Groth, M, Schillinger, C., and Heinzl, A. 2011. “The
Committees and Communication Policies,” European Journal of Impact of IT Governance on Business Performance,” in
Information Systems (19:3), pp. 288-302. Proceedings of the 2011 Americas Conference on Information
Hussin, H., King, M., and Cragg, P. 2002. “IT Alignment in Small Systems, Detroit, MI, Paper 189.
Firms,” European Journal of Information Systems (11), pp. Luftman, J. N. 2003. “Assessing It/Business Alignment,” Informa-
108-127 tion Systems Management (20:4), pp. 9-15.
Information Technology Governance Institute (ITGI). 2009. “An Luftman, J. N., and Brier, T. 1999. “Achieving and Sustaining
Executive View of IT Governance,” (www. itgi. org.; accessed Business-IT Alignment,” California Management Review (42:1),
May 5, 2010). pp. 109-122.
Jarvis, C. B., Mackenzie, S. B., and Podsakoff, P. M. 2003. “A Luftman, J., and Kempaiah, R. 2008. “Key Issues for IT Execu-
Critical Review of Construct Indicators and Measurement Model tives 2007,” MIS Quarterly Executive (7:2), pp. 99-112.
Misspecification in Marketing and Consumer Research,” Journal Luftman, J. N., Papp, R., and Brier, T. 1999. “Enablers and
of Consumer Research, (30:2), pp. 199-218. Inhibitors of Business-IT Alignment,” Communications of the
Kaplan, R. S., and Norton, D. P. 1992. “The Balanced Scorecard - AIS (1:11), pp. 1-32.
Measures that Drive Performance,” Harvard Business Review MacKenzie, S. B., Podsakoff, P. M., and Podsakoff, N. P. 2011.
(70:1), pp. 71-79. “Construct Measurement and Validation Procedures in MIS and
Kaplan, R. S., and Norton, D. P. 1996. “Using the Balanced Score- Behavioral Research: Integrating New and Existing Tech-
card as a Strategic Management System,” Harvard Business niques,” MIS Quarterly (35:2), pp. 293-334.
Review (74:1), pp. 75-85. Martin, N., Gregor, S., and Hart, D. 2005. “The Social Dimension
Kaplan, R. S., and Norton, D. P. 2004. “Measuring the Strategic of Business and IS/IT Alignment: Case Studies of Six Public-
Readiness of Intangible Assets,” Harvard Business Review Sector Organizations,” Australian Accounting Review (15:3), pp.
(82:2), pp. 52-63. 28-38.
Karahanna, E., and Preston, D. S. 2013. “The Effect of Social Martinsons, M., and Davison, R. 2007. “Culture's Consequences
Capital of the Relationship Between the CIO and Top Manage- for IT Application and Business Process Change: a Research
ment Team on Firm Performance,” Journal of Management Agenda,” International Journal of Internet and Enterprise
Information Systems (30:1), pp. 15-55. Management (5:2), pp. 158-177.
Karimi, J., Bhattacherjee, A., Gupta, Y. P., and Somers, T. M. Mata, F., Fuerst, W. L., and Barney, J. B. 1995. “Information
2000. “The Effects of MIS Steering Committees on Information Technology and Sustained Competitive Advantage: A Resource-
Technology Management Sophistication,” Journal of Manage- Based Analysis,” MIS Quarterly (19:4), pp. 487-505.
ment Information Systems (17:2), pp. 207-230. Melville N., Kraemer K., and Gurbaxani V. 2004. “Review:
Kenny, D. A. 2012. “Mediation” (http://davidakenny.net/cm/ Information Technology and Organizational Performance: An
mediate.htm, updated April 3,2012; accessed September 25, Integrative Model of IT Business Value,” MIS Quarterly (28:2),
2012). pp. 283-322.

Nevo, S., and Wade, M. R. 2010. “The Formation and Value of Ringle, C. M., Wende, S., and Will, A. 2005. “SmartPLS 2.0,”
IT-Enabled Resources: Antecedents and Consequences,” MIS University of Hamburg, Hamburg, Germany
Quarterly (34:1), pp. 163-183. (http://www.smartpls.de).
Nolan, R. L. 1982. “Managing Information Systems by Com- Ross, J. W., Beath, C. M., and Goodhue, D. L. 1996. “Develop
mittee,” Harvard Business Review (60:4), pp. 72-79. Long-Term Competitiveness through IT Assets,” Sloan Manage-
Oh, W., and Pinsonneault, A. 2007. “On the Assessment of the ment Review (38:1), pp. 31-42.
Strategic Value of Information Technologies: Conceptual and Sabherwal, R., and Chan, Y. E. 2001. “Alignment between
Analytical Approaches,” MIS Quarterly (31:2), pp. 239-265. Business and IS Strategies: A Study of Prospectors, Analyzers,
Papp, R. 1999. “Business-IT Alignment: Productivity Paradox and Defenders,” Information Systems Research (12:1), pp. 11-33.
Payoff?,” Industrial Management & Data Systems (99:8), pp. Sambamurthy, V., and Zmud, R. W. 1999. “Arrangements for
367-373. Information Technology Governance: A Theory of Multiple
Peterson, R. 2004. “Crafting Information Technology Gover- Contingencies,” MIS Quarterly (23:2), pp. 261-291.
nance,” Information Systems Management (21:4), pp. 7-23. Sobel, M. E. 1982. “Asymptotic Confidence Intervals for Indirect
Petter, S., Straub, D. W., and Rai, A. 2007. “Specifying Formative Effects in Structural Equations Models,” in Sociological Method-
Constructs in IS Research,” MIS Quarterly (31:4), pp. 623-656. ology, S. Leinhart (ed.), San Francisco: Jossey-Bass, pp.
Podsakoff, P. M., MacKenzie, S. B., Lee, J. -Y., and Podsakoff, 290-312.
N. P. 2003. “Common Method Biases in Behavioral Research: Stephens, C. S., Ledbetter, W. N., Mitra, A., and Ford, F. N. 1992.
A Critical Review of the Literature and Recommended “Executive or Functional Manager? The Nature of the CIO’s
Remedies,” Journal of Applied Psychology (88:5), pp. 879-903. Job,” MIS Quarterly (16:4), pp. 449-467.
Powell, T. 1992. “Organizational Alignment as Competitive
Straub, D. W., Boudreau, M., and Gefen, D. 2004. “Validation
Advantage,” Strategic Management Journal (13:2), pp. 119-134.
Guidelines for IS Positivist Research,” Communications of the
Preston, D. S., and Karahanna, E. 2009. “Antecedents of IS
AIS (13), pp. 380-427.
Strategic Alignment: A Nomological Network,” Information
Straub, D., Rai, A., and Klein, R. 2004. “Measuring Firm Perfor-
Systems Research (20:2), pp. 159-179.
mance at the Network Level: A Nomology of the Business
Prasad, A., Green, P., and Heales, J. 2012. “On IT Governance
Impact of Digital Supply Networks,” Journal of Management
Structures and Their Effectiveness in Collaborative Organiza-
Information Systems (21:1), pp. 83-114.
tional Structures,” International Journal of Accounting
Tallon, P. P. 2008. “A Process-Oriented Perspective on the
Information Systems (13), pp. 199-220.
Alignment of Information Technology and Business Strategy,”
Prasad, A., Heales, J., and Green, P. 2010. “A Capabilities-Based
Journal of Management Information Systems (24:3), pp. 231-272.
Approach to Obtaining a Deeper Understanding of Information
Technology Governance Effectiveness: Evidence from IT Tallon, P. P., Kraemer, K. L., and Gurbaxani, V. 2000. “Execu-
Steering Committees,” International Journal of Accounting tives’ Perceptions of the Business Value of Information Tech-
Information Systems (11), pp. 214-232. nology: A Process-Oriented Approach,” Journal of Management
Rai, A., Patnayakuni, R., and Seth, N. 2006. “Firm Performance Information Systems (16:4), pp. 145-173.
Impacts of Digitally Enabled Supply Chain Integration Capa- Tallon, P. P., and Pinsonneault, A. 2011. “Competing Perspectives
bilities,” MIS Quarterly (30:2), pp. 225-246. on the Link between Strategic Information Technology Align-
Ravichandran, T., and Lertwongsatien, C. 2005. “Effect of ment and Organizational Agility: Insights from a Mediation
Information Systems Resources and Capabilities on Firm Model,” MIS Quarterly (35:2), pp. 463-486.
Performance: A Resource-Based Perspective,” Journal of Tan, C. W., Benbasat, I., and Cenfetelli, R. T. 2013. “IT-Mediated
Management Information Systems (21:4), pp. 237-276. Customer Service Content and Delivery in Electronic Govern-
Reich, B. H., and Benbasat, I. 1996. “Measuring the Linkage ments: An Empirical Investigation of the Antecedents of Service
between Business and Information Technology Objectives,” MIS Quality,” MIS Quarterly (37:1), pp. 77-109.
Quarterly (20:1), pp. 55-62. Tan, F. B. 1995. “The Responsiveness of Information Technology
Reich, B. H., and Benbasat, I. 2000. “Factors that Influence the to Business Strategy Formulation: An Empirical Study,” Journal
Social Dimensions of Alignment between Business and Infor- of Information Technology (10:3), pp. 171-178.
mation Technology Objectives,” MIS Quarterly (24:1), pp. Tan, F. B., and Gallupe, R. B. 2006. “Aligning Business and
81-114. Information Systems Thinking: A Cognitive Approach,” IEEE
Reichheld, F. F., Markey, R. G. J., and Hopton, C. 2000. “The Transactions on Engineering Management (53:2), pp. 223-237.
Loyalty Effect–The Relationship between Loyalty and Profits,” Tanriverdi, H. 2006. “Performance Effects of Information Tech-
European Business Journal (12:3), pp. 134-139. nology Synergies in Multibusiness Firms,” MIS Quarterly (30:1),
Reynolds, P., Thorogood, A., and Yetton, P. 2010. “Allocation of pp. 57-77.
IT Decision Right in Multibusiness Organizations: What Taylor, H., Dillon, S., and Wingen, M. V. 2010. “Focus and
Decisions, Who Makes Them, and When Are They Taken?,”in Diversity in Information Systems Research: Meeting the Dual
Proceedings of the 31st International Conference on Information Demands of a Healthy Applied Discipline,” MIS Quarterly
Systems, St. Louis, MO, Paper 169. (34:4), pp. 647-667.

Van Grembergen, W. 2002. “Introduction to the Minitrack: IT About the Authors

Governance and Its Mechanisms,” in Proceedings of the 35th
Hawaii International Conference on System Sciences, Los Shelly Ping-Ju Wu is an assistant research fellow of the Electronic
Alamitos, CA: IEEE Computer Society Press. Commerce Research Center at National Sun Yat-sen University
Van Grembergen, W., and De Haes, S. 2009. Enterprise Gover- (NSYSU). She received her Ph.D. in MIS from NSYSU and MA in
nance of Information Technology: Achieving Strategic Align- English from Arizona State University. Shelly is a recipient of
ment and Value, New York: Springer. several grants from the National Science Council, including the
Van Grembergen, W., and De Haes, S. 2012. “A Research Journey Distinguished Doctoral Dissertation Award and Postdoctoral
into Enterprise Governance of IT, Business/IT Alignment and Research Abroad Program. Her current research interests include IT
Value Creation,” in Business Strategy and Applications in governance, information systems sourcing, IT management and
Enterprise IT Governance, W. Van Grembergen and S. De Haes strategy, project management, and e-Commerce. She has published
(eds.), Hershey, PA: IGI Global, pp. 1-13. several papers in research journals and presented her research at
Van Grembergen, W., De Haes, S., and Guldentops, E. 2004. major conferences such as the International Conference on Infor-
“Structure, Process and Relational Mechanism for IT Gover- mation Systems (Doctoral Consortium), the Americas Conference
nance,” in Strategies for Information Technology Governance, on Information Systems, and the Pacific Asia Conference on
W. Van Grembergen (ed.), Hershey, PA: Idea Group Publishing. Information Systems. She was a visiting scholar of the CIS depart-
Venkatraman, N. 1989. “The Concept of Fit in Strategy Research: ment at Georgia State University from March 2011 to March 2012.
Toward Verbal and Statistical Correspondence,” Academy of
Management Review (13:3), pp. 423-444. Detmar Straub is a Visiting Distinguished Professor at Temple
Wang, X. 2010. “The Analysis of Influential Factors on IT University’s Fox School and the Korea University Business School.
Governance Risks for Listed Companies in China. Research Formerly he was a Regents Professor of the University System of
on Financial and Economic Issues (in Chinese) (319:6), pp. Georgia with an appointment in the CIS Department of the Robinson
78-85. School of Business at Georgia State University. Detmar has con-
Weill, P. 2004. “Don’t Just Lead, Govern: How Top-Performing ducted research in the areas of information security, e-Commerce,
Firms Govern IT,” MIS Quarterly Executive (3:1), pp. 1-17. technological innovation, international IT studies, and IS research
Weill, P., and Broadbent, M. 1998. Leveraging the New Infra-
methods. He holds a DBA in MIS from Indiana and a Ph.D. in
structure: How Market Leaders Capitalize on Information
English from Penn State. Detmar has more than 200 publications
Technology, Boston: Harvard Business School Press.
appearing in many top business journals and other venues. He was
Weill, P., and Ross, J. 2004. IT Governance: How Top Managers
the 2008 winner of the Alumni Distinguished Professor Award at
Manage IT Decision Rights for Superior Results, Boston:
Georgia State University and, in 2012, was awarded a LEO by the
Harvard Business School Press.
Association for Information Systems for lifetime achievement in the
Weill, P., and Ross, J. 2005. “A Matrixed Approach to Designing
field of information systems.
IT Governance,” MIT Sloan Management Review (46:2), pp.
26-34.
Ting-Peng Liang is a Life-time National Chair Professor of
Weill, P., and Woodham, R. 2002. “Don’t Just Lead, Govern:
National Chengchi University in Taipei, Taiwan, and director of the
Implementing Effective IT Governance,” CISR WP No. 326.
Center for Service Innovation and Electronic Commerce. He is on
Center for Information Systems Research, Massachusetts Institute
leave from National Sun Yat-Sen University, where he is director of
of Technology,
Wernerfelt, B. 1984. “A Resource-Based View of the Firm,” the Electronic Commerce Research Center. Ting-Peng is an AIS
Strategic Management Journal (5:2), pp. 171-180. Fellow (2003) and has taught at University of Illinois, Purdue
Williams, C. K., and Karahanna, E. 2013. “Causal Explanation in University, Chinese University of Hong Kong, and City University
the Coordinating Process: A Critical Realist Case Study of of Hong Kong. He is the founding Editor-in-Chief of Pacific Asia
Federated IT Governance Structures,” MIS Quarterly (37:3) pp. Journal of the Association for Information Systems, Coeditor-in-
933-964. Chief of Journal of Electronic Commerce Research, and serves on
Xue, L., Ray, G., and Sambamurthy, V. 2012. “Efficiency or the editorial board of Journal of the AIS, Decision Support Systems,
Innovation: How Do Industry Environments Moderate the and several other journals. His papers have appeared in MIS
Effects of Firms’ IT Asset Portfolios,” MIS Quarterly (36:2), pp. Quarterly, Management Science, Journal of Management Informa-
509-528. tion Systems, Operations Research, Decision Support Systems,
Xue, L., Zhang, C., Ling, H., and Zhao, X. 2013. “Risk Mitigation International Journal of Electronic Commerce, and other journals.
in Supply Chain Digitization: System Modularity and Infor- His recent research interests include intelligent systems and business
mation Technology Governance,” Journal of Management analytics, IS strategy, electronic commerce, knowledge manage-
Information Systems (30:1), pp. 325-352. ment, service innovation, and neuro-information systems.

How Information Technology Governance Me

Uploaded by

Copyright:

Available Formats

How Information Technology Governance Me

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

How Information Technology Governance Me

Uploaded by

Copyright:

Available Formats

RESEARCH NOTE

HOW INFORMATION TECHNOLOGY GOVERNANCE

Keywords: IT governance mechanisms, strategic alignment, organizational performance, degree-symmetric

MIS Quarterly Vol. 39 No. 2, pp. 497-518/June 2015 497

498 MIS Quarterly Vol. 39 No. 2/June 2015

MIS Quarterly Vol. 39 No. 2/June 2015 499

Figure 1. Conceptual Model of Our Research

500 MIS Quarterly Vol. 39 No. 2/June 2015

Table 1. Summary of Prior Research on IT Governance Mechanisms

MIS Quarterly Vol. 39 No. 2/June 2015 501

Table 1. Summary of Prior Research on IT Governance Mechanisms (Continued)

502 MIS Quarterly Vol. 39 No. 2/June 2015

Although antecedents of the intellectual dimension of stra-

MIS Quarterly Vol. 39 No. 2/June 2015 503

504 MIS Quarterly Vol. 39 No. 2/June 2015

use more of their IT domain knowledge in strategic decision Research Methodology

MIS Quarterly Vol. 39 No. 2/June 2015 505

506 MIS Quarterly Vol. 39 No. 2/June 2015

MIS Quarterly Vol. 39 No. 2/June 2015 507

508 MIS Quarterly Vol. 39 No. 2/June 2015

MIS Quarterly Vol. 39 No. 2/June 2015 509

Figure 2. Results of Initial Path Analysis

510 MIS Quarterly Vol. 39 No. 2/June 2015

cients, that IT governance mechanisms enable IS strategic Implications for Practice

MIS Quarterly Vol. 39 No. 2/June 2015 511

knowledge sharing among IT and business executives and a Contributions to Research

512 MIS Quarterly Vol. 39 No. 2/June 2015

MIS Quarterly Vol. 39 No. 2/June 2015 513

To check whether interpretational confounding existed in this Acknowledgments

514 MIS Quarterly Vol. 39 No. 2/June 2015

MIS Quarterly Vol. 39 No. 2/June 2015 515

516 MIS Quarterly Vol. 39 No. 2/June 2015

MIS Quarterly Vol. 39 No. 2/June 2015 517

Van Grembergen, W. 2002. “Introduction to the Minitrack: IT About the Authors

518 MIS Quarterly Vol. 39 No. 2/June 2015

You might also like

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.