The Relationship between the Alignment of Information Technology and Business Strategy and the Organization’s Financial Performance

Subject Areas : Strategic Management Researches

mazyar ganjoo ¹ (: PhD student in Information Technology Management, Department of Information Technology Management, Faculty of Management and Economics, Science and Research Branch, Islamic Azad University, Iran, Tehran)
Sohrab khalili shavereini ² (Professor, University of Petroleum Industry, Tehran, Iran (Corresponding Author))
mahmood alborzi ³ (Associate Professor, Department of Information Technology Management, Science and Research Branch, Islamic Azad University, Tehran, Iran)
seyed mohammad zargar ⁴ (Assistant Professor, Department of Management, Faculty of Humanities, Semnan Branch, Islamic Azad University, Semnan, Iran)

Received: 2018-11-04 Accepted : 2019-06-12 Published : 2019-12-21

Keywords: Alignment, Business Strategy, Information Technology Strategy, Configuration Theory and Performance,

Abstract :

The alignment of information technology (IT) and business strategy and its relationship with the organization’s financial performance are research domains which are still investigated despite having a long history. The present study attempted to analyze the relationship between IT and business strategy alignment (vertical alignment) and the organization’s financial performance in a five-year period from 2014 to 2018 in a group of companies registered in Tehran Stock Exchange. The configuration theory in strategic management was used to develop the conceptual model and research hypotheses. By analyzing the resulting data, the IT strategy was divided into four configurations of developmental, innovative, and conservative behavior, and the business strategy was divided into four configurations of innovators, cost defenders, distinction defenders, and analysts. Research hypotheses involved the relationship between the combination of configurations and the organization’s financial performance. Therefore, two methods of alignment as correlation and alignment as Gestalt were used. In the correlation test, the relationship between combinations were extracted from the literature, and in the Gestalt method, the configurations were combined in an exploratory manner using the data of the problem without presuppositions in the literature. Results of the correlation test showed that, except for the relationship between conservative and cost defender configurations, the other relationships does not have a significant correlation with performance. In the Gestalt method, two clusters were obtained; the first cluster with a high performance was mainly a combination of innovators’ and distinction defenders’ strategies in terms of business, and innovative and developmental strategies in terms of IT.

References:

اورصاد، بلقیس، بتول، رضایی، رحیمی، فرجاله و سینایی، حسنعلی(1395 ). بررسی تاثیر همسویی راهبردهای زنجیره تامین و راهبردهای سیستم اطلاعاتی بر عملکرد مدیریت زنجیره تامین (مطالعه موردی: شرکت های تولیدی استان خوزستان)، مدیریت فناوری اطلاعات، 8(4)،681 -702.

پریزادی، عیسی(1394). طراحی مدل نظری پیکربندی کنترل استراتژیک، دانشکده مدیریت و حسابداری، دانشگاه شهید بهشتی، تهران.

حسن پورارباستانی, عذرا (1393). یررسی تاثیر همسویی استراتژی کسب و کار و فن آوری اطلاعات یر عملکرد مالی شرکتهای پذیرفته شده در بورس اوراق بهادار تهران, دانشکده مدیریت و حسابداری, دانشگاه آزاد اسلامی واحد تهران مرکزی, تهران.

تهرانی، رضا، زکلیکی، محمدعلی بابایی و کریمی، کیانا(1387). تاثیر استراتژی تنوع بر عملکرد مالی شرکتهای تولیدی عضو بورس اوراق بهادار تهران،تحقیقات مالی شماره 9(4)،21-40.

خلیلی شورینی، سهراب و اربابی، عباس(2016).اندازه گیری اثر همراستایی استراتژیهای کسب وکار و استراتژی های فناوری اطلاعات بر میزان موفقیت شرکتهای بیمه در ایران، سیاست نامه فناوری و علم،(1)6 ، 88-75

زاهدی، بهزاد(1390). همسویی استراتژیک فناوری اطلاعات و ارتباط آن با عملکرد سازمان، دانشکده اقتصاد و مدیریت، دانشگاه تبریز، تبریز.

مهرانی،ساسان مهرانی،کاوه و لهراسبی حمیدرضا(1389). تاثیر مدیریت هزینه و تمایز محصول بر عملکرد مالی بلند مدت، مطالعات تجربی حسابداری مالی (مطالعات حسابداری سابق)، 4(1)،59-74.

قراجهداغی، جمشید. (1394). تفکر سیستمی، مدیریت آشفتگی و پیچیدگی، پلتفرمی برای معماری کسب و کار. ترجمه سهراب خلیلی شورینی: سازمان مدیریت صنعتی.

کامینگز، استیفن و دانکن، آنگوین(1395 ). استراتژیساز: تدوین و ترویج استراتژی های اثربخش، ترجمه سهراب خلیلی شورینی, محمد مسعود نخستین و علی عباس بنایی. تهران:

رسا. مرادی، محمد و سپهوندی، سعیده(1394). (تاثیر استراتژیهای رقابتی بر پایداری عملکرد مالی و ریسک، پژوهش های حسابداری مالی، 7(1)1،(75-90.

مشایخی، علینقی، فرهنگی، علیاکبر، علیدوستی، سیروس و مومنی، منصور(1384 ). بررسی عوامل کلیدی مؤثر بر کاربرد فناوری اطلاعات در سازمانهای دولتی ایران: کاربرد روش دلفی، مدرس علوم انسانی.شماره 9(1)، 210-191

Al-Surmi, A., Cao, G & Duan, Y. (2019). The impact of aligning business, IT, and marketing strategies on firm performance, Industrial Marketing Management,84:39-49.

Banker, R. D., Hu. N., Pavlou,P. A. & Luftman, J. (2011). CIO reporting structure, strategic positioning, and firm performance, MIS Quarterly, 35(2):487-504.

Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17 (1):99-120.

Bergeron, F., Raymond L. & Rivard S. (2004). Ideal patterns of strategic alignment and business performance, Information & Management, 41 (8):1003- 1020.

Chan, Y. E., Huff S.L., Barclay D. W & Copeland D. G. (1997), Business strategic orientation, information systems strategic orientation, and strategic alignment, Information systems research, 8 (2):125-150.

Chan, Y. E & Horner Reich, B. (2007), IT alignment: what have we learned?" Journal of Information technology,22 (4):297-315.

Chan, Y. E., Sabherwal R & Thatcher,J.B. (2006), Antecedents and outcomes of strategic IS alignment: an empirical investigation, IEEE Transactions on engineering management, 53 (1):27-47.

Chen, D. Q., Mocker, M.,Preston, D.S & Teubner, A. (2010). Information systems strategy: reconceptualization, measurement, and implications, MIS quarterly,34 (2):233-259.

Chowa, C. K (2010). Strategic information systems alignment: A longitudinal investigation, University of Missouri,Saint Louis.

Cragg, P, King,M & Hussin,H.(2002). IT alignment and firm performance in small manufacturing firms,The Journal of Strategic Information Systems, 11 (2):109-132.

Croteau, A & Bergeron, F. (2001), An information technology trilogy: business strategy, technological deployment and organizational performance, The Journal of Strategic Information Systems,10 (2):77-99.

Gerow, J.E.(2011). IT-Business strategic alignment: Essays examining types of alignment and their relationship with firm performance, USA:Clemson University.

Gerow, J.E, Thatcher, J.B & Grover, V. (2015). Six types of IT-business strategic alignment: an investigation of the constructs and their measurement, European Journal of Information Systems, 24 (5):465-491.

Henderson, J. C & Venkatraman, N. (1993). Strategic alignment: Leveraging information technology for transforming organizations, IBM systems journal, 32(1):4-16.

High, Peter A. (2014). Implementing World Class IT Strategy: How IT Can Drive Organizational Innovation, New York: John Wiley & Sons.

Holzer, J. V. M. L (2012). Strategy formulation in U.S. federal agencies: Insights from the miles and snow typology applied to three united states federal  agencies,USA: Oklahoma State Univesity.

Huang, L. K. (2019). Constructing Green IT Alignment Framework: Car Manufacturer Case, In Green Business: Concepts, Methodologies, Tools, and Applications, UK IGI Global: 232-254.

Karpovsky, A. (2015). Information Systems Strategy and the Role of Chief Information Officers: Strategizing and Aligning Practices, USA: Bentley university.

Leidner, D.E., Lo,L. and Preston D. (2011). An empirical investigation of the relationship of IS strategy with firm performance, The Journal of Strategic Information Systems, 20 (4):419-437.

Lo, J & Leidner, D (2012). Extending the IS strategy typology: An assessment of strategy impacts on capabilities development and performance, Thirty Third International Conference on Information Systems, USA:Orlando.

Luftman, J., Ben-Zvi, T., Dwivedi,R & Rigoni, H. (2010). IT Governance: An alignment maturity perspective, International Journal of IT/Business Alignment and Governance (IJITBAG), 1 (2):13-25.

Luftman, J. N (1996). competing in the information age: strategic alignment in practice, UK: Oxford University Press.

Martinez-Simarro, D., Devece, C & Llopis-Albert, C. (2015). How information systems strategy moderates the relationship between business strategy and performance, Journal of Business Research,68 (7):1592-1594.

Meyer, A. D., Tsui, A. S., & Hinings, C. R. (1993). Configurational approaches to rganizational analysis. Academy of Management Journal, 36(6), 1175-1195 .

Mintzberg, H. (1979). The structure of organizations: A synthesis of the research,UAS:Prentice-Hall.

Mintzberg, H., Ahlstrand, B., & Lampel, J. (2005). Strategy Safari: A Guided Tour Through The Wilds of Strategic Mangament,USA: imon and Schuster.

Mintzberg, H., & Waters, J. A. (1985). Of strategies, deliberate and emergent. Strategic management journal, 6(3), 257-272.

Miles, R. E, Snow,C, Meyer,A.D , and Coleman H.J. (1978), Organizational strategy, structure, and process, Academy of management review,3 (3):546-562.

Miller, D. (1981), Toward a new contingency approach: The search for organizational gestalts, Journal of management studies, 18 (1):1-26.

Miller, D., Friesen, P. H., & Mintzberg, H. (1984). Organizations: A quantum view, USA: Prentice Hall.

Morton, M. S. (1991), The Corporation of the 1990s: Information technology and organizational transformation, UK: Oxford University Press.

Porter, M. E. (1996). What is strategy? Harvard Business Review, 74(6), 61-80.

Queiroz, M., Coltman T., Sharma R., Tallon P & Reynolds, P. (2012). Strategic IT alignment: an evaluation and process-level reconceptualization of the construct, Academy of Management Annual Meeting: The Informal  Economy,United States: Academy of Management (1-32)

Raymond, L., Bergeron, F., Croteau, A. M & Uwizeyemungu, S. (2019). Determinants and Outcomes of IT Governance in Manufacturing SMEs: A strategic IT management perspective. International Journal of Accounting Information Systems, 35:100.

Reich, B. H & Benbasat, I. (1996). measuring the linkage between business and information technology objectives, MIS quarterly, 20(1):55-81.

Sabherwal, R & Chan,Y. E. (2001). Alignment between business and IS strategies: A study of prospectors, analyzers, and defenders, Information systems research,12 (1):11-33.

Sabherwal, R., Hirschheim, R & Goles,T. (2001). The dynamics of alignment: Insights from a punctuated equilibrium model, Organization Science, 12 (2):179-197.

Sabherwal, R., Sabherwal, S., Havakhor, T & Steelman, Z. (2019). How Does Strategic Alignment Affect Firm Performance? The Roles of Information Technology Investment and Environmental Uncertainty, MIS Quarterly, 43(2):453-474.

Shao, Z. (2019). Interaction effect of strategic leadership behaviours and organizational culture on IS-Business strategic alignment and Enterprise Systems assimilation, International Journal of Information Management, 44: 96- 108.

Smeureanu, I., & Diab, B. (2019). Modeling the Impact of Information System on Organizational Culture and Business-IT Strategic Alignment, Informatica Economica, 23(3):16-25.

Slater, S.F., Hult,G. T & Olson, E. M.(2010), Factors influencing the relative importance of marketing strategy creativity and marketing strategy implementation effectiveness, Industrial Marketing Management,39 (4):551- 559.

Slater, S. F & Olson E. M. (2001). Marketing's contribution to the implementation of business strategy: An empirical analysis, Strategic management journal, 22 (11):1055-1067.

Sollosy, M., Guidice, R. M & Parboteeah, K. P. (2019). Miles and Snow’s strategic typology redox through the lens of ambidexterity, International Journal of Organizational Analysis, 27(4):925-046.

Sperber, A. D. (2004). Translation and validation of study instruments for cross-cultural research, Gastroenterology, 126:124-S128.

Tafti, F. F., Abdolvand, N & Harandi, S. R. (2019). A strategic alignment model for collaborative open innovation networks,International Journal of Business Innovation and Research, 19(1): 1-28.

Tai, J. C., Wang, E. T & Yeh, H. Y. (2019). A study of IS assets, IS ambidexterity, and IS alignment: the dynamic managerial capability perspective,Information & Management, 56(1):55-69.

Tallon, P. (2007). A process-oriented perspective on the alignment oinformation technology and business strategy, Journal of Management Information Systems, 24 (3):227-268.

Tallon, P. (2011). Value chain linkages and the spillover effects of strategic information technology alignment: A process-level view, Journal of Management Information Systems,28 (3):9-44.

Van Decker, John E. (2012). Top 10 Findings From Gartner's Financial Executives International CFO Technology Study, Stamford: Gartner, Inc.

Venkatraman, N, Sawy,O. , Pavlou, P & Bharadwaj, A. (2014). Theorizing digital business innovation: platforms and capabilities in ecosystems,Fox School of Business Research Paper, (15-080).

Venkatraman N. (1989). The concept of fit in strategy research: Toward verbal and statistical correspondence, Academy of management review, 14 (3):423-444.

Venkatraman, N., Henderson,J.C & Scott O. (1993). Continuous strategic alignment: Exploiting information technology capabilities for competitive success, European Management Journal ,11 (2):139-149.

Walker, J., Orville, C & Ruekert, R.W. (1987). Marketing's role in the implementation of business strategies: a critical review and conceptual framework, The Journal of Marketing, 51(3):15-33.