IT strategy and business strategy mediate the effect of managing IT on firm performance: empirical analysis

Abstract

PurposeThe multifaceted effect of IT in organizations has been widely examined. However, the intervening role of IT strategy and business strategy on the effect of managing IT on firm performance remains less strong. This study examines how managing information technology (MIT) effects on firm performance by looking at the mediating role of IT strategy and business strategy.Design/methodology/approachDrawing on the resource-based view of IT and contingency perspective, theoretical insights for managing IT and the mediating effect of IT strategy and business strategy on firm performance are established. The model is empirically tested by using hierarchical regression and structural equation modeling for the data collected through the survey of 194 senior IT and business managers in China.FindingsThe significant and impactful relationship found in the model for the proposed idea. The results show that both IT strategy and business strategy partially mediate the effect of managing IT on firm performance.Research limitations/implicationsThe findings highlight that managing IT does not merely influence better firm performance; instead, the coherent amalgamation of IT strategy and business strategy can enrich firm performance. The theoretical and practical implications are also discussed.Originality/valueIn line with the call for rigorous research to integrate the managing IT and firm strategies, this study demonstrates the mediating role of business strategy and IT strategy between the managing IT and the firm performance relationship, hence contributing to the IS research literature.

The impact of managing IT on business-IT alignment and firm performance: an empirical study

“…To confirm the mediating effect of business-IT alignment, we used different approaches (Ilmudeen and Bao, 2020). First, the Sobel test where the indirect effect of management of IT investment through the mediated path of (MIT → Bu-IT alignment → FP) on firm performance shows the Sobel test statistics (11.145, p < 0.001).…”

Impact of Information Technology (IT) governance on firm business value: the role of business-it alignment and IT investment performance

“…measuring, maximizing and signifying the business value of IT investment have become as a top most priority for business executives (Ilmudeen et al 2019). Business firms are continually investing massive amount of money in IT investment with the aim of getting substantial benefits and business value (Ilmudeen and Bao 2020). But, it is obvious that IT in itself does not have any inherent value and just keeping any kind of system or technology does not automatically give any value to the firm.…”

“…Scholars claimed that adopting IT governance practices will bring closer to business -IT alignment (Ilmudeen and Bao 2020;Ilmudeen and Yukun 2018;Tallon et al 2000). Moreover, the strategic alignment and IT investment estimation both are complementary, which add to greater perceived levels of IT business value and the important to comprehend how IT creates business value to the firm (Tallon et al 2000).…”

“…Managing IT investment drives positively to attain firm performance when getting top management support (Ali et al 2015;Karimi et al 2000;Kearns and Lederer 2003;Tallon et al 2000). The management of IT critically significant to its value creation from IT investment (Ali et al 2015;Ilmudeen and Bao 2020;Ilmudeen and Yukun 2018;Prasad et al 2010;Wu et al 2015). Hence, the appropriate IT investment performance is timely wanted to create firm business value from IT investment.…”

Effect of IT capability and intangible IT resources on sustainable competitive advantage: Exploring moderating and mediating effect of IT flexibility and core competency

“…The IT infrastructure flexibility and IT strategic planning empower advanced computing capabilities, effective information processing, business analytics effectiveness, tracking customers' needs and anticipated preferences, competitors' actions and reactions, and regulations and law of new markets (Al-Surmi et al, 2020). Beyond significantly contributing to the operational and tactical impacts, IT strategic planning capability is a key driver for enabling an organization to transform strategies, relationships partners, linking customers' needs with business design, and developing competitive business models (Bharadwaj et al, 2013;Ilmudeen & Bao, 2020).…”