Strategic IT-business alignment and organizational agility: from a developing country perspective
| DOI | https://doi.org/10.1108/JABS-10-2016-0132 |
| Published date | 10 December 2018 |
| Date | 10 December 2018 |
| Pages | 422-440 |
| Author | Sukanya Panda,Santanu Kumar Rath |
| Subject Matter | Strategy,International business |
Strategic IT-business alignment
and organizational agility: from a
developing country perspective
Sukanya Panda and Santanu Kumar Rath
Abstract
Purpose –This study aims to test a model in which the effect of strategic information technology (IT)-
business alignment on organizational agility is examined by the moderating influence of environmental
uncertainty.
Design/methodology/approach –This researchutilizes a matched-pair survey datacollected from 300
IT and businessexecutives working in various privatelyowned Indian financial enterprises,and structural
equationmodeling is used to examine the alignment–agilitylinkage.
Findings –The analysis demonstrates the positive effect of alignment on agility (studied as
business process and market responsive agilities), and alignment is more effective on business
process agility than market responsive agility. However, the moderation analysis reveals that in a
highly uncertain environment, alignment has more effect on market responsive agility but not on
business process agility.
Originality/value –Although previous studies (mostly conducted in the context of developed
countries) have reported about the positive IT-business alignment and organizatio nal agility linkage,
the literature is silent regarding the influenceof external contingent factors on this relationship from
a developing country perspective. The authors have conceptualiz ed alignment on the basis of
strategic alignment maturity model and meticulously examined its relationship with both categories
of agility. This research extends the alignment-agility theoryand provides empirical support for this
unique association from a developing country (i.e. India) perspective, and thereby, gr eatly
contributes to thealignment literature.
Keywords Environmental uncertainty, Interaction-moderation, Organizational agility,
Strategic IT-business alignment, Structural modeling
Paper type Research paper
1. Introduction
In recent times, strategic information technology (IT)-business alignment has become a top
priority for the managementpractitioners and information system (IS) scholars.It has usually
been studied as an outcome to be accomplished (Benbya and McKelvey, 2006) with little
focus on the process through which it can be achieved. Althoughprior studies have defined
strategic IT-business alignment (or simply “alignment”) as the right coherence (fit) between
IT and business strategies (Henderson and Venkatraman, 1993;Luftman et al., 2015), due
to lack of knowledge on the process of alignment, many organizations make huge IT
investments without analyzing the degree of coherence between their IT and business
objectives (Raymond and Croteau, 2009). According to some researchers, strategic
alignment facilitates effectiveutilization of IT resources to support business strategies which
in turn maximizes return on IT investments, fosters effective IT and business process
integration and thereby createssustainable competitive advantage (Baker et al.,2011;Byrd
et al.,2006
;Sabegh and Motlagh, 2012).
Sukanya Panda and
Santanu Kumar Rath are
both based at the National
Institute of Technology
(NIT), Rourkela, India.
Received 4 October 2016
Revised 10 May 2017
Accepted 29 July 2017
PAGE 422 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 12 NO. 4 2018, pp. 422-440, ©EmeraldPublishing Limited, ISSN 1558-7894 DOI 10.1108/JABS-10-2016-0132
At the same time, it is also evident that today’s fast-moving, volatile and competitive
business environment has created immensepressure on the organizations to quickly sense
and readily respond to the unanticipated changes so as to remain agile. Agile firms can
easily assimilate the tactics to successfully cope with the unprecedented threats created
due to extreme business competition, the accelerating paceof modern technology, growing
stake holder’s expectation, globalization, emerging market uncertainty, etc. and survive
amongst the competitors by capitalizing on business opportunities. Moreover, it is desired
that firms need to persistently transform their resources, infrastructure, and strategies to
remain adaptable to domestic as well asexternal changes (Prahalad, 2009). Therefore, next
to strategic alignment, organizational agility (or simply “agility”) may bestudied as a crucial
business imperative which is defined as the ability of the organization to easily identify and
swiftly react to unexpected changes in customers’ demands, competitors’ strategy,
business environment, etc. (Galliers, 2007;Overby et al.,2006).
Based on the rationale of dynamic capabilities (Cirjevskis, 2017), past studies have
examined both alignment and agility as higher order capabilities in two separate streams of
researches (Mao et al., 2014;Pelletier and Raymond, 2014), yet integrating these two
distinct research areas to examine agility as an outcome of alignment has been largely
overlooked (Tallon and Pinsonneault, 2011). In addition, due to the complex nature of
contingent factors such as environmental volatility, and nature of competition and lack of
prior literature support, our understandingof this alignment–agility relationship is limited.
On the basis of the resource-based view(RBV) and knowledge-based view (KBV), previous
literature exhibits contradictory theories for the alignment–agility linkage. For example,
according to Preston and Karahanna (2009), apposite knowledge sharing among IT and
business executives facilitates effective alignment and enables firms to sense
environmental threats and opportunities before they could make decisions about when and
how to respond. If their viewpoint is correct, thenalignment may support agility. A resource-
based argument needs IT to be deep-rooted within those business activities that may
change when environmental factors require a shift in the strategic foci. So IT’s close
proximity to these activities generates rapid responses to change and thereby, facilitate
agility (Allen and Boynton, 1991).
On the other hand, following Gibson and Birkinshaw (2004), sometimes knowledge sharing
may emphasize on maintaining the status quo and in turn creates a state of the corporate
myopic situation. In such cases, organizations tend to exploit existing resources before
exploring new opportunities which ironically hinders agility. In addition, based on
Bharadwaj’s (2000) research, too much IT embeddedness within business activities may
sometimes restrict firms’ strategic choices and impedes agility. These mixed observations
essentially demand furtherstudies to investigate the unique alignment-agility association.
Moreover, the extant studies have been mostly carried out in context to organizations in
various advanced countries, namely, USA and Canada, which limits the generalizability of
the concept of IT-business alignment (Yaylaand Hu, 2012)(Table I). Due to the influence of
structural and cultural variations, the applicability and validity of the research findings from
a developed country and a developingcountry perspective may not be the same. It may be
perceived that compared to developed countries, developing countries have inadequate IT
infrastructure and resources with insufficient IT educated workforce and less dynamic
business environment whichmay limit IT utilization at the strategic level (Yahya, 1993).
Given the competing alignment–agility relationships and lack of studies in the context of
developing countries, our studyaddresses the following research questions:
RQ1. Does strategic IT-business alignment enable or impede organizational agility
(studied as business process and market responsive agilities) in context to a
developing country?
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