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Research Article

The Effect of IT Governance Capabilities on Information System (IS) Effectiveness and Organizational Performance

Choi, Sangmin, Moon, Taesu

Dongguk University
Dongguk University

Published: January 2015 · Vol. 44, No. 3 · pp. 909-932

DOI: https://doi.org/10.17287/kmr.2015.44.3.909

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Abstract

Information Technology(IT) is fundamental to support, sustain and grow the business. IT is essential to manage transactions, information and knowledge necessary to initiate and sustain business and economic activities. These activities increasingly rely on globally cooperating entities to be successful. IT governance is an integral part of enterprise governance and consists of the leadership, organizational structures, and processes that ensure organization's IT decision making for achieving organizational goal. Today, IT governance faces on either efficiency or flexibility for technology supply and usage in organizational IT infrastructure. In other word, IT governance faces the dual demands for flexibility and speed on the one hand, and efficiency and standardization on the other. Most firms have failed to resolve the balance in building IT governance. The challenge is to align IT strategy with business strategy in establishing and implementing effective IT governance. Effective IT governance requires a significant amount of time and effort. Few empirical studies have been carried out to explain the extend to which information systems(IS) complement business strategy. The purpose of this study is to find out the relationship between IT governance competence factors, IS effectiveness, and organizational performance. IT governance competence factors, such as IT vendor management, IT human resource management, and IT infrastructure. are influenced by strategic alignment, which was measured as the alignment between business strategic orientation and IS strategic orientation. Based on the theoretical rationale of past research, an integrated research model was suggested in this study, combining strategic alignment with IT governance competence factors. Five hypotheses were generated to exploit the relationship between strategic alignment, three IT governance competence factors, IS effectiveness, and organizational performance. This study used the survey method to collect primary data from 200 senior IT managers list of big 1000 firms, which were enrolled in Korea stock market to test the hypotheses. Data from 110 firms was collected. Usable responses came from 104 firms, yielding a response rate of about 15.7 percent. Results of hypothesis testing showed that strategic alignment had positive influence on all of three IT governance competence factors, such as IT vendor management, IT human resource management and IT infrastructure. And IT vendor management and IT human resource management had positive influence on IS effectiveness. However, IT vendor management and IT infrastructure had no significant influence on organizational performance. Finally, IS effectiveness had positive influence on organizational performance. Specifically, the results of structured model analysis indicated that the relationship between strategic alignment and three IT governance competence factors is significantly positive, while the relationship between three IT governance competence factors and dependent variables, such as IS effectiveness and organizational performance, is partly positive. IT human resource management in IT governance is significantly influencing on IS effectiveness and organizational performance. Also, IT vendor management in IT governance is significantly influencing only on IS effectiveness. However, IT infrastructure in IT governance is not significantly influencing on IS effectiveness and organizational performance. This study suggests an integrated research model with theoretical linkages for understanding the impact of IT governance competence factors on organizational performance. Although previous studies have identified the importance of IT governance factors, additional explanation and causal relationship with empirical evidence for their efforts have been relatively not enough. The contribution of this study is to identify the strong relationship between strategic alignment and IT governance competence factors, such as IT vendor management, IT human resource management, and IT infrastructure, with empirical evidence on understanding the need of IT governance by strategic direction. This study provides practical insight that strategic alignment for IT governance is very important managing factor for the organization to initiate major decisions of IT resource management, and IT human resource management for IT governance is also important managing factor for improving IS effectiveness and organizational performance.
Keywords: 전략적 연계IT거버넌스 역량IT벤더관리IT인적자원관리IT인프라관리IS 효과성조직성과