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This study applies the concept of organizational boundary to examine how outsourcing and the management of external and internal boundaries of the information technology (IT) function impact IT alignment. The article argues that by decreasing the governance costs for the less strategic IT transactions, IT outsourcing enables the IT function, and IT management particularly, to focus more on aligning the IT activities and plans with business strategies and priorities, and thereby improve IT alignment. This article also suggests that organizations may improve IT alignment by effectively transmitting knowledge and supporting collaboration between IT and business functions through boundary spanning activities and with boundary objects. The concept of organizational boundaries and boundary management has not been explicitly addressed by the existing research on IT alignment. This study also contributes to the IT outsourcing literature by linking outsourcing to improved IT alignment.

We study path-dependence of technological systems and power relations inside companies. While existing literature suggests power relations and technology to be path-dependent and influenced by each other, interactions across these evolutionary processes remain poorly understood. We studied the history of four retail firms over forty years, applying event structure analysis to explicate key dynamics. Companies exhibited two episodes of converging path dependency, where power relations further increased technological inertia. In each case, power initially concentrated outside the central headquarters. Path-breaking change led all firms to centralize power and implement networked IT systems supporting central control. We discuss the ability of converging technological and organizational path dependencies to create competitive disadvantage. Widely available technological advances create advantage even when competitors have similar existing systems, when power structures are strongly path-dependent, impeding technological change. Thus, company owners ought to create path-breaking disruptions in power relations when technological adoption provides value.

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