Impact of IS Strategy and Technological Innovation Strategic Alignment on FirmPerformance

Abstract

Abstract-The alignment between information systems strategy and business strategy as an important driver of competitiveness has predominantly been assessed through quantitative methods without exploring in detail factors that influence strategic alignment and their implications for perceived business performance. Most IS-business strategic alignment studies dominantly focus on entire business and IS strategies resulting in many findings that are too general and inconclusive. This study aims at assessing strategic alignment factors, their interrelationships, and how they influence the IS-business alignment and its consequential effect on the performance of six universal banks in Ghana. The study followed the systematic procedure of grounded theory design and adopted qualitative dominant crossover mixed analysis. The findings of the study indicate strategic alignment between information systems strategy and technological innovation impacts positively on the performance of a firm where IT utilization complements resources and capabilities.

Assessment of IS‐innovation strategic alignment factors among universal banks in Ghana

“…Well‐aligned (EA_WAL) category is positioned at the median of managers and IT heads (see Figure ). This implies that management of these six universal banks were generally interested in finding the right type of fit in terms of strategic content (Tallon, ) and strategically collaborated to pursue strategic alignment activities that resulted in successful alignment (Obeng & Mkhize, ). This finding is consistent with the claims of (Henderson & Venkatraman, ; Panda & Rath, ) that successful IS‐business strategic alignment requires collaboration between functional areas and commitment of the top executives.…”

“…This finding is consistent with the claims of (Henderson & Venkatraman, ; Panda & Rath, ) that successful IS‐business strategic alignment requires collaboration between functional areas and commitment of the top executives. Partial alignment does not result in a full realization of strategic intent (Obeng & Mkhize, ); hence, it is positioned far from the rest of the strategic alignment categories (see Figure ). What specific factors influence IS and innovation strategic alignment? First, we examined the alignment factors on the left side of the perceptual map.…”

“…Competence is expressed through collaboration that facilitates organizational learning and new knowledge acquisition (Chae, Koh, & Prybutok, ). These banks through organizational learning were able to develop new knowledge and capabilities that are difficult to imitate to support their strategic intent (Obeng & Mkhize, ). Organizational learning, which is mainly driven by IT, is considered a strategic tool for achieving long‐term organizational success (Liao et al, ), a crucial input of innovation processes (Jiménez‐Jiménez & Sanz‐Valle, ), and promotes strategic alignment (Crossan & Berdrow, ).…”

“…Innovation objectives, drivers, and challenges are plotted at right side in Figure . In a competitive market, banks adopt innovation as a strategy to withstand challenges and improve performance (Obeng & Mkhize, ). The banks embraced IS‐innovation efforts as business practices (Bharadwaj et al, ; Coltman et al, ).…”

“…There are several factors that enable or inhibit IS‐innovation strategic alignment. Among these include relationships within organizations, sharing information, and strategically planning together (Chan, Sabherwal, & Thatcher, ); formal and informal aspects of organizational culture (Tallon & Kraemer, ), collaboration and sharing of knowledge and skills between business staff and IT staff (Luftman, ; Obeng & Mkhize, ), scope of IT initiatives (Luftman, Lyytinen, & Zvi, ), and leadership to facilitate the alignment process (Panda & Rath, ). For other researchers, firm‐wide active involvement between the business and IT functions during strategy formulation (Henderson & Venkatraman, ), senior management support and focus on long‐term critical issues for successful alignment (Broadbent & Weill, ), management skill and capability (Luftman, Papp, & Brier, ; Street, Gallupe, & Baker, ), purposeful and strategically focused communication (Panda & Rath, ), and organizational learning (Crossan & Berdrow, ; Obeng & Mkhize, ) are factors that promote or hinder alignment.…”