How Social Capital Among Information Technology and Business Units Drives Operational Alignment and IT Business Value

Abstract

It is widely acknowledged that information technology (IT) and business resources need to be well aligned to achieve organizational goals. Yet, year after year, chief information officers still name business-IT alignment a key challenge for IT executives. While alignment research has matured, we still lack a sound theoretical foundation for alignment. Transcending the predominantly strategic executive-level focus, we develop a model of "operational alignment" and IT business value that combines a social perspective of IT and business linkage with a view of interaction between business and IT at nonstrategic levels, such as in daily business operations involving regular staff. Drawing on social capital theory to explain how alignment affects organizational performance, we examine why common suggestions such as "communicate more" are insufficient to strengthen alignment and disclose how social capital between IT and business units drives alignment and ultimately IT business value. Empirical data from 136 firms confirms the profound impact of operational business-IT alignment, composed of social capital and business understanding of IT, on IT flexibility, IT utilization, and organizational performance. The results show that social capital theory is a useful theoretical foundation for understanding how business IT alignment works. The findings suggest that operational alignment is at least as important as strategic alignment for IT service quality; that managers need to focus on operational aspects of alignment beyond communication by fostering knowledge, trust, and respect; and that IT utilization and flexibility are appropriate intermediate goals for business-IT alignment governance.

Keywords:

• business-IT alignment
• business value of IT
• information systems alignment
• operational alignment
• social capital