How Information Technology Governance Influences Organizational Agility: The Role of Market Turbulence

Figures & data

Figure 1. Conceptual model.

Table 1. Constructs and measurement items.

Construct	Items	Authors
IT governance mechanisms		(Wu, Straub, & Liang, 2015) (De Haes & Van Grembergen, 2009) (Weill & Ross, 2004)
Decision-making structure (ITGD)	ITGD1: Our company has a Steering Committee at Executive or senior management level responsible for determining IT development prioritization. ITGD2: Our company has a Steering Committee composed of business and IT people focusing on prioritizing and managing IT projects. ITGD3: CIO has a direct reporting line to the CEO and/or COO.
Formal process (ITGF)	ITGF1: Our company has established a formal prioritization process for IT investments and projects in which business and IT is involved. ITGF2: Our company has established formal processes to define and update IT strategies. ITGF3: Our company has established formal processes to govern and manage IT projects.
Communication approach (ITGC)	ITGC1: CIO is a full member of the executive committee. ITGC2: Our company has a committee at level of broad of directors to ensure IT is regular agenda item and reporting issue for the board of directors. ITGC3: The CIO or similar role in our company is able to clearly articulate a vision for IT’s role in the company.
IT capability		(Lu & Ramamurthy., 2011) (Bharadwaj, Sambamurthy, & Zmud, 1998) (Fichman, 2004) (Mata, Fuerst, & Barney, 1995) (Ross, Beath, & Goodhue, 1996) (Weill, Subramani, & Broadbent, 2002)
IT infrastructure capability (ITCI)	ITCI1: Data management services & architectures (e.g., databases, data warehousing, data availability, storage, accessibility, sharing etc.) ITCI2: Network communication services (e.g., connectivity, reliability, availability, LAN, WAN, etc.) ITCI3: Application portfolio & services (e.g., ERP, ASP, reusable software modules/components, emerging technologies, etc.) ITCI4: IT facilities’ operations/services (e.g., servers, large‐scale processors, performance monitors, etc.)
IT business spanning capability (ITCB)	ITCB1: Developing a clear vision regarding how IT contributes to business value ITCB2: Integrating business strategic planning and IT planning ITCB3: Enabling functional area and general management’s ability to understand value of IT investments ITCB4: Establishing an effective and flexible IT planning process and developing a robust IT plan
IT proactive stance (ITCP)	ITCP1: We constantly keep current with new information technology innovations ITCP2: We are capable of and continue to experiment with new IT as necessary ITCP3: We have a climate that is supportive of trying out new ways of using IT ITCP4: We constantly seek new ways to enhance the effectiveness of IT use
Innovation capability (IC)		(Menguc & Auh, 2006) (Hurley & Hult, 1998)
	IC1: Technical innovation, based on research results, is readily accepted. IC2: We actively seek innovative ideas. IC3: Innovation is readily accepted in program/project management. *IC4: Employees are penalized for new ideas that do not work. *IC5: Innovation in our company is perceived too risky and is resisted.
Organizational agility		(Lu & Ramamurthy., 2011) (Tsourveloudis, Valavanis, Gracanin, & Matijasevic, 1999)
Market capitalizing agility (OAM)	OAM1: We are quick to make and implement appropriate decisions in the face of market/ customer-changes. OAM2: We constantly look for ways to reinvent/reengineer our organization to better serve our market place. OAM3: We treat market-related changes and apparent chaos as opportunities to capitalize quickly.
Operational adjustment agility (OAO)	OAO1: We fulfill demands for rapid-response, special requests of our customers whenever such demands arise; our customers have confidence in our ability. OAO2: We can quickly scale up or scale down our production/service levels to support fluctuations in demand from the market. OAO3: Whenever there is a disruption in supply from our suppliers we can quickly make necessary alternative arrangements and internal adjustments.
Market turbulence		(Jaworski & Kohli, 1993)
Market turbulence (MT)	MT1: In our kind of business, customers’ product preferences change quite a bit over time. MT2: Our customers tend to look for new product all the time. MT3: We are witnessing demand for our products and services from customers who never bought them before. MT4: New customers tend to have product-related needs that are different from those of our existing customers. *MT5: We cater to many of the same customers that we used to in the past.

Note: * Indicators dropped due to low indicator reliability

Table 2. Descriptive statistics, correlation, composite reliability (CR), and average variance extracted (AVE).

	Mean	SD	CR	ITGD	ITGF	ITGC	IC	ITCI	ITCB	ITCP	MT	OAM	OAO
ITGD	4.743	1.687	0.908	0.877
ITGF	4.502	1.635	0.959	0.734	0.942
ITGC	4.467	1.682	0.907	0.684	0.678	0.874
IC	4.419	1.593	0.961	0.531	0.613	0.676	0.944
ITCI	4.843	1.329	0.944	0.490	0.531	0.540	0.705	0.900
ITCB	4.646	1.520	0.965	0.506	0.587	0.646	0.747	0.778	0.934
ITCP	4.783	1.550	0.970	0.401	0.551	0.593	0.799	0.722	0.828	0.944
MT	4.454	1.410	0.865	0.325	0.338	0.252	0.381	0.422	0.313	0.352	0.788
OAM	4.097	1.570	0.940	0.359	0.518	0.569	0.724	0.603	0.673	0.733	0.329	0.916
OAO	4.057	1.480	0.895	0.393	0.505	0.559	0.755	0.529	0.686	0.704	0.200	0.791	0.861

Notes: Values in diagonal (bolt) are the AVE square root; Decision-making structure (ITGD); Formal process (ITGF); Communication approach (ITGC); Innovation Capability (IC); IT infrastructure capability (ITCI); IT business spanning capability (ITCB); IT proactive stance (ITCP); Market turbulence (MT); Market capitalizing agility (OAM); Operational adjustment agility (OAO).

Table 3. Loadings and cross-loadings.

Construct	Item	ITGD	ITGF	ITGC	IC	ITCI	ITCB	ITCP	MT	OAM	OAO
Decision-making structure (ITGD)	ITGD1	0.929	0.705	0.595	0.505	0.503	0.454	0.390	0.297	0.343	0.353
	ITGD2	0.926	0.697	0.630	0.506	0.506	0.527	0.424	0.301	0.360	0.345
	ITGD3	0.765	0.511	0.575	0.376	0.254	0.336	0.222	0.255	0.228	0.339
Formal process (ITGF)	ITGF1	0.684	0.923	0.664	0.588	0.509	0.558	0.527	0.280	0.528	0.537
	ITGF2	0.728	0.950	0.653	0.581	0.511	0.555	0.517	0.380	0.479	0.448
	ITGF3	0.659	0.953	0.598	0.565	0.479	0.546	0.513	0.292	0.456	0.441
Communication approach (ITGC)	ITGC1	0.524	0.534	0.872	0.522	0.395	0.502	0.432	0.242	0.459	0.442
	ITGC2	0.687	0.567	0.907	0.567	0.459	0.528	0.490	0.254	0.480	0.464
	ITGC3	0.574	0.673	0.842	0.678	0.557	0.659	0.626	0.166	0.551	0.557
Innovation Capability (IC)	IC1	0.504	0.617	0.659	0.947	0.674	0.697	0.766	0.386	0.704	0.711
	IC2	0.511	0.584	0.630	0.940	0.675	0.732	0.745	0.316	0.652	0.698
	IC3	0.491	0.536	0.626	0.946	0.648	0.689	0.753	0.374	0.694	0.732
IT infrastructure capability (ITCI)	ITCI1	0.465	0.496	0.511	0.656	0.907	0.744	0.659	0.354	0.519	0.486
	ITCI2	0.509	0.475	0.524	0.597	0.887	0.678	0.578	0.367	0.449	0.420
	ITCI3	0.378	0.474	0.445	0.629	0.892	0.689	0.664	0.402	0.605	0.515
	ITCI4	0.417	0.465	0.467	0.652	0.913	0.687	0.693	0.397	0.592	0.481
IT business spanning capability(ITCB)	ITCB1	0.420	0.498	0.599	0.696	0.772	0.921	0.785	0.291	0.616	0.614
	ITCB2	0.500	0.549	0.617	0.710	0.742	0.952	0.773	0.344	0.654	0.640
	ITCB3	0.450	0.545	0.587	0.713	0.706	0.928	0.771	0.282	0.620	0.660
	ITCB4	0.522	0.603	0.609	0.671	0.682	0.934	0.762	0.250	0.621	0.648
IT proactive stance (ITCP)	ITCP1	0.357	0.496	0.563	0.733	0.749	0.801	0.949	0.288	0.697	0.690
	ITCP2	0.393	0.490	0.545	0.746	0.704	0.793	0.955	0.309	0.671	0.655
	ITCP3	0.370	0.523	0.529	0.755	0.603	0.720	0.918	0.383	0.660	0.632
	ITCP4	0.396	0.573	0.601	0.787	0.662	0.807	0.953	0.356	0.737	0.678
Market turbulence (MT)	MT1	0.282	0.190	0.231	0.247	0.341	0.286	0.244	0.592	0.163	0.087
	MT2	0.282	0.319	0.192	0.312	0.377	0.251	0.259	0.834	0.273	0.134
	MT3	0.212	0.201	0.188	0.326	0.392	0.249	0.293	0.824	0.221	0.144
	MT4	0.271	0.322	0.209	0.318	0.280	0.241	0.315	0.871	0.335	0.225
Market capitalizing agility (OAM)	OAM1	0.270	0.412	0.444	0.593	0.537	0.586	0.606	0.243	0.893	0.676
	OAM2	0.339	0.497	0.535	0.736	0.617	0.658	0.732	0.314	0.938	0.755
	OAM3	0.373	0.512	0.582	0.656	0.501	0.602	0.671	0.345	0.915	0.739
Operational adjustment agility (OAO)	OAO1	0.360	0.458	0.534	0.747	0.582	0.665	0.696	0.279	0.802	0.872
	OAO2	0.357	0.457	0.499	0.598	0.358	0.544	0.557	0.112	0.651	0.886
	OAO3	0.292	0.382	0.400	0.594	0.412	0.553	0.551	0.109	0.567	0.823

Table 4. Heterotrait-Monotrait Ratio (HTMT)

	ITGD	ITGF	ITGC	IC	ITCI	ITCB	ITCP	MT	OAM	OAO
ITGD
ITGF	0.819
ITGC	0.809	0.760
IC	0.593	0.654	0.756
ITCI	0.546	0.571	0.610	0.757
ITCB	0.560	0.623	0.718	0.791	0.830
ITCP	0.439	0.582	0.655	0.843	0.765	0.866
MT	0.405	0.379	0.318	0.441	0.515	0.374	0.405
OAM	0.405	0.562	0.649	0.784	0.659	0.725	0.786	0.370
OAO	0.471	0.572	0.663	0.853	0.600	0.771	0.785	0.224	0.906

Notes: Values in diagonal (bolt) are the AVE square root; Decision-making structure (ITGD); Formal process (ITGF); Communication approach (ITGC); Innovation Capability (IC); IT infrastructure capability (ITCI); IT business spanning capability (ITCB); IT proactive stance (ITCP); Market turbulence (MT); Market capitalizing agility (OAM); Operational adjustment agility (OAO).

Table 5. Formative measurement model evaluation

Formative construct (second-order construct)	Constructs (first-order reflective)	Weights	VIF
IT governance (ITG)	Decision-making structure (ITGD)	0.320***	2.150
	Formal process (ITGF)	0.426***	2.516
	Communication approach (ITGC)	0.371***	2.481

Notes: *** p < 0.01; ** p < 0.05; * p < 0.10.

Figure 2. Results of the research model.

Table 6. Significance analysis of the direct and indirect effects.

Effect of	Direct effect	Indirect effect	Interpretation
ITG→ IC →OA	0.112	0.328***	Indirect-only (full mediation)
ITG→ ITC →OA	0.112	0.177***	Indirect-only (full mediation)

Notes: *** p < 0.01; ** p < 0.05; * p < 0.10

Figure 3. Moderation effect of MT and IC on OA.

Figure 4. Moderation effect of MT and ITG on OA.

Figure 5. Moderation effect of MT and ITC on OA.

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