Board-level IT governance and organizational performance

Abstract

Research on the strategic management of Information Technology (IT) resources has mostly focused on the oversight provided by the management team as a means to increase organizational performance. In recent years, boards of directors have also increased their involvement in IT matters, and various theoretical lenses suggest that this oversight too has the potential to influence organizational performance. Hence, this study synthesizes the resource-based and contingency views of MIS with corporate governance theories, and examines key antecedents and consequences of board-level IT governance (ITG) using a multi-method approach. Structural Equation Modelling analysis applied to organization-level data collected from 171 board members suggested that the level of ITG exercised by boards was contingent upon the organization's ‘IT use mode’, along the two dimensions of need for (a) fast and reliable IT, and (b) new innovative IT. But, the findings further suggested that the contingency approach may be suboptimal because it can cause new ways of leveraging IT to be ignored. High levels of board-level ITG, regardless of existing IT needs, increased organizational performance. This phenomenon was illuminated with applicability checks. Moreover, content analysis and structured interviews with board members further enriched these insights.

Keywords:

• IT governance
• board of directors
• resource-based view
• strategic grid
• organizational performance
• corporate governance

Additional information

Notes on contributors

Ofir Turel

About the Authors

Dr. Ofir Turel is a professor of information systems and decision sciences at the College of Business and Economics, California State University, Fullerton. Before joining the academia, he held senior positions in the information technology and telecommunications industries. His research interests include a broad range of behavioural and managerial issues in various information systems contexts. His work received several national and international awards, and was presented in many conferences. He published over 40 articles in journals such as MIS Quarterly, journal of MIS, European Journal of Information Systems, Communications of the ACM, Information & Management, Journal of Information Systems, Behavior & Information Technology, Telecommunications Policy, Group Decision and Negotiation, and Communications in Statistics.

Chris Bart

Dr. Chris Bart is a professor of Strategic Market Leadership (Strategy and Governance) at the DeGroote School of Business, McMaster University, Hamilton, Ontario and the Principal with Corporate Missions Inc. (http://www.corpor-atemissionsinc.com). In 2003, he helped found The Directors College, Canada's first university accredited director education programme. He is the author of the Canadian Business #1 best seller, A Tale of Two Employees and the Person Who Wanted to Lead Them as well as the CICA Publication, 20 Questions for Directors About Strategy. He has also published over 100 other articles, cases and reviews.