The moderating role of IT-business alignment in the relationship between IT governance, IT competence, and innovation

ABSTRACT

Results from a survey of senior executives/officers in charge of IT suggest that while greater IT governance triggers more innovation, IT-business alignment does not moderate this relationship. Executive management IT competence has a direct and positive impact on innovation, and this relationship is stronger when moderated by IT-business alignment. However, regardless of IT-business alignment, innovation is not significantly affected by the board’s IT competence but is positively impacted by IT intensity. This study extends the IS literature on the role of IT in innovation and contributes to the IT governance literature.

KEYWORDS:

• IT governance
• IT competence
• board of directors
• executive management team
• IT-business alignment
• innovation

Acknowledgments

We thank the participants who pre-tested the questionnaire or completed our survey.

Notes

^1. Digital capabilities include the ability to integrate business and IT, to appropriately integrate data and processes on a unified platform, to modify processes or build new methods onto the data and process platform, and to combine integrated data with powerful analysis tools (Westerman et al., 2012).

^2. Inbound open innovation refers to leveraging the discoveries of others (Chesbrough & Crowther, 2006).

^3. “(…) scholars are increasingly using the term resource-based theory instead of resource-based view. This reflects the fact that the resource-based research has reached a level of precision and sophistication” (Barney et al., 2011, p. 1303). Thus, in this study, we use the term resource-based theory (RBT).

^4. Prior studies refer to the group of individuals involved in strategic decision making at the highest level of a firm as the “top management team” (Bantel & Jackson, 1989; Karake, 1995; MacCurtain, Flood, Ramamoorthy, West, & Dawson, 2010; Prajogo & Ahmed, 2006; Talke et al., 2010), “senior management” (Sing Wong, 2013), or the “executive management team” (Turel & Bart, 2014). In this study, we use the expressions “executive management” or “executive management team” when referring to the group that includes the Chief Executive Officer (CEO), the Chief Information Officer (CIO), and other senior executives.

^5. Some targeted respondents indicated by email that their organizations’ policy did not allow them to respond to questionnaires. Others mentioned that they did not have time to fill out the questionnaire while some simply mentioned that they would not answer.

^6. Following the procedure laid out in Chin, Marcolin, and Newsted (2003), the items for the three latent moderator variables were obtained by the cross-product of each item loading on IT governance, board and executive management IT competence with each item that loaded on the moderator, IT-business alignment. As recommended by Chin et al. (2003), we used centered variables for all items that were part of the moderated relationships.

Additional information

Funding

We are grateful to both the Autorité des marchés financiers du Québec and the Canadian Academic Accounting Association (CAAA) Research Grant Program for their financial contribution.

Notes on contributors

Sylvie Héroux

Sylvie Héroux (Ph.D., M. Sc., CPA auditor, CA) is a full professor at the École des sciences de la gestion of Université du Québec à Montréal, in the area of audit and ethics. Her research interests are in IT governance, the influence of board of directors and executive management characteristics, innovation, and corporate governance efficiency. She has published in International Journal of Organizational Innovation, Information Systems Management, Journal of Information Systems, Journal of Management and Governance, Advances in Management Accounting, Gestion – Revue internationale de gestion, and has presented at Canadian, American and European accounting association conferences.

Anne Fortin

Anne Fortin (Ph.D. in Accounting, University of Illinois at Urbana-Champaign) is a Full Professor of accounting and ethics in the École des sciences de la gestion of Université du Québec à Montréal. Her research focuses mainly on stakeholders’ role in standard setting, accounting information and user decision making, IT governance, CSR, and accounting students’ competency development. She has published in several journals including Accounting, Organizations and Society, Contemporary Accounting Research, Journal of Business Ethics, Accounting and Business Research, Advances in Accounting Behavioral Research, International Journal of Managerial Finance, Journal of Information Systems, Information Systems Management, and Accounting Education: An International Journal.