The impact of strategic alignment on organizational performance: The case of Ethiopian universities

Abstract

Strategic alignment deals with organizational strategic fit with functional areas strategies, such as human resources management strategy. It is based on goal setting premise which believes in collaborative effort that involves all parties imagining and working towards a common aim in tandem. Strategic alignment in this study takes assumption of goal setting theory stressed on importance of clarity of the goal to perform at the highest level and achieve success. The purpose of this study was to look into the impact of strategic alignment on organizational performance. Clarity in the aim, role clarity, and process clarity were discovered and examined for the measurement of organizational strategic alignment. The study took a quantitative approach with descriptive and explanatory research designs. Three Ethiopian universities were chosen based on generation of establishment to include 365 personnel in the sample using a random selection technique. Descriptive statistical tools such as mean and standard deviation were used, whereas structural equation models were used for confirmatory factor analysis and path analysis. According to the study’s findings, goal clarity, role clarity, and process clarity all have a significant and favorable effect on organizational performance in higher education. Findings of the study reveal also that organizational performance varies among study institution based on implementation level of strategic alignment. Based on the study’s findings, it is recommended that organizational leaders outline organizational strategic intents with specific goals. Thus, it is recommended that governing bodies need to promote defined roles and processes for all workers.

Keywords:

• alignment
• clarity
• goal
• role
• performance
• process
• strategy

PUBLIC INTEREST STATEMENT

Strategic alignment increasingly showing important role in the organizational performance improvement. This study provides significance of strategic clarity for goal achievement in public institutions. Moreover, this study magnifies importance of alignments between strategic components. To increase employee commitment and engagement; institutional leaders must increase the level of employee trust in management system through clarity in goal, role and process, which increases individual motivation to contribute for their institutional better achievements.

1. Introduction

Organizational performances are a set of overall preferred results that it wants to accomplish and measure for different levels of hierarchy and can be assessed for individuals, groups, and the entire organization as a whole (Knies et al., 2016). Thus, performance is success that doesn’t exist by itself, but it is a function of individual efforts and the result of action (Anwar & Abdullah, 2021).

Change dynamism in modern business environment complicated the management system and challenging effectiveness in performance. Hence, to sustain performance improvement, organization of all structure and size searching for strategic fit that allow all parts of the system to be closely integrated and aligned toward actively achieving the desired results. Thus, integration of business resources and activities with organizational strategic priority is termed as strategic alignment as it is used in this study. Strategic alignment is critical trend among contemporary strategic concepts helping organizations to cope up with challenges and altering old work system to productive one (Sharma & Behl, 2023). It is a long-term function that secures organizational survival and protect the continuity of performance improvement (Sha et al., 2020). Strategic alignment allow harmony relation and transparent communication between lower and higher level administrators and staff. This enables organizations to work together and achieve a unified goal through effective communications. It is a source of compatibility and harmony at the organization’s internal level due to unified efforts (Abanumay & Mezghani, 2022; Ahmad & Adnan, 2017; Chtourou Ben Amar & Ben Romdhane, 2020).

The basic foundation of strategic alignment is contingency theory that states the fit between certain contextual and organizational factors leads to higher performance (Hanisch & Wald, 2012). There is also configurational theory which suggests strategic alignment as the fit between a firm’s strategy and its internal and external factors leads to superior firm performance (Herd et al., 2018). Strategic alignment has different dimensions representing organizational strategic fit with various contextual components (Younis et al., 2023). It includes harmony of business strategy, information technology strategy, organizational infrastructure and processes, and IT infrastructure and processes by Luftman et al. (1993). Moreover, it encompasses organizational strategic fit with strategies in other functional areas, such as procurement strategy (Knudsen, 2003), human resource management strategy (Shih et al., 2005) and advertising strategy (Boudreau & Watson, 2006). But, the focus of this study is investigation of strategic clarity dimensions like goal clarity, role clarity and process clarity effects on organizational performance.

Clarity in strategic statement provides valuable guidance to workers through specific identification of the performance dimensions that organization seeks to optimize (Smith & Thomas, 2020). It shapes workers’ attention in the most effective way which in turn, results in the highest performance. Goal, role and process clarities are the strategic clarity statements used for this study and represents the degree to which employees understand why the task assigned is relevant or essential (Anderson & Stritch, 2016). It help employees to feel that their organization includes their contribution and also acts as an essential motivator for achievements and task performance (Bellamkonda et al., 2021).

Many scholars have attempted to explore implementation and theoretical implication of constructs at practical level given the importance of strategic alignment for the success of organizations performance. However, no common sense were reached about unified constructs and best dimension of strategic alignments (Herd et al., 2018; Reese, 2020; Wamba-Taguimdje et al., 2020). Moreover, the focus of many researchers in the area of strategic alignment is fit between organizational strategic priorities with information technology and/or with external environment. Therefore, the focus of current study is investigation of how clarity in organizational strategic objectives is communicated among the parts in organization and how it affects targeted performance.

Though concepts of strategic alignment have been studied and insights into understanding of different dimension of strategic alignment and its impact on organizational performance were established (Al-Surmi, 2016; Ghonim et al., 2022; Sharma & Behl, 2023); those researches mainly focused on three issues as fit between information technology and business strategy, fit between business strategy and competitive environment and as fit between business and marketing strategy. But, alignments between important strategy components as goal, tasks (role) and procedure (process) through which assigned tasks performed was not yet investigated. Moreover, prior researchers have generalized strategic alignment as equally applicable concepts to all organization irrespective to size and nature without taking into account the specific strategies of firms and alignment dimensions. Therefore, this study focused on effects of strategic alignment dimensions as goal, role and process clarity in Ethiopian higher educational institutions assuming fit between clarity of these concepts improve performance.

2. Literature review

2.1. Theoretical foundation of strategic alignment

Strategic alignment refers to fit between corporate resources with opportunities and threats. It can be traced to the work of Chandler (1962); Andrews (1971). In its early stage and much of the literature on strategic alignment has focused on the alignment of IT strategy with corporate strategy. Henderson and Venkatraman (1992) develop strategic alignment model framework that includes strategic fit, functional integration and linkage between business strategy and information technology. Henderson and Venkatraman’s strategic alignment model extends to emphasize how business success depends on the harmony of business strategy, information technology strategy, organizational infrastructure and processes, and IT infrastructure and processes by Luftman et al. (1993). It includes the calibration of the organization’s culture, staff, structure and governance with the strategy (Al-Shami et al., 2022).

Moreover, strategic alignment deals with organizational strategic fit with strategies in other functional areas, such as procurement strategy (Knudsen, 2003), human resource management strategy (Shih et al., 2005) and advertising strategy (Boudreau & Watson, 2006). Those functional areas have also been addressed in the literature. For this study, Shih et al. (2005) strategic alignment dimension dealing with strategic clarity is a focus. The notion of alignment is used to investigate the extent of fit between an organization’s human resources management and its development strategies. In a sense of strategic human resource management, knowledge is the major driver of business performance by creating core capability to an organization (Moustaghfir, 2014). The logic behind the concept of strategic human resource management is linking such organizational core capabilities with business strategy so as to win competitive advantage against the rivals. It is the alignment of organizations strategic human resource management function as a strategic partner to organizational growth in the formulation and implementation of the organization’s strategies through human resource activities crating clarity in stated goal and courses of actions that take way to its achievement Junita (2016) suggested that a clarity in strategic management practice is the best way to differentiate one organization from other, and also as the most significant tool to achieve competitive advantage of organizations. Kidanemariam (2016) concludes that the alignment of human resource management with organizational strategy intent is positively related to performance. Based on his finding Kidanemariam also concluded that effectiveness of performance depends on the effective management of human activities.

Strategic management focuses on developing internally consistent human resource activities to build employees’ knowledge, skills, and abilities in an effort to support competitive strategies and achieve business objectives. Aligning business strategies with human resource activities helps a business in three ways. In the first place, the business can adapt to a change because the time from the conception to the execution of a strategy is shortened. In the second case, the business can better meet customer demands because its customer service strategies have been translated into specific policies and practices. Third and lastly, the business can achieve both financial and non-financial performance through its effective execution of strategy.

2.2. Contingency theory

This study attempted to find out relationship between strategic alignment in the form of goal clarity, role clarity and process clarity and organizational performance. According to contingency theory, performance is balanced fits between organization’s strategy and its environmental context (McAdam et al., 2019). This theory states that performance effectiveness depends on situational fit with business strategies. As this theory, no single management system and/or situation is fit for organizational effectiveness. The essence of strategic alignment is also fitness between different parts and components of organizational working system for better performance achievement. The importance of contingency theory for this study is to reside in fitness between strategic alignment dimensions used for study as goal, role and process clarity. Contingency theory argues that there is no universally acceptable management system applied equally at all organization in all conditions. But, it suggest that particular features of the system and effectiveness of operating system is depending on organizational situation and contextual factors. Therefore, it was used to investigate strategic alignment implementation level and organizational performance in sampled institutions as comparative analysis.

2.3. Goal setting theory

Goal setting theory stressed on importance of clarity of the goal to perform at the highest level and achieve success (Asmus et al., 2015). This theory magnifies importance of strategic alignment for performance improvement. Many professionals explain why goals are important for motivation, but there are also several resources that provide guidance and guidelines for shaping objectives. Psychologist Edwin Locke’s goal setting theory is one of the most popular models of employee mental readiness through strategic alignment. This theory believes that goal-setting process is collaborative effort that involves all parties imagining and working towards a common aim in tandem (Asmus et al., 2015). Goal setting theory outlines five requirements for goals as it need to be clear, specific, and easy to understand, push employees (challenging), pursues the objective wholeheartedly from its inception, provides feedback and direction throughout the process to maintain momentum or encourage improvement and set reasonable expectations and should divide larger projects into smaller, easier to tackle tasks with steps, milestones, and regular review (Teo & Low, 2016). This theory is used to clarify investigation of impacts of strategic alignment on organizational performance in the form of fitness between clarity in the goal, clarity in the role and clarity in process.

2.4. Hypothesis development

2.4.1. Strategic alignment and organizational performance

The effectiveness of an organization will be realized when that organization achieves its predetermined goals about the needs of stakeholders (Dreiss et al., 2017). This goal will not be achieved unless the employees are aware about it and responsibilities. Alignment is a necessary condition for organizational effectiveness. It helps to have common agreements about the goals and the means. Through that, all parts, members and functions of the organization work towards the same purpose. Anthony‐McMann et al. (2017) recommend that the employees be precisely and accurately communicated on the strategic and goals of the organization. This increased employees’ understanding of organizational strategies leading to improved organizational commitment, job satisfaction, and trust among employees (Willems and Ingerfurth (2018). Gorgi et al. (2019) also indicate that the level of performance is higher among the employees who have a better understanding of organizational strategies and responsibilities. Consolidation of synergy between strategy, processes, organizational resources and technological capabilities is strategic means for organizational goal achievement (Chi et al., 2020). And they recommend that the mission, objectives and plans of organization should be integrated and synchronized with business strategies. Strategic alignment significantly and positively affects effectiveness of managerial decision and achieve the greatest impact on organizational success (Ghonim et al., 2020). Chi et al. (2020) suggested that keeping fit between organizational priorities and resources through strategic alignment enhances its response to environmental pressures and moves toward a higher level of performance by integrating the main thrusts of the organization’s goals and objectives.

H1:

Strategic alignment has positive significant effect on performance of higher educational institutions.

2.4.2. Dimensions of strategic alignment and organizational performance

2.4.2.1. Goal clarity and organization performance

Strategic alignment is related to organizational performance through goal clarity. When all levels of employees in the organization have clear, unambiguous views of the organization’s strategic goals; a culture of alignment is promoted. The culture begins at the individual employee level and expands to linkages at the group and organization levels. Empirically, it also clarified that the motivation of strategic alignment in terms of individuals is to create psychological stability of individual goals and actions whereas at organizational level it is to ensure high level of engagement toward the organization’s active support (Kim et al., 2020). The core concept behind goal clarity is that it is important that need to be clear in order to be perceived as important, thereby increasing one’s motivation to achieve it.

H2:

Goal clarity has positive significant effect on performance of higher educational institutions.

2.4.2.2. Process clarity and organization performance

Processes clarity not only increases individuals’ understanding of their work objectives and paths but also emphasizes the alignment of colleagues, teams, and organizations. Collective interaction among the team’s competencies can be improved by clear goals and processes. Process clarity is the degree to which individuals are certain about how they perform their duties. High clarity in process at the employee, team and organizational levels helps members understand the procedures necessary to achieve goals. Hu and Liden (2015) posit that clarity in goals and processes at the employee and team level is positively related to employee and team performance as well as organizational efficiency as a whole. Clear procedures toward goals are also very important for employee and team performance, because process clarity provides clearer and more active plans and visible strategies to achieve the goal. Empirical evidences reveal that poor or incomplete definition of the work content of a role, unclear relationships between roles, overlapping work boundaries, or inappropriate authority causes confusion and uncertainty and will ultimately result in poor performance, poor morale or conflict. Role clarity extends beyond the tasks in the position description and it includes the broader accountabilities of all employees on how they are to work with their manager, their team and others in the organization. Clarity on how people work together is about understanding roles and respecting those roles. It is with clarity that individuals, teams and the organization can work together to perform their work (Onuoha et al., 2016).

H3:

Process clarity has positive significant effect on performance of higher educational institutions

2.4.2.3. Role clarity and organization performance

Role clarity is the degree to which employees have a clear perception of their role expectations and actions. If roles are not clear, employees avoid their job responsibilities which lead to tension and make it difficult to achieve strategic goals or exerting a negative effect on organizational performance. Clarity on the tasks to be performed relates to how organizations define, align and cascade their work, including their strategic goals (Al Khalifa, 2016). This requires every manager at every level to provide. It mainly concerned with clarity about what is expected and the boundaries within which they must work. Role clarity create shared understanding of the work to be performed in an organization (Ghonim et al., 2020). It mainly dealing with clarity in role design, clarity in direction and clarity in assigned task.

H4:

Role clarity has positive significant effects on performance of higher educational institutions

3. Conceptual framework

For this study, the relations between constructs were depicted by measurement and structural models between latent and observed variables as well as relation between two latent variables. The study has two latent constructs (strategic alignment and organizational performance) with three by three observed variables. Strategic alignment construct represented by three observed variables as goal clarity, role clarity and process clarity. Organizational performance construct represented by indicators like quality in service, quality of research output and competency in graduate students. For each latent variable there are questions that indicated by single line on graph in figure 1 represents the relation between independent and dependant variables of study with their respective indicators.

Figure 1. Conceptual framework.

Where SA represent strategic alignment

GC >> Goal clarity

PC >> Process clarity

RC >> Role clarity

OP >> Organizational performance

QS >> Quality in service (Service quality)

QRO >> Quality in research out put

CGS >> Competency of graduate students

Σ >> Error

4. Methodology

Quantitative research approach with both descriptive and explanatory study design was employed. To explain the nature and characteristics of the units in the sample, a descriptive study design was adopted. The influence of strategic alignments on organizational performance was investigated using an explanatory design. Using their generational and excellence classifications, three universities were chosen.

The target population comprised universities that fall under the first, second, and third classes based on generation and the research, applied, and comprehensive classifications based on excellence. Three universities from both classes were purposefully chosen based on proximity and locational convenience for researcher. This leads to the selection of Hawasa from the first and research domain, Wolaita Sodo from the second and applied domain, and Bule Hora from the third and comprehensive domain. The study’s population reflects the combined numbers of academic and administrative staff at those three universities. Table 1 shows the stratified target population of the study according to the human resource data of the three universities.

Table 1. Target population in each University

S/n	Universities	Targeted populations						G/total
		Academic staff			Admin staff
		Male	Female	S/total	Male	Female	S/total
1	Hawasa	1327	276	1603	3690	3673	7363	8966
2	Wolaita Sodo	757	132	889	2114	2294	4408	5297
3	Bule Hora	657	53	710	1144	1234	2378	3612
Total		2741	461	3202	6948	7201	14149	17875

Source: researcher survey result, (2022).

Because of the nature of the study, employees who cannot be governed by local or conventional human resource policies and practices were excluded. As a result, all expatriate and temporary employees were excluded from sampling frame.

Because of the size of target population; Rosenheim and Hoy (1989) formula is preferred to be employed to determine sample size and 376 employees were selected as a sample from three Universities with proportional sample size from each University with total population they have. Proportional quota sampling was applied in each university based on the 4-pillars of university good governance, teaching and learning, research and communities services. Accordingly, 25% quota for administrative staff and 75% quota were given for academic staff. Simple random sampling technique was employed to select sample from both wings. Data were collected with 5-point Likert scale and open ended questions. Likert scale question is preferred because of its ability to reduce the risks of an expression of opinion by respondents being influenced by their opinion on only one or two aspects of that situation. Among the Likert scale types, five points scale questions were used because of its simplicity to be understood by both survey administrator and respondents. Accordingly sample size selection in each university was made based on proportional rate as follows.

Data were analyzed using both descriptive and structural equation model. Descriptive statistics such as mean and standard deviation were employed, whereas, confirmatory factor analysis and path analysis were used for structural equation model.

4.1. Model specification

Model specification involves determination of relationships between variables and number of parameters interested to the researcher in the model (Khine, 2013). Since model specification is about explaining parameters included or excluded in the model with respective relationships among the variables, researcher tried to enumerate parameters included in this study with their respective relationships. While the objective of a study is to examine a relationship between independent and dependent variable, there is a need to model the theorized relationship to test it with the empirical data from the fields:

$Y=0+{}_1{x}_1{\text{+}}_2{x}_2{\text{+}}_3{x}_3\text{+}\in$

When Y= Overall organizational performance

ß0= Constant values of regression

ß1–3= unstandardized Beta coefficients

Σ = Error

$\text{OP}={\text{ss}}_0+{\text{ss}}_1\text{GC}+{\text{ss}}_2\text{RC}+{\text{ss}}_3\text{PC}+\in$

4.2. Validity and reliability

Scale questions used for data collection were checked for the pattern of the responses given from participants (unidimensionality) using item-to-rest correlation. All scale items used for data collection for this article have item-to-rest correlation coefficients greater than 0.3 which is acceptable level as per rule of thumb. Reliability of instruments used for data collection was checked using Cronbach’s alpha values and approved that data is highly reliable with Cronbach’s Alpha value of 0.895. Content validity of instruments was checked with peer review and also questions were given for senior researchers and professors and approved. Validity and reliability of instruments were further checked and approved using confirmatory factor analysis.

5. Data analysis and presentation

5.1. Comparative analysis of application level of the concepts among study institutions

Clarity in goal, role and process was used to investigate influence of strategic alignment on organizational performance. Descriptive analysis was used to explain application of strategic alignment level and to describe status of organizational performance in the institutions of the study. Average mean of responses of participants was used to identify application level as per understanding of the participant. Large value of average mean represents good application of the issue under study whereas, small average mean indicate low applications. Among 391 distributed questionnaires 376 were collected and used for data analysis with approximately 96% response rate.

Based on the summary of participants’ responses about implementation of study concepts, level of strategic alignment implementation is better in Wolaita Sodo University with average mean of 3.03 followed by Hawasa University with average mean of 2.87, whereas, average value of the participant responses about implementation level of strategic alignment in Bule Hora University was 2.50. The variability among institution in implementation level of strategic alignment as it can be seen from average mean value table above are statistically significant at 1% significance level. Moreover, organizational performance also higher in Wolaita Sodo with average mean of 3.49 followed by Hawasa University with average mean responses of 3.38, but performance in Bule Hora University is lower than others two Universities with average mean responses of 2.95.

Level of implementation of the study concepts varies among institutions at statistically significant level. The variability among the institutions with regard to implementation of strategic alignment and organizational performance was tested using ANOVA and it is statistically significant at 19.40 f statistics and at p-values of 0.0000 for strategic alignment, whereas, organizational performance varies statistically at significant level with 21.78 f statistics and at p-values of 0.0000.

The results from descriptive analysis show that performance is analogous with implementation level of institution strategic alignment. Hence, performance is better in university where strategic alignment is higher than others. Accordingly, both strategic alignment level and performance are higher in Wolaita Sodo University, followed by Hawasa University which is average mean responses of 3.03 and 2.87 respectively. In Bule Hora University, both average mean of responses for strategic alignment and performance are lower than two universities with mean values of 2.50 for strategic alignment and 2.95 of organizational performance.

The results from descriptive analysis above reveal that there is positive relationship between strategic alignment and organizational performance. This result has conformity with findings of Smith & Thomas, (2020) who have studied about performance effects of strategic alignment and clarity. Smith & Thomas concluded in their research that alignment in strategy as performance measure and strategic clarity as mechanism to ovrcome negative performance effect. This study result also has conformity with conclusion of AL-Hashem and Orabi (2021) study on Impact of Strategic Alignment and Strategic Awareness on Strategic Performance, who has concluded as strategic alignment has a positive and significant impact on strategic performance. Table 2 below show sample representatives in each sampled university based on proportional ratio of the target population in each institution.

Table 2. Sample size in each university

S/n	Names of Universities	Target population	Proportional rate	Sample size assigned
1	Hawasa	8966	50%	188
2	Wolaita Sodo	5297	30%	113
3	Bule Hora	3612	20%	75
Total		17875		376

Source: Constructed by researcher (2021).

5.2. Measurement model

The relation among study variables was tested using Stata SEM builder through two stage procedure. Confirmatory factor analysis (CFA) was used to test measurement model to evaluate whether all indicators represent respective construct. After achievement of satisfactory fit of measurement model, structural model was estimated to test causal effect relation between latent variables. The figure in table 3 indicates comparative implementation level of study concept among sampled institutions. As it can be seen from the mean values in the table level of implementation is vary among institutions.

Table 3. Summary statistics: mean standard deviation by University

Dimensions	BHU		HU		WSU ANOVA
	mean	sd	mean	sd	mean	sd F p(sig)
Strategic alignment	2.50	.62	2.87	.64	3.03	.51 19.40 0.0000
Organization performance	2.95	.63	3.38	.64	3.49	.55 21.78 0.0000

Source: researcher survey result (2023).

For this study analysis, covariant-based structural equation modeling was employed because of the large sample size used for data collection. The SEM model testing is done in stages ways. The original model was revised due to failure of model goodness fit obtained from test result. The first step attempted to improve model fitness was application of modification indices and error variances were correlated, but model fitness was not achieved. After modification indices trial were failed questions with low factor loadings were deleted. Finally, model goodness of fit was achieved after 7 questions were deleted from organizational performance construct. The results of data processing and analysis in the full SEM model were carried out through a goodness of fit test statistics after approval of model fitness. Accordingly, the results of goodness of fit test can be seen in Figure 2. The table 5 below show the summary of measurment model goodness of fit.

Figure 2. Structural model.

Table 5. Test results of the goodness-of-fit model CFA

No	Index	Critical Value	Results	Model fit
1	Chi Square	The smaller the better	476.871	Less Fit
2	CMIN/DF	<2.00	276	Les Fit
3	CFI	≥0.95	0.956	Fit
4	RMSEA	≤0.08	0.055	Fit
5	TLI	≥0.90	0.946	Fit
6	CI	≤0.50	0.048	Fit
7	SRMS	≤0.60	0.041	Fit
8	CD	Close to 1	0.999	Fit

Source: Researcher survey result (2023).

Standard CFA factor loadings of each scale were assessed for construct validity. Each item suggested having values of above minimum threshold of factor loading of 0.6 for acceptable construct validity (Nunnally, 1978). As it can be seen from Table 4 factor loads of minimum .78 and all mean average extracted are greater than 0.50 cutoff points which is indication of good convergent validity. Discriminate validity of the indicators was checked by Squawroots of average mean extracted and all values are greater than the values of covariant among latent constructs. Composite reliability of each construct is above .70 and it indicates reliability of instruments.

Table 4. Reliability and validity of instruments

Construct	Number of items	Factor loading	AVE	Sqrt of AVE	CR
Goal clarity	3	.81
Process clarity	2	.74	.58	.76
Role clarity	3	.73
Quality of service	3	.76			0.75
Quality R/output	3	.87	.68	.82
Competence of	3	.84
Graduate students

5.2.1. Goodness of-Fit test for measurement models

The result of confirmatory factor analysis showed that the chi-Square value 476.871, the degree of freedom value is 276 and probability level is (p > 0.001). The chi-Square value indicating that the model is not good fit for the data. But due to sensitivity of χ2 with sample size scholars suggested not to use χ2 as a formal test statistic but rather as a descriptive goodness-of-fit index (Ullman & Bentler, 2012). Goodness of model fit as per χ2 statistics may result from a correctly specified model or from a highly over parameterized model. Thus, use of χ2 for evaluation of basic model fit may lead to the problem that plausible models might be rejected based on a significant χ2 statistic even though the discrepancy between the sample and the model-implied covariance matrix is actually irrelevant (Jöreskog & Sörbom, 1993). Because of the limitation of the χ2 goodness-of-fit tests, alternative descriptive fit indices have been developed that are often assessed intuitively. These alternative fit indices are based on the difference between the sample covariance matrix and the model-implied covariance matrix.

In practical application, exact fit of hypothesized model is rare. Therefore, estimation of model fitness is more of approximate fits in the population and close fit to the data (Kaplan, 2000). In this regard, the fitness of the model for this research article is based on this fact and considers close fit as acceptance for model. The value of RMSEA for this study is 0.055 which found in the values between .05 and .08 and considered as an adequate fit. Model is acceptable with this value as it recommended by Hu and Bentler (1999) values less than .06 as a cutoff criterion. Model fitness from RMSEA can also be evaluated by the point estimate enables an assessment of the precision of the RMSEA estimate. MacCallum et al. (1996) proposed that the lower boundary (left side) of the confidence interval should contain zero for exact fit and be < .05 for close fit. Accordingly, the lower bound of this research model is below suggested close fit value of .05 which is .048. Thus, the model is close fit for the data.

The second descriptive fit index used for this research model validation is SRMR (Standardized Mean Square Residual) with value of .041 which is lower than cutoff points of rule of thumb and indication of close fit of model for the data. Therefore, the model is close fit for data.

Another measure of goodness fit of the model is comparative fit index which measure the fit of a model of interest is compared to the fit of some baseline model. The cutoff of acceptable level of the rule of thumb for this index is that .95 for relative fit to the baseline model (Kaplan, 2000). But Marsh and Grayson (1995) and Lomax and Schumacker (2004) suggested the values greater than .90 are typically interpreted as indicating an acceptable fit. Therefore, the values of comparative index (CFI) for this study is .956 which is good indication of comparative fit that above cutoff points. It is always possible that a model may fit the data although one or more fit measures may suggest bad fit (Schermelleh-Engel et al., 2003).

5.2.2. Structural model (causal model) analysis

The default model chi-Square result for structural model is 28.877 at the degree of freedom value of 6 with probability of significance level (P < 0.05). Independent model chi-Square value for the model is 1133.399 at the degree of freedom value of 15 with probability level of significance (P < 0.05). Model is not good as per the chi-Square values. Therefore, another model fitness indexes were employed to assess structural model fitness. The model is fit for comparative fit indexes (CFI = 0.980 & TLI = 0.949) which are higher than acceptable cutoff points of 0.90 (Lomax & Schumacker, 2004). This structural model is also fit as per the SRMR fitness index with 0.023 value which is below suggested upper limit of 0.05 (MacCallum et al., 1996). The graph in the figure 3 represent the path model that show the effects of explanatory variables on predicted variable.

Figure 3. Path analysis.

Path analysis is a technique to analyze causal relationships that occur in multiple regressions when the independent variables affect the dependent variable not only directly but also indirectly. Scholar define path analysis as an analytical technique used to analyze inherent causal relationships between variables that are arranged based on sequence by using path coefficient as the amount of value in determining the magnitude of the effect of exogenous independent variables on the endogenous dependent variable (Sarwono, 2011). For this research, Path analysis was used standardized coefficient ‘beta weight (β) that indicates the direct influences of exogenous variables (Goal clarity, Process clarity and Role clarity) on an endogenous variable (organizational performance) in this path model. In this path model, only direct effects were found because of an absence of mediating or moderating variables between study variables. Table 6 show the summary of hypothesis test with standard path coefficients represting magnitude of influences of explanatory variable on pridected variable.

Table 6. Standardized pathways and effects of Model

No	Hypothesis	Structural pathways	Path coefficients (Standardized)	p value
1	H1	GC → OP	.2828768	.000
2	H2	PC → OP	.1616817	.000
3	H3	RC → OP	.401813	.000
4	H4	SA → OP	.67	0.000

Source: Researcher survey result (2023).

The goodness of model fit with theoretical one in this path analysis is determined by simultaneous effect contributed from all exogenous variables together on to the endogenous variable whose value is associated with R². The R² value in path analysis is known by coefficient of determination which also referred to as the association index. This value is used as a value scale to express the magnitude of the effect of all exogenous variables on endogenous variables simultaneously or referred to as the combined effects. Explanatory variables have 48% of power to explain variability in dependent variable all together.

Path coefficients were significantly fit in predictive direction. That indicates all hypothesized path relations are supported. Since p values of all variables are less than 0.05; relation between variables is statistically significant at 1% significant level.

5.2.2.1. Strategic alignment has significant and direct effect on organizational performance

The significance value of the variables is (P < 0.01) which is far less than 0.05 points of null hypothesis rejection level. Therefore, null hypothesis was rejected and researcher hypothesis was accepted. Hence, there is significant direct effect of strategic alignment on organizational performance. Therefore, regression coefficient of the variables for the effect was interpreted as follow. One standard deviation improvement of strategic alignment in institution leads to 0.60 standard deviation improvements in organizational performance assuming all other variables unchanged.

6. Discussion

The objective of this study was to investigate the effect of strategic alignment on organizational performance in Ethiopian higher educational institutions. In order to achieve objectives information was collected in a field from three universities staff and analyzed by CFA and path analyses using stata SEM builder. The variables like goal clarity, role clarity and process clarity were identified as dimension of strategic alignment and investigated for their effects on organizational performance. All items used for data collection were conformed as it represent respective latent construct through confirmatory factor analysis. Factor loadings of each item were above the cut off points stipulated by the rule of thumb 0.6 acceptable (Nunnally, 1978).

All three variables identified to measure influence of strategic alignment on organizational performance have significant effects on organizational performance. This findings support contingency theory which states that “the balance between the organization’s strategy and its environmental context has significant impacts on performance” (McAdam, Miller, & McSorley, 2019). This result implies that clarity in the goal if backed by clarity in the task assigned to achieve stated goal with clear procedures through which assigned tasks performed enhances performance. It confirms contingency theory statements stating fitness and balances between component parts lead to higher performances.

The result of this study reveals that organizational performance varies among the institution based on strategic alignment implementation level. In the institution that have good implementation of strategic alignment in the form of clarity in the goal, role and process; there is higher organizational performance level. Accordingly, Wolaita Sodo University has relatively higher performance achievement than two Universities Hawasa and Bule Hora. Low-performance achievement was recorded in Bule Hora University both at strategic alignment implementation level and organizational performance. Findings reveal that there is logical connectivity between strategic alignment and organizational performance as it observed from all three universities. It reflected through that in the University where implementation level of strategic alignment is good; organizational performance also good and performance is low where strategic alignment implementation is lower.

This finding contradicting with findings of Smith and Thomas (2020). The authors conducted their study on the title effects of strategic alignment and clarity and found out that strategy consistent performance improves with alignment when the strategic statement is vague. But it has conformity with the findings of Ghonim et al. (2020) that reveal strategic alignment significantly and positively affects decision effectiveness which in turn enhances organizational performance.

Previous empirical literature reveal that the concept of strategic alignment involves the idea of achieving a degree of compatibility and harmony among a range of organizational elements that ensures achievement of the strategic priorities of the organization (Alkarabsheh et al., 2022; Visinescu et al., 2017). Keeping the fit between employees’ understanding and action with that of organizational strategic priorities enhances response to environmental pressures and moves toward a higher level of performance (Chi et al., 2020). The results of our study confirm these empirical evidences. Descriptive analysis of this study reveals that application of strategic alignment in the form of Goal clarity; role clarity and process clarity in Ethiopian higher educational institutions are at moderate level with average mean of response rates around 3.00 with slight difference among variables. But overall applications among the institutions have differences including organizational performances.

The results of structural path analysis show that the sum total effects of strategic alignment on organizational performance accounts more than 67% in the variance of performance. The effects of individual variables representing strategic alignment are higher for goal clarity which accounts around 22% of variation in organizational performance, whereas, the effects of clarity in the role is higher than process clarity which has 21%. Process clarity has around 12% share of effects on organizational performance. All variables have positive effects as improvements in those variables lead to higher performance in organization.

6.1. Conclusion and implication of the study

The major aim of this study was investigation of effect of strategic alignment on organizational performance. Organizational performance is the sum total effort of individual and team works towards organization goal achievement. Effectiveness of individual and team performance determined by knowledge they have about the goal and intended organizational strategies. Clarity in the goal with specified tasks and procedures enhances employee moral to perform well. Therefore, investigation of strategic alignment in public institutions and effects on organization performance is important to improve effectiveness in goal achievement.

From the result of the study, researchers conclude that all three variables identified to examine effect of strategic alignment on organizational performance have significant relation with dependent variable. In general, researchers concluded that clarity in the goal, clarity in the role assigned to and clarity in process how to perform assigned task have significant effects on organizational performance. Study concluded that performance variation among public higher educational institutions is result of variability in strategic clarity. This finding has practical managerial implication by indicating significance of clarity in goal, role and process for performance improvement. This study shows managers how clarity of goal and tasks for employees is a key for management function and help to insure higher level of performance. Clarity in the goal to be achieved and specification in the tasks to be performed with clear procedure enhances employee motivation to be dedicated for organization. Employee dedication has positive implication on performance. Scholars in this area suggests that organizations should strive constantly to enhance role clarity among employees as they remain motivated and involved in their jobs and exhibit innovative behavior at work (Alkarabsheh et al., 2022; Kundu et al., 2021; Lynn & Kalay, 2015; Mehboob & Hina, 2011; Onuoha et al., 2016; Park & Choi, 2020). This study has practical implication as it show the way how to attain strategic priority of organization through employee motivation with strategic clarity. It indicates strategic communication between administrators and staffs. Our study result has managerial implication of how become proactive leader than reactive decision makers. Strategic alignment open the room for employees to learn more about organizational policy and direction and initiate them for innovation (Al-Shami et al., 2022). This study has implication for contingency and goal setting theories. Study result supports contingency theory stating fitness between parts in organization enhance performances. It also confirm statements of goal setting theory saying participatory goal setting is means through which performance is improved. Study result shows clarity in the goal improve performance. Findings of this study enrich management literature with regard to the concepts of study.

6.2. Limitation and suggestion for future researchers

This study was limited to higher educational institutions in Ethiopia. Further researchers need to widen geographical and institutional scope to include other country or other sectors. For this article only quantitative data was employed to analyze application level of strategic alignment and to examine the effects of strategic alignment on organization performance. Further researchers need to include qualitative information for further conformity of the findings. This study limited only to strategic clarity dimension of strategic alignment as goal, role and process clarity. Further study should include other dimensions. For this study one time survey cross-sectional data were used. Therefore, other researchers can use longitudinal design.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Dawit Udessa Gede

Dawit Udessa is a lecture in the Department of Management, College of Business and Economics, Bule Hora University, Ethiopia. He is a PhD student in Bule Hora University in management department. Currently, he is working on dissertation titled impact of human resource management practices and strategic alignment on organizational performance: mediating role of employee engagement: Case in Ethiopian higher educational institutions. Dawit has more than 6 years’ different industry and about 6 years teaching experience in university. His hobbies and interest are reading and advising others.