Does Organizational Culture Influence IT-Business Alignment and Business Performance in Large Manufacturing Companies?

Abstract

This study examines and analyzes the influence of Organizational Culture on business alignment and business performance in large manufacturing companies. This study used a quantitative research method; data were collected using a questionnaire using SmartPLS 4. This study involved 47 large manufacturing companies as unit analysis with multistage sampling in sample selection, first by purposive sampling and second by the Slovin formula. The results of this study stated that organizational culture affects IT-business alignment significantly but has no effect on the business performance. The collaboration and formalization indicators effect on strengthening organizational culture on IT-business alignment. On the other side, the lack of creative and innovative culture in the organizational culture of manufacturing companies has an impact on failure in supporting business performance. The results of this study provide valuable insight for IT and business executives in developing the organizational culture of large manufacturing companies that is suitable to cope with IT implementation strategically namely IT-business alignment in supporting business performance successfully.


Keywords: organizational culture, IT-business alignment, business performance

References
[1] Weill P, Ross J. A matrixed approach to designing IT governance. Sloan Manag Rev. 2005;46:26–34.

[2] De Haes S, Van Grembergen W. An exploratory study into IT Governance implementations and its impact on business/IT alignment. 2009; 26:123–37.

[3] Chan YE, Reich BH. IT alignment: What have we learned? J Inf Technol. 2007;22:297–315.

[4] Gerow JE, Thatcher JB, Grover V. Six types of IT-business strategic alignment: an investigation of the constructs and their measurement. Eur J Inf Syst. 2014;1–27.

[5] Long S. Socioanalytic methods: Discovering the hidden in organisations and social systems. Karnac Books Ltd; 2013.

[6] Luftman J, Lyytinen K, Zvi T ben. Enhancing the measurement of information technology (IT) business alignment and its influence on company performance. J Inf Technol. 2017;32.

[7] Henderson JC, Venkatraman N. Strategic alignment: Leveraging information technology for transforming organizations. IBM Syst J. 1993;Vol. 32.

[8] Van Grembergen W, De Haes S. A research Journey into Enterprise Governance of IT, Business/IT alignment and Value Creation. Int J ITBusiness Alignment Gov. 2010;1(1):1–13.

[9] Liang T-P, Chiu Y-C, Wu SP-J. The impact of IT Governance on organizational performance. AMCIS 2011 Proc - Submiss 268 [Internet]. 2011; Available from: http://aisel.aisnet.org/amcis2011_submissions/268

[10] Harguem S, Karuranga E, Mellouli S. Impact of IT Governance on organizational performance: Proposing an explanatory model. Eur Conf Manag Leadersh Gov. 2014.

[11] Chan YE, Sabherwal R, Thatcher JB. Antecedents and outcomes of strategic IS alignment: An empirical investigation. IEEE Trans Eng Manag. 2006;Vol. 53.

[12] Wu SP-J, Straub DW, Liang T-P. How information technology governance mechanisms and strategic alignment influence organizational performance: Insight from a matched Survey of Business and IT Managers. MIS Q. 2015;Vol. 39:497–518.

[13] Vejseli S, Rossmann A. The impact of IT governance on firm performance a literature review. PACIS 2017 Proc Assoc Inf Syst. 2017;41.

[14] ITGI. Board Briefing on IT Governance 2nd Edition. IT Governance Institute; 2003.

[15] Aladwani AM. Change management strategies for successful ERP implementation. Bus Process Manag J. 2001;7:266–75.

[16] Sikdar A, Payyazhi J. A process model of managing organizational change during business process redesign. Bus Process Manag J. 2014;20:971–98.

[17] Bradford DL, Burke WW. Reinventing organization development: New approaches to change in organizations. Pfeiffer. 2005.

[18] Fruhlinger J, Wailgum T, Sayer P. 16 famous ERP disasters, dustups and disappointments [Internet]. cio.com. 2020 [cited 2022 Jan 22]. Available from: https://www.cio.com/article/278677/enterprise-resource-planning-10-famous-erpdisasters- dustups-and-disappointments.html

[19] Kitani K. The $900 billion reason GE, Ford and P&G failed at digital transformation. cnbc.com; 2019.

[20] Kappelman L, McLean E, Johnson V, Torres R, Maurer C, Snyder M, et al. The 2018 SIM IT Trends study the 2019 comprehensive report: Issues, investments, concerns and practices of organizations and their it executives. SIM IT Trends Study. 2018.

[21] Nfuka EN, Rusu L. The effect of critical success factors on IT governance performance. Ind Manag Data Syst. 2011;Vol. 111:1418–48.

[22] Al-Ali AA, Singh SK, Al-Nahyan M, Sohal AS. Change management through leadership: the mediating role of organizational culture. Int J Organ Anal. 2017;25:723–39.

[23] Onyango WP. Effects of organization culture on change management: A case of the vocational training centre for the blind and deaf Sikri. Eur J Bus Manag. 2014;Vol. 6, 2014:204–14.

[24] Karahanna E, Watson RT. Information systems leadership. IEEE Trans Eng Manag. 2006;VOL. 53, NO. 2, MAY 2006:171–6.

[25] El-Mekawy M, Rusu L, Perjons E. The impact of business-IT alignment on organizational culture. PACIS 2014 Proc. 2014;Paper 310.

[26] Weiss JW, Anderson D. Aligning technology and business strategy: issues & frameworks, a field study of 15 companies. 37th Annu Hawaii Int Conf Syst Sci 2004 Proc Of [Internet]. Big Island, HI, USA: IEEE; 2004 [cited 2023 Jun 19]. p. 10 pp. Available from: http://ieeexplore.ieee.org/document/1265511/

[27] Dahlberg T, Lahdelma P. IT Governance maturity and IT outsourcing degree: An exploratory study. 2007 40th Annu Hawaii Int Conf Syst Sci HICSS07 [Internet]. Waikoloa, HI, USA: IEEE; 2007 [cited 2023 Jun 19]. p. 236a–236a. Available from: http://ieeexplore.ieee.org/document/4076859/

[28] Peterson R. Crafting Information Technology Governance. Inf Syst Manag. 2004;

[29] Raghupathi W “Rp.” Corporate governance of IT: A framework for development. Commun ACM. 2007;50:94–9.

[30] Robbins SP, Judge TA. Essentials of organizational behavior. 14th Edition. Pearson Education Limited; 2018.

[31] Spremic M. IT Governance mechanisms in managing IT business value. Inf Sci Appl. 2009;Vol. 6:906–15.

[32] Bradley RV, Byrd TA, Pridmore JL, Thrasher E, Pratt RM, Mbarika VW. An empirical examination of antecedents and consequences of IT Governance in US Hospitals. J Inf Technol. 2012;27:156–77.

[33] Cameron KS, Quinn RE. Diagnosing and changing organizational culture. 3rd Edition. Jossey-Bass; 2011.

[34] Mian Z, Li H, Wei J. Examining the relationship between organizational culture and performance: The perspectives of consistency and balance. Front Bus Res China. 2008;2:256.

[35] De Haes S, Haest R, Van Grembergen W. IT Governance and Business-IT Alignment in SMEs. ISACA J. 2010;VOLUME 6.

[36] De Haes S, Van Grembergen W, Joshi A, Huygh T. Enterprise governance of information technology achieving alignment and value in digital organizations Steven De Haes Wim Van Grembergen Anant Joshi Tim Huygh. Third Edition. Springer; 2020.

[37] Neely A. Business performance measurement: Unifying theories and integrating practice. 2nd Edition. Cambridge University Press; 2007.

[38] Santos JB, Brito LAL. Toward a subjective measurement model for firm performance. BAR Rio Jan. 2012;Vol. 9:95–117.

[39] Kaplan RS, Norton DP. The balanced scorecard – measures that drive performance. Harv Bus Rev. 1992;70-79.

[40] Mollah S, Al Farooque O, Karim W. Ownership structure, corporate governance and firm performance: Evidence from an African emerging market. Stud Econ Finance. 2012;Vol. 92:301–19.

[41] Kaplan RS, Norton DP. The execution premium: Linking strategy to operations for competitive advantage. 1st Sed. HBS Press; 2008.

[42] Melville, Kraemer, Gurbaxani. Review: Information technology and organizational performance: An integrative model of IT Business Value. MIS Q. 2004;28:283.

[43] Rai, Patnayakuni, Seth. Firm performance impacts of digitally enabled supply chain integration capabilities. MIS Q. 2006;30:225.

[44] Wade, Hulland. Review: The resource-based view and information systems research: Review, extension, and suggestions for future research. MIS Q. 2004;28:107.

[45] Tallon PP. Does IT pay to focus? An analysis of IT business value under single and multi-focused business strategies. J Strateg Inf Syst. 2007;16:278–300.

[46] Tallon PP, Kraemer KL, Gurbaxani V. Executives’ perceptions of the business value of information technology: A process-oriented approach. J Manag Inf Syst. 2001;16:145– 73.

[47] BPS J. Direktori Perusahaan Industri Besar dan Sedang Provinsi Jawa Timur 2022. ©Badan Pusat Statistik Provinsi Jawa Timur. ©Badan Pusat Statistik Provinsi Jawa Timur.; 2022.

[48] Amar NCB, Fimel E. Examining the impact of organizational culture on IS strategic alignment under a qualitative analysis. AIMS-XXVème Conférence Int Manag Strat. 2016.

[49] Joseph OO, Kibera F. Organizational culture and performance: Evidence from microfinance institutions in Kenya. SAGE Open. 2019;1–11.

[50] Eom MT, Kahai S, Yayla A. Investigation of how IT leadership impacts IT-business alignment through shared domain knowledge and knowledge integration. Bus Fac Publ Present 21 [Internet]. 2015; Available from: http://pilotscholars.up.edu/bus_facpubs/21

[51] Miyamoto M. IT-business alignment and resource-based view of competitive advantage: Intangible assets of Korean SMEs. Univers J Manag. 2017;5:101–9.

[52] Yayla AA, Hu Q. The impact of IT-business strategic alignment on firm performance in a developing country setting: Exploring moderating roles of environmental uncertainty and strategic orientation. Eur J Inf Syst. 2012;21:373–87.

[53] Sirisomboonsuk P, Gu VC, Cao RQ, Burns JR. Relationships between project governance and information technology governance and their impact on project performance. Int J Proj Manag. 2017.

[54] Cohen BA. Point of view: How should novelty be valued in science? eLife- Sciences.org. 2017.

[55] Solimun, Fernandes AAR. Metodologi Penelitian Kuantitatif Perspektif Sistem. Cetakan kedua. UB Press; 2019.

[56] Chin WW. Partial least squares for researchers: An overview and presentation of recent advances using the PLS approach. Proc Twenty First Int Conf Inf Syst. 2002.

[57] Daikeler J, Bošnjak M, Lozar Manfreda K. Web versus other survey modes: An updated and extended meta-analysis comparing response rates. J Surv Stat Methodol. 2020;8:513–39.

[58] Shih T-H, Xitao Fan. Comparing response rates from web and mail surveys: A metaanalysis. Field Methods. 2008;20:249–71.

[59] Garson D. Garson_2016_Partial Least Squares. Regression and Structural Equation Models.pdf. Statistical Publishing Associates; 2016.

[60] Kock N. WarpPLS User Manual: Version 6.0. ScriptWarp Syst. 2019.

[61] Hair JF, Ringle CM, Sarstedt M. PLS-SEM: Indeed a Silver Bullet. J Mark Theory Pract. 2011;19:139–52.

[62] Chin WW. The Partial Least Squares Approach to SEM. Lawrence Erlbaum Assoc. 1998.

[63] Sadeghi D. Alignment of organizational change strategies and its relationship with increasing organizations’ performance. Procedia Soc Behav Sci. 2011;20:1099–107.