Resolving IT-business Alignment Paradox: How does IT-business Alignment Shape Organizational Agility?


Student thesis: Doctoral Thesis

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Awarding Institution
  • Yulin FANG (Supervisor)
  • Zhongsheng Hua (External person) (External Supervisor)
Award date23 Oct 2018


IT-business alignment reflects the degree of fit between business and IT domains, including strategies, infrastructures, processes and human actors. IT-business alignment is generally considered to be an enabler of firm performance. However, the previous literature has found that IT alignment has no or even a negative effect on firm performance, suggesting an alignment paradox. Scholars propose that IT alignment may induce rigidity that impedes the firm’s ability in response to external changes quickly. A dimensional view of IT alignment has been proposed as a possible solution to IT alignment paradox. It suggests that intellectual dimension impedes organizational agility, while social dimension enhances organizational agility. However, the dimensional view of IT alignment cannot explain the existing inconclusive empirical findings on the intellectual dimension of IT alignment. Therefore, we still have limited understanding of how and why IT alignment enhances or impedes organizational agility.

This thesis aims to address this paradox both theoretically and empirically, by examining how IT alignment shapes organizational agility. Following the Strategic Alignment Model (SAM) of Henderson and Venkatraman and the dimensional view of IT alignment, I investigate how IT alignment influences organizational agility at two different levels, namely, strategic level and operational level. At the strategic level, IT alignment focuses on strategy formation and includes intellectual alignment (i.e., fit between business and IT strategies) and senior business and IT executives’ social alignment. At the operational level, IT alignment concentrates on strategy implementation and includes structural alignment (i.e., fit between business and IT infrastructure/processes) and business and IT departments’ social alignment.

At the strategic level, this thesis responds to the calls for more studies on examining boundary conditions confining the positive effect of IT alignment. Drawing on resource bundling theory, I clarify IT alignment as a resource bundling and argue that IT alignment paradox is attributed to the resource bundling nature that may induce the risk of inflexibility of IT alignment. Furthermore, this work extends the dimensional view of IT alignment by accounting for different environmental conditions external to the firm. Based on the resource bundling theory, intellectual alignment and social alignment are interpreted as the formal and informal resource bundling and then discussed under different environmental dynamisms. I empirically examined the proposed research model through a two-wave, pair-matched survey of business and IT executives in 148 organizations. The findings suggest that environmental dynamism has a negative moderating effect on the relationship between intellectual alignment and organizational agility. In a dynamic environment, intellectual alignment improves organizational agility when social alignment is high but reduces it when social alignment is low. However, in a stable environment, intellectual alignment consistently contributes to agility regardless of social alignment.

Operational IT alignment serves as my second solution to IT alignment paradox. Operational level of IT alignment is a relevant but understudied perspective in explaining the effect of IT alignment on organizational agility. Drawing on ambidexterity theory, this study extends the dimensional view of IT alignment by conceptualizing operational-level IT alignment (hereafter OITA) as an ambidextrous capability consisting of both structural and social alignments and examine its effect on organizational agility. Furthermore, this thesis investigates the role of shared competence between business and IS departments in influencing OITA ambidexterity. Survey data of 119 departmental managers is collected to empirically test my research model. The findings showed that OITA ambidexterity positively enhances organizational agility. Shared domain competence serves as a key basis in developing OITA ambidexterity.

This study takes an in-depth thought towards a solution of IT alignment paradox. Implications to management and IS theory and practice are discussed.

    Research areas

  • IT-business alignment, paradox, organizational agility, resource bundling, ambidexterity