Using Flexibility to Enhance the Alignment between Information Systems and Business Strategy: Implications for IT Business Val

While executives continue to rate strategic alignment – denoting the fit between information technology (IT) and the business strategy – as a key IT management issue, the rise in business uncertainty in the late 1990s may have given executives cause to question whether attempts to increase strategic alignment limit their ability to maintain strategic flexibility. How corporations structure their IT decisions has implications for how easily and quickly they can respond to events in their external and internal environment. Using the theory of dynamic capabilities, we develop a model to examine how IT and strategic flexibility interact with, and shape, strategic alignment. By allowing strategic alignment to mediate the link between IT and strategic flexibility and IT business value, we can assess whether capabilities around flexibility can enable corporations to realize greater payoffs from IT investment. Using survey data from 208 U.S. corporations, we find that where corporations have clearly defined goals for IT, there is no tradeoff between IT flexibility and strategic alignment. Instead, IT flexibility enhances strategic alignment and leads to improved IT business value. To investigate this further, we develop a two dimensional framework based on IT flexibility and IT business value, and through the use of measures of industry clockspeed, find that a tradeoff only takes place in highly dynamic environments. In contrast, in stable environments, corporations may have no need for IT flexibility. Even while operating in uncertain and rapidly changing industries, one-third of the firms in our sample successfully combined high strategic alignment with IT flexibility, confirming that IT flexibility and strategic alignment can be complementary, rather than mutually exclusive.