Strategy Matters: The Role of Strategy Type for IT Business Value

There is a general consensus among practitioners and researchers alike that IT business alignment improves business performance. Typically, alignment is analyzed at a strategic level. Yet, it has to be implemented in daily operations to be effective. Therefore, in this paper we introduce the concept of operational IT business alignment, reflecting the functional integration at the structural level and representing the linkage between business and IT structure. Using structural equation modeling and data from 136 banks we show that operational IT business alignment positively impacts IS usage and IT flexibility and in turn process performance. Especially, it is shown that the effect of IT business alignment strongly depends on the type of business strategy a firm follows.