IT strategy and business strategy mediate the effect of managing IT on firm performance: empirical analysis

Abstract

Purpose – The multifaceted effect of IT in organizations has been widely examined. However, the intervening role of IT strategy and business strategy on the effect of managing IT on firm performance remains less strong. This study examines how managing information technology (MIT) effects on firm performance by looking at the mediating role of IT strategy and business strategy. Design/methodology/approach – Drawing on the resource-based view of IT and contingency perspective, theoretical insights for managing IT and the mediating effect of IT strategy and business strategy on firm performance are established. The model is empirically tested by using hierarchical regression and structural equation modeling for the data collected through the survey of 194 senior IT and business managers in China. Findings – The significant and impactful relationship found in the model for the proposed idea. The results show that both IT strategy and business strategy partially mediate the effect of managing IT on firm performance. Research limitations/implications – The findings highlight that managing IT does not merely influence better firm performance; instead, the coherent amalgamation of IT strategy and business strategy can enrich firm performance. The theoretical and practical implications are also discussed. Originality/value – In line with the call for rigorous research to integrate the managing IT and firm strategies, this study demonstrates the mediating role of business strategy and IT strategy between the managing IT and the firm performance relationship, hence contributing to the IS research literature.