The impact of managing IT on business-IT alignment and firm performance: an empirical study

Abstract

Purpose – Though prior studies have attempted to explore the various effects of managing information technology (IT) investment on firmperformance, themechanismthrough which management of IT impact on firm performance rests less clear. The purpose of this study is to examine the impact of managing IT and business-IT alignment on firm performance. Design/methodology/approach – Drawing on the resource-based theory and process theory, this study examines how managing IT impacts business-IT alignment and firm performance. The primary survey of 182 responses from IT and businessmanagers fromSri Lanka was empirically examined. Findings – The findings reveal that managing IT has a positive and strong impact on business-IT alignment and firm performance. Further, business-IT alignment partially mediates between managing IT investment and firmperformance relationships. Research limitations/implications – Today, businesses have invested a massive amount of money in IT investment, and the return on this investment is always a serious concern for managers and industry practitioners. This study finding proposes meaningful insights on managing IT, business-IT alignment and firm performance. Originality/value – This study opens up the black box on the above nomological linkage and contributes to the literature by extending the theoretical lenses while suggesting insightful and practical implications.