A Configurational Approach to Examining the Influence of Information Technology Management and Governance on Organization Performance

Abstract

Information technology (IT) is becoming an increasingly crucial part of modern organizations. This dissertation includes two essays that examine how effective IT management and decision-making structure are associated with better organizational performance. The first essay examines the complementarity between IT management and human resource (HR) management capabilities and discusses the mechanisms through which these two capabilities jointly lead to better organizational performance. The unique contribution of this study is the use of direct measures of IT management and HR management capabilities to estimate their joint impact on organizational performance. Furthermore, I disaggregate HR capability into two specific dimensions: (1) work systems such as employee performance management systems and hiring and promotion systems, and (2) employee learning and development. The main results confirm the complementarity between IT management and both HR management dimensions, and show that work systems more positively moderates the impact of IT management on organizational performance based on financial and market measures. The study is supplemented with a configurational analysis that examines the complex relationships between the organizational capabilities and explain how the complementarity between IT management, work systems, and employee learning varies across sectors and relies also on the presence and absence of other capabilities such as leadership and strategic planning. The study compares the results of the conventional and configurational methods and highlights the unique insights derived from each approach. The second essay discusses the optimal IT reporting structure in a firm, that is, whether the IT head should report to the chief executive officer or some other executive. This study proposes that there are several factors that determine the optimal IT reporting structure such as firm size, industry, IT investment intensity, and whether IT is viewed as strategic to the firm. The study argues that the relationship between these factors and the optimal IT reporting structure is too complex to be represented by linear models that rely on the correlation-based approach. Instead, there is a need to study configurations that lead to better performance based on different combinations of firm-level and industry-level conditions. The study uses a novel configurational approach and a corresponding method, the fuzzy-set qualitative comparative analysis, to determine the optimal IT reporting structure of different configurations. The study results shed light on the complex relationship between IT reporting structure and the conditions defining various firm configurations. Together the two essays provide new insights on how successful IT management and governance structure lead to organizational success.