Environment uncertainty, business strategy, and firm performance: An empirical investigation of information technology
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Since information technology has been acknowledged as strategic tools, strategic information technology alignment, which is defined as the fit between information technology and business strategy, remains a continuous topic for information systems researchers and practitioners. Although achieving this alignment is a highly valuable step, the validity of any business strategy is originated from its adequacy with the environment in which a firm does business activities. In order to reduce a gap, thus, I elaborate the information technology alignment by classifying four levels of the alignment with business strategy (first level), business constituents (second level), external environment (third level), and time (fourth level). In the Chapter II, I investigate the relationship among information technology, business strategy, and firm performanceby extending the concept of alignment to the first and second level of the alignment, incorporating objective documents of letters to shareholders, and by analyzing CEOs’ perspectives. I find that firms having more alignment over business functions tend to have higher firm performance. I also find that the greater integration of business strategies in information systems, the higher firm performance a firm has. Finally, I observe that CEOs perceive the objectives of information systems as a way to improve more efficiency and customer satisfaction than internal and external growth. Given that the stereotyped perceptions of CEOs, it seems that the effect of the first and second level of the alignment comes from information systems for the purposes of efficiency and customer satisfaction. In the Chapter III, I investigate the third level of the alignment and explorer the relationship among information technology, business strategy, and environment uncertainty.With three types of environment uncertainty (state, effect, and response uncertainty) and two types of business strategy (efficiency orientation and market orientation), I find that whereas high environment uncertainty is associated with efficiency orientation strategy, low environment uncertainty is associated with market orientation strategy. Also, I find that the third level of the fit has a positive influence with firm performance. Yet, I do not find the moderate role of IT to firm performance in this level. The findings imply that the concept of the alignment has to be understood in terms of system because each level are serially interconnected and one level of alignment is a prerequisite for the next level of the alignment. A failure of fit in any level of the alignment cannot lead a good firm performance. Also, the dominant state type of uncertainty implies that more information systems to scanning wide areas of environmental sources are required. The empirical results shed light on the deeper understanding of strategic alignment of information systems and establishing effective business strategy to response external environment.