The organisational integration of the IT function: A key enabler of firm capabilities and performance

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Pleasecitethisarticleinpressas:Ricciardi,F.,etal.OrganizationalintegrationoftheITfunction:Akeyenablerofﬁrmcapabilitiesand performance.JournalofInnovation&Knowledge(2017),http://dx.doi.org/10.1016/j.jik.2017.02.003

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www.elsevier.es/jik

Journal

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Innovation

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Knowledge

Empirical

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Organizational

integration

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IT

function:

A

key

enabler

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ﬁrm

capabilities

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performance

Francesca

Ricciardi

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Alessandro

Zardini,

Cecilia

Rossignoli

UniversityofVerona,DepartmentofBusinessAdministration,Verona,Italy

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Articlehistory: Received5January2017 Accepted5February2017 Availableonlinexxx JELclassiﬁcation: M15 L2 Keywords: Organizationalintegration Organizationalunits ITmanagementvalue Competitivecapabilities Cooperativecapabilities CIO

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Organizational integration between intra- and inter-organizational subsystems is an important factor of operational coordination, innovation, and strategic effectiveness. Scholars have mainly focusedon the organizational integrationof three sub-systems: production/operations,marketing/sales,andR&D.Thisstudyexploredtheorganizational integrationoftheorganizationalunitinchargeofthefirm’sITandinformationsystems: theITfunction.Thisconstructhasfivekeydimensions:integrationoftheITfunctionwith topmanagement,businessunits,customers,non-ITsuppliers,andITproviders.Analysisof datafrom236responsestoasurveyquestionnaireconfirmedthatallfivedimensions pos-itivelyinfluencethefirm’smarketperformance.Thecontributionofthefirm’sinformation systemstobothcompetitiveandcooperativeorganizationalcapabilitiesstronglymediates thisrelationship.Thisresearchmodelhighlightsthecomplementaryexplanatorypowerof LawrenceandLorsch’s(1967)theoryoforganizationalintegration,thebusiness-ITalignment literature,andtheresource-basedview(RBV).Theresultssuggestthatthemorefirmsevolve towardsIT-enabledbusinessenvironments,themoretheyneedITmanagerstobesocially embeddedintheseenvironmentsandtocontributeactivelytotheoverallknowledge-based organizationalintegrationofthesystem.

La

integración

organizacional

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la

función

IT:

un

facilitador

clave

de

las

capacidades

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el

rendimiento

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la

empresa

Palabrasclave: Integraciónorganizacional Unidadesorganizacionales ValordegestióndeIT Capacidadescompetitivas

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s

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Laintegraciónorganizacionalentrelossubsistemasintraeinterorganizacionalesesun fac-torimportantedecoordinaciónoperacional,innovaciónyeﬁcaciaestratégica.Hastaahora, losestudiosossehancentradoprincipalmenteenlaintegraciónorganizacionaldetres subsistemas:producción/operaciones,marketing/ventaseinvestigaciónydesarrollo.Este estudioinvestigalaintegraciónorganizacionaldelaunidadorganizacionalacargodela

∗ _{Corresponding}_author.

E-mailaddresses:francesca.ricciardi@univr.it,ricciardi.francesca9@gmail.com(F.Ricciardi). http://dx.doi.org/10.1016/j.jik.2017.02.003

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journal of innovation & knowledgexxx(2017)xxx–xxx

Capacidadesdecooperación CIO

tecnologíadelainformación(IT)delaempresaylossistemasdeinformación(SI):lafunción IT.Seidentificancincodimensionesclavealrespecto:integracióndelafuncióninformática conelequipodirectivosuperior(TMT),unidadesdenegocio,clientesdelaempresa, provee-doresnoITyproveedoresIT.Uncuestionariodeencuestacon236encuestadosconfirma quetodasestascincodimensionesdelaintegraciónorganizacionaldelafunciónITinfluyen positivamente eneldesempe ñodelmercado dela empresa;Esta relaciónestá fuerte-mentemediadaporlacontribucióndelaISdelaempresaalascapacidadescompetitivas ycooperativasdelaorganización.Estemodelodeinvestigaciónresaltaelpoderexplicativo complementariodelateoríadelaintegraciónorganizacionaldeLawrenceyLorsch,la lit-eraturadealineacióndenegocios-ITylavisiónbasadaenrecursos(RBV).Losresultados sugieren quecuantomásempresasevolucionanhaciaentornosempresariales habilita-dosparaIT,másnecesitanquelosadministradoresdeITesténsocialmenteintegradosen estosentornosycontribuyanactivamentealaintegraciónorganizacionalglobaldelsistema basadaenelconocimiento.

Introduction

Organizationalintegration can bedefined as the extent to which distinct and interdependent organizational compo-nentsrapidlyand adequatelyrespondand/oradapt toeach other while pursuing common organizational goals (Barki & Pinsonneault,2005; Lawrence & Lorsch, 1967). Theterm “component”inthis definitionindicatesany organizational sub-system,suchasorganizationalunits,functions,or exter-nalpartners. Organizationalintegration is essential in the knowledgeage. For example,in ahighly integratedsupply chain,afirm’sresearchanddevelopment(R&D)function,its marketingfunctionanditskey,trustedsuppliercan system-aticallycollaborateandlearnfromeachotherfornewproduct development.

Theliteraturehasidentiﬁedseveralorganizational mecha-nismsthataredirectenablersoforganizationalintegration. Among these mechanisms, some have proved particu-larly relevant,suchas process standardisation,good social relationships within the senior team, purposeful inter-componentconnectedness,cross-functionalprojects, cross-functionalteams,andtechnologicalinterfaces(Gilbert,2005; Glouberman&Mintzberg,2001;Gupta&Govindarajan,2000; Hansen,2002;Jansen,Tempelaar,vandenBosch,&Volberda, 2009;Klein&Rai,2009;Lawrence&Lorsch,1967;Martinez& Jarillo,1989;Nelson,1989;Tsai,2002).

Technologicalinterfaces,inparticular,playanincreasingly crucialroleininnovation-orientedorganizationalintegration. Inthelastdecades,theevolutionofIThasenabledan unprece-dented integration of processes and information ﬂows, bothwithinandacross organizationalboundaries (Berente, Vandenbosch,& Aubert, 2009; Sambamurthy,Bharadwaj, & Grover, 2003). Today, internet-based systems are the key enablersofsocialconnectednessinbusinessenvironments (Jue,Marr,&Kassotakis,2009).Inaddition,the implementa-tionofsomenewtechnologicalinterfaces,suchasenterprise resource planning (ERP) systems or e-business platforms, resultsingiganticcross-functionalprojectsinwhich cross-functionalteamsofITpeoplemustbridgeorganizationalsilos

(Barki&Pinsonneault,2005;Newell,Tansley,&Huang,2004). Forthesereasons,effectiverelationshipsbetweenthe highest-rankedITmanager,oftencalledthechiefinformationofﬁcer (CIO) and the top management team (TMT), including the chiefexecutiveofﬁcer(CEO),mayofferakeycontributionto innovativestrategiesandgrowthinthee-businessera(Feeny, Edwards,&Simpson,1992;Naranjo-Gil,Hartmann,&Maas, 2008).

Insum,therelevanceoftheITfunctionand,inparticular, ITmanagers(includingtheCIO)toorganizationalintegration isatleastfourfold.First,thisfunctionisinchargeofdesigning, adjustingandimplementingthetoolsthatarekeytoprocess standardisation,whichisanimportantmechanismenabling integration.Second,theITfunctionisinchargeofsupporting allthesystem’s socialconnectednessthroughsmooth web-basedcommunication;alsosocialconnectednessisapowerful mechanismenablingintegration.Third,theITfunction peri-odicallyparticipatesincross-functionalteams inchargeof keycross-functionalprojects,whennewimportantISsystems aredesignedandimplemented:bothcross-functionalteams andprojectsarekeymechanismsforintegration.Fourth,the highest-ranked IT managers are in the position to play a pivotalroleinfosteringconstructiverelationshipsand coop-erationwithinthefirm’sseniorteam,akeyfactortospread thecultureofintegrationthroughoutthewholeorganization. Allthesereasonsnotwithstanding,theliteraturehas over-looked the role of the IT function and IT managers in organizationalintegrationsofar.Scholarshaveinvestigated the importanceofspecificaspects:forexample,the impor-tance ofaneffectiverelationshipbetweenthe CIOand the CEOhasbeenhighlightedandtested(Feenyetal.,1992). Nev-ertheless,tothebestoftheauthors’knowledge,anempirical investigationoftheITfunction’soverallorganizational inte-grationanditsimpactonfirmperformanceisstillmissing.

Previousstudiesontheorganizationalintegrationof spe-ciﬁcfunctions havethusfar mainly focusedonthe roleof themarketing/sales,production,andR&Dfunctions(Barki& Pinsonneault, 2005;Jaspers& vanden Ende, 2006;Millson, 2013), whilst the IT function has not attracted scholarly attention so far. These studies have conﬁrmed that the

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Contribution of IS to cooperative capabilities Market performance Organisational Integration between the IT

function and:

Hp1- the Top Management Team (TMT) Hp2- the business units

Hp3- the customers Hp4- the non-IT suppliers Hp5- the IT providers/outsourcers

Contribution of IS to competitive capabilities

Fig.1–Researchmodel.

organizational integration of marketing/sales, production, and R&D functions is an important antecedent of perfor-mance.

Three theoretical views have so far proved particularly suited to provide explanations to this link between orga-nizationalintegrationandﬁrmperformance:Lawrenceand Lorsch’stheoryoforganizationaldifferentiation(Lawrence& Lorsch,1967),theresource-basedview(RBV)anditssister the-ories(Barney & Arikan, 2001), and the strategic alignment view (Johnson & Lederer, 2010). Although scholars usually adoptoneoftheseviewsatatime,thisstudyleveragesthe complementaryexplanatory powerofallthree approaches. Thenovelty ofthis article,then,resultsfrom boththe lack ofstudiesonthetopic(theorganizationalintegrationofthe IT function)and the cross-fertilization ofthree theoretical approaches (organizational differentiation and integration, RBVandbusiness-ITalignment)thathaveevolvedquite inde-pendentlysofar.

Thiscross-fertilizationallowedtheauthorstofocusonthe contributionofIStoorganizationalcapabilitiesasakey pos-siblemediatorbetweentheorganizationalintegrationofthe ITfunction and firmperformance. Organizational capabili-ties are a key concept inRBV and sister theories, such as theknowledge-basedview(Phelps,Heidl,&Wadhwa,2012) and the relational view (Lavie,2006). These theories high-lightthatdifferentfirmscanrelyondifferentresourcesand, evenmore importantly, can re-combine and leverage their resourcesindifferent,divergentways,thusdeveloping spe-cificorganizationalcapabilitiesthatmayprovehardlyimitable andenablingthedevelopmentofcompetitiveadvantage(Jay Barney,2001). Thewayeach organizationleveragesand re-combinesits resources isstrongly influenced bythe social exchangesbetweenindividuals and organizationalunits in that organization’s context.For this reason,some scholars havefocusedonthepossiblelinkbetweenorganizational inte-gration,capabilities,andperformance(Argyres,1996;Zahra& Nielsen,2002).Thethreetheoreticalapproachesmentioned above(RBV,organizationaldifferentiationandintegration,and strategic alignment)convergein predictingthat high orga-nizational integrationenables moreeffective relationships, specialisation,coordinationandalignment.Therefore, orga-nizationalintegrationmayprovecrucialtodevelopunique, valuableandinimitableorganizationalcapabilities.

This study leverages this view to investigate the spe-ciﬁc link, hitherto neglected, between the organizational

integrationoftheITfunction,thecontributionoftheﬁrm’s IStoorganizationalcapabilities,andmarketperformance.

Throughliteratureanalysisandfactoranalysis,basedon a surveyquestionnairewith 236respondents, the research modelpresentedinthisstudy(seeFig.1)identifiesfive dimen-sions of the organizational integration of the IT function: integrationoftheITfunctionwiththeTMT,businessunits, firm’scustomers,non-ITsuppliers,andITproviders.

Thesamesurveyalsoallowstheauthorstoidentifytwo dimensions of the key organizational capabilities that the ﬁrm’sITmaycontributeto:competitivecapabilities(including customerorientation,strategicinnovationcapability,andthe capabilitytofacemarketchallenges)andcooperative capabil-ities(includinginter-andintra-organizationalcommitment, knowledgesharing,andtrustworthiness).

Theanalysis ofsurvey dataconfirms thatall these five dimensionsoftheorganizationalintegrationoftheIT func-tionpositivelyinfluencethefirm’smarketperformance;this relationshipisstronglymediatedbythecontributionofthe firm’sIStobothcompetitiveandcooperativeorganizational capabilities.Ouranalysisalsoshowsthatallfivedimensions oftheorganizationalintegrationoftheITfunctionhavea com-parably relevantinfluenceonperformance,including those aspectsoftheITfunction’sintegration(withthecustomers andnon-ITsuppliers)thathavebeencompletelyoverlooked bytheempiricalresearchsofar.

Background

and

hypotheses

development

TheorganizationalintegrationoftheITfunction

Lawrence and Lorsch’s seminal study (Lawrence & Lorsch, 1967)onorganizationaldifferentiationandintegrationstates that,indynamiccompetitiveenvironments,differentpartsof the organizationbecomeincreasinglyspecialised,andeach part tends to diverge from the others as for its people’s sharedgoals,beliefsandattitudes.Therefore,organizations rapidlyevolve intosystemswherepeopleindifferentunits thinkandactdifferently.However,excessivedifferentiation,if notbalancedbyeffectiveintegration,cancauseinefﬁciencies and conﬂict.Differentiationand specialisationare success-fulstrategiesindynamicenvironmentsonlyifthediffering specialisedpartsoftheorganizationremaincapableof under-standingeachotherinordertocollaborateforcommongoals.

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Coordination and collaboration issues emerge wherever operational interdependencies are present, including both intra-andinter-organizationalrelationshipsbetweenkey sub-systems(Whang,1995).Active,creativecooperationbecomes evenmoreimportantwheninnovationneedsemerge(Ettlie, 1992; Jansen et al., 2009; Millson, 2013). For these rea-sons,the organizationshould developformal and informal organizationalmechanismsthatenableandencourage inte-gration(Volkoff,Strong,&Elmes,2005),andmanagersshould strive continuously and creatively for integration (Barki & Pinsonneault,2005).Managersthatdriveprojectsand activ-itiesinvolvingthewholeorganizationarethebestcandidates for strong integration roles (Lawrence & Lorsch, 1967). IT managers, including the CIO, are certainly among them, sinceITplaysapivotal roleinbusinessprocess integration (Berenteetal., 2009;Cheung,Mocker,Schlagwein,Sunyaev, & Turowski, 2015; Mangan & Kelly, 2009; Ranganathan & Brown,2006;Volkoffetal.,2005).TheITmanagers’ contribu-tiontofirmperformanceandcompetitiveadvantagelargely dependsonthesemanagers’abilitytounderstandand sup-porttheevolvingbusinessneedsand processes(Ding,Li,& George,2014;Peppard,2007).Thisabilitymaybedeveloped onlyif the ITmanagement isatthe centre ofaneffective andwell-structurednetworkofintra-andinter-organizational relationships(Cravens,Piercy,&Shipp,1996).Infact,intoday’s networkedeconomy,increasinglybasedonextensiveIT out-sourcingande-business,thepossiblestrategicroleofITgoes farbeyondtheboundariesofasinglefirm(Chun&Mooney, 2009);thus,alongwithtraditionalinteractionswiththe so-calledinternalcustomer,IT managementisalsomoreand moreinvolvedininter-organizationalinteractions,especially withthefirm’scustomers,ITprovidersandoutsourcersand non-ITsuppliers(Kohli&Grover,2008).Therefore, IT man-agersshouldbeableto,andputintheconditionto,actively andcollaborativelyinteractwithdifferentpartsofthe orga-nization’secosystem, notonlyto avoid, minimiseor solve conflicts,misunderstandings and inefficiencies,but also to contributetostrategicgrowththroughproduct,processand marketinnovation(Chen,Preston,&Xia,2010).

As synthesised in Table 1, the literature mentions five categories or types of relationships of the IT managers and IT functions as crucial to organizational integration andperformance.Threeofthesetypicalrelationshipshave already been empirically investigated, although separately (the relationships with the CEO/TMT, business units and ITproviders/outsourcers).Scholarshaveassertedthe impor-tance of the other two (the relationships with the firm’s customersandnon-ITsuppliers),buttheserelationshipshave beenoverlookedbyempiricalresearchsofar.Thisstudywill considerallofthesefivedimensionstodescribethe organi-zationalintegrationoftheITfunction.Thisisthefirststudy thatinvestigatestheimpactoftheorganizationalintegration oftheITfunctionbyanalysingitsconnectednessthrougha comprehensiverangeofintra-andinter-organizational rela-tionships.

Competitiveandcooperativecapabilities

Inthis study,wefocuson thecontributionofISto organi-zationalcapabilities(Day,1994)asthepossiblekeymediator

betweentheorganizationalintegrationoftheITfunctionand firmperformance.ResearchersmaintainthatITmanagement influencesfirmperformancebyenablingkeyorganizational capabilitiesthroughIS(BulliniOrlandi,2016;Liang,You,&Liu, 2010).Forexample,MithasandRamasubbu(2011)foundthat information management capability favourably affects the developmentofotherfirmcapabilitiesforcustomer manage-ment,processmanagementandperformancemanagement. Inturn,thesecapabilitiespositivelyaffectseveralmeasures offirmperformance.

Many attempts have been made to classify organiza-tional capabilities. Day (1994) proposes a model where organizationalcapabilitiesfallintothreedimensions: inside-out capabilities(efﬁciency,technological solutionsand cost controls), outside-in capabilities (customer relationships, understandingcompetitorsandmarketresponsiveness),and spanningcapabilities (partnershipsmanagementand plan-ning). Hulland,Wade,and Antia(2007)proposeasimpliﬁed view, including just two dimensions: internal capabilities (intra-organizational control, internal cooperation and IT experience) and external capabilities (supply chain coop-eration and understanding customer needs). A similar two-dimensionmodelisproposedbyBharadwaj(2000).

Thisstudy alsoadoptsatwo-dimension viewof organi-zationalcapabilities:competitivecapabilitiesandcooperative capabilities(seeFig.1).

Thecompetitivecapabilitiesofafirmdescribetheextent to which the firmiscapable ofeffectively facing the mar-ket(Koufteros,Vonderembse,&Doll,2002).Thesecapabilities are usually measuredthrough several indicators, including cost leadership, product/service quality, delivery depend-ability,production/servicerapidity,productinnovationrates, customersatisfactionandloyalty,serviceadaptability, time-to-market, product/service innovation rates and process flexibility (Bhatt & Grover, 2005; McEvily & Marcus, 2005; Rosenzweig,Roth,&Dean,2003).

Thecooperativecapabilitiesofaﬁrm(Tyler,2001)arerooted in keysocial assets,such asreputation(Barney& Hansen, 1994) and knowledge sharing (Chow & Chan, 2008). They includeintra-andinter-organizationalcooperation capabili-ties(Sahay,2003),whichareusuallymodelledtoincludethe threedimensionsofcommunication,commitmentandtrust (Blomqvist&Levy,2006).

Marketperformance

Asforthedependentvariable,thisstudyadoptsmarket per-formanceincomparisonwiththecompetitors(Ritala,2012; Rivard,Raymond,&Verreault,2006),whichisakeyexpected outcome ofsuperiorfirm capabilitiesfrom the RBV stand-point (Spanos & Lioukas, 2001). In addition, this indicator offirmperformanceisalsoconsistentwithboththe strate-gicalignment (Bergeron,Raymond,& Rivard,2004)and the organizationalintegration(Barki&Pinsonneault,2005) liter-atures.Manyauthoritativescholarshavestatedthatmarket performanceisevenamoreinterestingperformance indica-torforIS thanefficiencyor financialperformance,because in today’s scenario newtechnologies are expected to con-tributenotonlytocostreduction,butalso,and evenmore importantly, tostrategicgrowthand competitiveadvantage

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Please cite this article in pr ess as: Ricciar di, F. , et al. Or g anizational inte gr ation of the IT function: A ke y ena b ler of ﬁrm capa bilities and performance . Journal of Innov ation & Knowledge (2017), http://dx.doi.or g/10.1016/j.jik.2017.02.003

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Table1–Expectedimpactsand/orimplicationsoftheITmanagers’and/orITfunction’srelationshipsaccordingtotheliterature.

Publication Type ITpeoplerelationswith: Claims Theoreticallens

(Bassellier&Benbasat,2004) Empirical–quantitative Businessunits BusinesscompetenceofITprofessionals

(organizationaloverview,organizational

responsibility,IT-businessintegration,interpersonal communication,leadership,andknowledge networking)signiﬁcantlyinﬂuencestheirintention todeveloppartnershipswiththeirbusinessclients.

Knowledgenetworks theory,socialcognitive theories

(Bharadwaj,Bharadwaj,&

Bendoly,2007)

Empirical–quantitative Businessunits Superiorcoordinationbetweenmanufacturingand ISfunctionsleadstosuperiorintegratedIS capability,whichinturnimpactsmanufacturing performance.

Theoriesoforganizational coordination

(Bhatt&Grover,2005) Empirical–quantitative Businessunits Higherqualityrelationshipinfrastructuresbetween

ITandbusinessunitsexecutiveshaveasigniﬁcant positiveeffectonthecompetitiveadvantageofthe ﬁrm.

RBV

(Chan,2002) Empirical–qualitative CEO–TMT;Businessunits Informalorganizationstructuresplayafarmore

importantrolethanformalalignmentinimproving ISperformance.

Business-ITalignment

(Day,2007) Empirical–qualitative Businessunits ThestrengthoftherelationshipbetweentheIT functionandtheinternalcustomerreﬂectsthe degreeofcongruencebetweenthecommonbeliefs oftheparties.

–

(Feeny&Willcocks,1998) Conceptual Businessunits,ITproviders ITmanagers’interpersonalskillsarekeytosuccess

infourareasofcoreIScapability(relationship building,contractfacilitation,leadershipandIT buying).

–

(Feenyetal.,1992) Empirical–qualitative CEO–TMT TheTMT’sCIOmembershipandaneffective

CIO-CEOrelationshipareimportanttomaximising ITexploitation.

–

(Gupta,1991) Conceptual CEO–TMT ThestrategicpartnershipbetweentheCEOandCIO

iskeytocompetitiveadvantage.

RBV

(Han,Lee,&Seo,2008) Empirical–quantitative ITproviders TheeffectivenessoftherelationshipbetweentheIT

vendorandclientorganizationinﬂuences outsourcingsuccess.

RBV–socialexchange theory

(Johnson&Lederer,2010) Empirical–quantitative CEO–TMT Communicationfrequencyandchannelrichness

positivelyinfluencesCEO/CIOconvergence,whichin turninfluencesthefinancialcontributionofISto theorganization.

Socialexchangetheories

(Karahanna&Preston,2013) Empirical–quantitative CEO–TMT ISalignmentmediatestherelationshipbetween

CIO-TMTsocialcapitalandﬁnancialperformance.

Socialcapital–knowl. networks

(Lane&Lum,2011) Empirical–quantitative ITproviders Trustandsharedbusinessunderstandingarethe

keydriversintheIToutsourcingrelationship, ensuringthatrisksandbeneﬁtsareshared, minimisingconﬂictandleadingtosuccessful partnerships.

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j o u r n a l o f i n n o v a t i o n & k n o w l e d g e x x x (2 0 1 7) xxx–xxx Table1–(Continued)

Publication Type ITpeoplerelationswith: Claims Theoreticallens

(Nelson&Cooprider,1996) Empirical–quantitative Businessunits SharedknowledgeandmutualtrustbetweenIS

groupsandtheirlinecustomerscontributetoIS performance.

Socialexchangetheories

(Peppard,2007) Conceptual Businessunits Theknowledgeresourcesneededtosuccessfully

deliverbusinessvaluethroughITaredistributed throughouttheorganization,presentingachallenge fortheCIO.

RBV

(Piccoli&Ives,2005) Conceptual CEO–TMT;Businessunits Thecompetitiveadvantagestemmingfrom

IT-dependentstrategicinitiativesismoredifﬁcultto erodeifitisbasedonafriendlyandtrusting relationshipbetweenITandthebusiness.

RBV

(Rayetal.,2005) Empirical–quantitative Businessunits SharedknowledgebetweenITandcustomerservice unitspositivelyaffectscustomerservice

performance.

RBV

(Reich&Benbasat,2000) Empirical–qualitative CEO–TMT;Businessunits ShareddomainknowledgebetweenbusinessandIT

executivespositivelyinﬂuencesITimplementation success.Communicationandconnectedplanning betweenbusinessandITinﬂuencealignment.

Theoriesoforg. coordinationBusiness-IT align.

(Ross,Beath,&Goodhue,1996) Conceptual CEO–TMT;Businessunits FirmsmustbuildandleverageITassetstogenerate

sustainablecompetitiveadvantage.ITassetsinclude strongITstaff,areusabletechnologybase,andthe partnershipbetweenITandbusinessmanagement.

RBV

(Smaltzetal.,2006) Empirical–quantitative CEO–TMT Businessandstrategicinformationtechnology

knowledge,politicalsavvy,andinterpersonal communicationarethecapabilitiesthatmakeCIOs effective.

Mintzberg’smanagerial roles

(Tai&Phelps,2000) Empirical–qualitative CEO–TMT SimilarITperceptionsbetweenbusinessexecutives

andITexecutivesmaycontributetoovercomingany resistancetotechnologicalchanges.

–

(Tallon,2011) Empirical–quantitative Businessunits Theeffectsofalignmentoninternalprocessesspill

overtodownstreamprocesses,creatinghigherIT businessvalueinthosedownstreamprocesses.

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(Rivardetal.,2006).Chenetal.(2010)identifyandtesta matu-ritymodel, accordingtowhichITmanagement startsfrom contributingtofirmefficiencyandfinallygetstocontribute toreturnoninvestments,sales growth andmarket shares. Therefore,thefirm’smarketperformanceincomparisonwith thecompetitorscanbeconsideredacomprehensive perfor-manceindicatorinthelightofthetheoriesadoptedbythis study.

OrganizationalintegrationbetweentheITfunctionand theTMT

Theliteratureonbusiness-IT alignment(Reich&Benbasat, 2000; Ullah & Lai, 2013) complements the literature on organizational integration in providing sound and specific explanationsfortheimportanceofrelationshipsbetweenthe CIO/topITmanagersandthe CEO/TMT(Johnson& Lederer, 2010).Theliteratureonbusiness-ITalignmentassumesthat top-downstrategicplanningandbusiness-ITco-evolutionare effectiveindesigningandmanagingsuccessfulinformation systems, fitting the firm’s business needs. Structured and effectiverelationshipswiththeCEOandbusinessexecutives allowbusinessandITstrategiestobemadeexplicitand recip-rocallyunderstood.Theserelationshipsalsoallowdiscussion, knowledgeintegrationandlearningamongtopmanagers,and theseattitudes arelikelytospreadtop-downinthe organi-zation(Naranjo-Giletal.,2008).Iftheserelationshipsprove effective,theITmanagersare morelikelytobeinvolvedin strategic challenges and to beinformed of business needs and expectations(Reich& Benbasat,2000).Meanwhile, the CEO and TMT are morelikely toconsider and understand thestrategicpotentialoftechnology-basedinnovationandare lesslikelytoconsiderITasamerecostthankstotheeffective relationshipwiththe highest-rankingITexecutives. Conse-quently,sucharelationshipmakesitmorelikelythatISwill beconsideredanopportunitytobuildnewcompetitive capa-bilities.

Moreover,thecontribution ofIStocooperative capabili-tieswillbepositivelyimpactedbecausetheinteractionwith business-orientedsubjectsislikelytodirecttheITmanagers’ attentiontothelegitimation,commitment,communication, andreputationalneedsthattheinformationsystemmay sup-port(Reich&Benbasat,2000).

Thecooperativeand competitive capabilitiesthat result fromtheorganizationalintegrationbetweentheITfunction and the TMT are likely tobe strongly idiosyncraticto the firmandhardlyimitable(Barney&Arikan,2006;Lavie,2006). Therefore,highlevelsoforganizationalintegrationbetween theITfunctionandtheTMTarelikelytoenablehighlevels ofIS-enabledandIS-supportedcompetitiveandcooperative capabilities,whichinturnwillpositivelyinfluencethefirm’s capabilitytooutperformcompetitors.Inanutshell,the align-mentliteratureprovidesrichinsightstoexplainthespecific influenceoforganizationalintegrationbetweentheIT func-tionandtheTMTonthecontributionofIStoorganizational capabilities;theRBVconfirmsthesepredictionsandexplains theinfluenceofthecontributionofITtoorganizational capa-bilitiesonmarketperformance.Theseconsiderationsleadto theformulationofthefollowinghypotheses:

H1a. The organizationalintegration between the IT func-tionandtheTMTpositivelyinﬂuencesmarketperformance, throughthemediatingeffectofthecontributionofISto com-petitivecapabilities.

H1b. The organizational integrationbetween the IT func-tionandtheTMTpositivelyinﬂuencesmarketperformance, throughthemediatingeffectofthecontributionofISto coop-erativecapabilities.

OrganizationalintegrationbetweentheITfunctionand thebusinessunits

Thetheoryoforganizationaldifferentiationandintegration (Lawrence & Lorsch, 1967) emphasizes the importance of achieving mutual understanding in order to avoid useless conﬂictsandsolveoperationalproblemsinawaythatis sat-isfactoryforallinvolvedactors.TheITfunctionisinchargeof providingthewholeorganizationwithtoolsenabling commu-nication,coordinationandcollaboration(Moynihan,1982).If thesetoolsareco-designedbykeepingintoaccounttheneeds andviewsofthebusinessunits,andtheactualevolutionof coreprocesses,thesetoolsaremuchmorelikelytoactually workasintegrationalmechanismattheorganizationallevel. Thisviewimpliesthateffectiveintegration-oriented relation-shipsoftheITfunctionwiththebusinessunitswillpositively inﬂuenceIS’scontributiontocooperativecapabilities(Swink, 2006).

TheRBVanditssistertheory,theknowledge-basedview ofthefirm(Conner&Prahalad,1996)notonlyallowto con-firm this prediction, but alsopredict apositive impact for effectiveintegrationoftheITfunctionandbusinessunitson IS’scontributiontocompetitivecapabilities.Thisview,infact, emphasizestheimportanceofcross-fertilization,innovation anduniquenessinsolutionsemergingfromeffective opera-tionalrelationships(Ray,Muhanna,&Barney,2005).Therefore, awell-establishedrelationshipbetweentheITpeopleandthe firm’skeyusers(i.e.thepeopleinvolvedincoreprocesses)is likelytodrawtheITmanagers’attentionandeffortstowards concretecompetitivechallenges,ontheoneside,and commu-nication,commitmentandreputationalneedsontheother. LikeinH1aandH1b,alsointhiscasebothcooperativeand competitivecapabilitiesaredevelopedthroughidiosyncratic, hardlyimitableprocesses,andthen,accordingtotheRBV,are likelytoresultincompetitiveadvantage,measurablethrough superiormarketperformance(Lavie,2006).

Theseconsiderationsleadtotheformulationofthe follow-inghypotheses:

H2a. TheorganizationalintegrationbetweentheITfunction and thebusiness unitspositively inﬂuencesmarket perfor-mance,throughthemediatingeffectofthecontributionofIS tocompetitivecapabilities.

H2b. TheorganizationalintegrationbetweentheITfunction and thebusiness unitspositively inﬂuencesmarket perfor-mance,throughthemediatingeffectofthecontributionofIS tocooperativecapabilities.

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OrganizationalintegrationbetweentheITfunctionand theﬁrm’scustomers

The RBV and all knowledge-based theoretical approaches statethatkeyknowledgeresourcesareembeddedincustomer relationships,asclearlyexpressed,forexample,bythe con-cept of‘customer capital’ or ‘relationalcapital’, developed inthe intellectual capitalliterature (Delgado-Verde, Navas-López,Cruz-González,&Amores-Salvadó,2011).TheRBVand sistertheoriesthensuggestthateffectiverelationshipswith customersprovidetheITfunctionwithanextremelyvaluable sourceofinformation,informationthatbecomesstrategicin the caseofe-businessprojects, newproductdevelopment, newcustomer-centredinnovativeservicesand business-to-businesscollaborationandintegrationprojects(Tallon,2007, 2011). Therefore,effectiverelationships withcustomers are likelytoenhancetheITpeople’sawarenessofboththe com-petitivechallenges oftheﬁrmandits strategiccooperative needsforcommunication,commitmentandreputation.

Moreover,accordingtothetheoryoforganizational differ-entiationandintegration,iftheITfunctionissystematically committedtointeractwiththecustomers,thiswillhelpthe IT people keep in touch with the problems and needs of other importantfunctions that continuouslydeal withthe ﬁrm’s customers, such as the marketing function and the sales function. In fact, according to Lawrence and Lorsch (1967),interactingwiththesameexternalpartiesisan impor-tantenablerofcommonlanguageandmutualunderstanding betweenorganizationalsub-systems.

Inother words,the jointpredictions emergingfrom the RBVliterature and the theoryof organizationalintegration stronglysupportthestatementthathighintegrationbetween theITfunctionandtheﬁrm’scustomerswillresultingreater IScontributionstobothcompetitiveandcooperative capabili-tiesforﬁrms.Stemmingfromacomplexnetworkoflong-term effective relationships, these capabilities are likely to be idiosyncraticandimperfectlymobile(Lavie,2006).Therefore, accordingtotheRBV,thesearelikelytoresultinsustained competitive advantage,measurable throughmarket perfor-mance.Inconclusion,wecaninferthefollowinghypotheses:

H3a. TheorganizationalintegrationbetweentheITfunction andtheﬁrm’scustomerspositivelyinﬂuencesmarket perfor-mance,throughthemediatingeffectofthecontributionofIS tocompetitivecapabilities.

H3b. TheorganizationalintegrationbetweentheITfunction andtheﬁrm’scustomerspositivelyinﬂuencesmarket perfor-mance,throughthemediatingeffectofthecontributionofIS tocooperativecapabilities.

OrganizationalintegrationbetweentheITfunctionand thenon-ITsuppliers

The RBV explicitly mentions the importance of the ﬁrm’s relationships with value chain partners. RBV holds that this relationship is a valuable, rare, inimitable and non-substitutableresource,likelycrucialtosustainedcompetitive advantage (Barney, 1991). IT managers play a pivotal role in this relationship, because of the growing relevance of

e-businessandsupplychainautomationtoﬁrmperformance (Amit&Zott, 2001).Ifareliableintegrationisachieved,the suppliersmaybecomekeypartnersforproduct,processand businessmodelinnovation,whichisgrowinglyimportantin today’sturbulentbusinessscenario(Hult,Ketchen,&Arrfelt, 2007; Rai,Patnayakuni, & Seth,2006; Roper &Crone, 2003; Squire,Cousins,&Brown,2009).

From thepointofviewofLawrenceand Lorsch’stheory (Lawrence & Lorsch, 1967), effective relationships between theITfunctionandtheﬁrm’ssuppliersarecertainly impor-tantbecausetheITmanagerswillcollectelementstoadapt theﬁrm’sIStotheever-evolvingcoordinationneedsbetween intra- andinter-organizationalkey partners.Moreover, sys-tematicinteractionwiththesupplierswillindirectlyfacilitate the intra-organizationalintegrationwiththe functionsthat morestrictlyinteractwiththesuppliers, i.e.the operations functionsoftheorganization.

Effective relationships with suppliers may also provide the IT managers with a valuable source of information. Thisinformationbecomesstrategicduringsupplychain inte-gration projects and when key suppliers are involved in product/serviceinnovationprocesses(Bardhan,Whitaker,& Mithas,2006;Klein&Rai,2009).Effectiverelationshipswith supplierscontributetoenhancingtheITmanagers’awareness ofthecompetitiveenvironmentandofICT’srolein suppor-tingstrategiccommunication,commitmentandreputational needs. Also these integration processes (similarly to those described inH1, H2andH3)are likelytoresultin idiosyn-cratic,hardlyimitablecapabilities(Lavie,2006).Therefore,we caninferthefollowinghypotheses:

H4a. TheorganizationalintegrationbetweentheITfunction andtheﬁrm’snon-ITsupplierspositivelyinﬂuencesmarket performance,throughthemediatingeffectofthecontribution ofIStocompetitivecapabilities.

H4b. TheorganizationalintegrationbetweentheITfunction andtheﬁrm’snon-ITsupplierspositivelyinﬂuencesmarket performance,throughthemediatingeffectofthecontribution ofIStocooperativecapabilities.

OrganizationalintegrationbetweentheITfunctionand theITprovidersandoutsourcers

Today,softwaresolutionsareincreasinglystandardised,while thetraditionalconcernsaboutin-househardware infrastruc-turesareoftenreplacedbyaportfolioofoutsourcedsolutions (Chun & Mooney, 2009), growinglyaccessed through cloud computing(Marston,Li,Bandyopadhyay,Zhang,&Ghalsasi, 2011).Theperformanceoftheﬁrm’sISoftendepends,then, on the IT providers and outsourcers. These subjects can act as business partnersand provide an important contri-bution to innovation and competitive advantage (Smaltz, Sambamurthy, & Agarwal, 2006). However,similar to what happens in all knowledge networks, they can also be a sourceofrisk,conservatismandresourcewaste.Therefore, an effective integration between the IT function and the ITproviders/outsourcersisessential toenhance the poten-tial and controlthe risksofsuch arelationship. Giventhe growingrole ofITprovidersinISquality,thisdimensionof

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theorganizationalintegrationofthe ITfunctionislikelyto impacttheconcretecontributionofIStocompetitive capabil-ities.Moreover,thesuccessfuladoptionofoutsourced,popular andlegitimatedbest-practicesoftwaresolutions(suchasthe leadingERPs)enhancestheﬁrm’sreputationandabilityto suc-cessfullycommunicatewithbusinesspartners(Hertwig,2012; Liang,Saraf,Hu,&Xue,2007).Therefore,successful integra-tionwiththeITproviderscanindirectlyimprovetheﬁrm’s optionstodevelopinternalcooperationandexternal partner-ships.Ultimately,theliteraturestronglysupportstheideathat effectiveorganizationalintegrationbetweentheITfunction andtheIToutsourcersandproviderswillresultinmore,and moreidiosyncratic,IScontributionstobothcompetitiveand cooperativecapabilities.

Theseconsiderationsleadtotheformulationofthe follow-inghypotheses:

H5a. TheorganizationalintegrationbetweentheITfunction andtheﬁrm’sITprovidersand/oroutsourcerspositively inﬂu-encesmarketperformance,throughthemediatingeffectof thecontributionofIStocompetitivecapabilities.

H5b. TheorganizationalintegrationbetweentheITfunction andtheﬁrm’sITprovidersand/oroutsourcerspositively inﬂu-encesmarketperformance,throughthemediatingeffectof thecooperationofIStocooperativecapabilities.

Overall,thesetenhypothesesleadtotheconceptualmodel depictedinFig.1.

Method

Variablesandscales

Totestourresearchmodelandhypotheses,weconducteda two-stageﬁeldstudytocollectsurveydatafromtopmanagers, includingCIOs,CEOsandotherexecutivesdirectlyreporting totheCEOorgeneralmanager.Thequestionnairescontained extantvalid measuresadaptedto ourresearch needs. The organizationalintegrationoftheITfunctionwasmeasured thankstoanadaptedversionofthescaledescribedinZardini, Ricciardi,andRossignoli(2015),which,inturn,buildsupon Delgado-Verde et al. (2011). This scale uses IT managers’ connectedness(Jansenetal.,2009)asakeyproxyofthe organi-zationalintegrationoftheITfunction.Asforthecontribution ofIStocompetitiveandcooperativecapabilities,weadapted theconstructsandscalesproposedbyChenetal.(2010)and Blomqvist and Levy (2006); we also took into account Tal-lon’sscale ofperceived effectsofIT(Tallon,2011).Inorder tomeasurethedependentvariable,i.e.marketperformance, weadaptedthemeasuresofmarket performanceproposed byRai(2013)andincludedperceptualmeasuresofthedegree towhichcompetitorshavebeen outperformedasforsales, marketshares,andproﬁtability(Ritala,2012;Venkatraman& Ramanujam,1986;Wade&Hulland,2004).

We created and tested the scales of the indepen-dent variables, mediators and dependent variable through standard instrument development methods (Bagozzi, Yi, & Phillips,1991).Weadministered apilotquestionnaireto14

managers,whichledtoareductioninthenumberofitems. Themanagersparticipatinginthepilotexpressedunanimous concernforthesurvey’sconfidentiality.Becausethe question-naireincludedpotentiallyawkwardrelationalquestions,the respondentssaidthattheywouldnotfeelfreetoanswer sin-cerelyunlessthequestionnairewascompletelyanonymous. We discussed this issue and eventually decided to follow the managers’ advice and to administer fully anonymised questionnaires,thus eliminatingthe possibilityof conduct-ing matchedanalyses (by comparingthe questionnairesof managersbelongingtothesameorganization)andfinancial statement analyses,infavourofhigherresponsereliability andlowerself-selectionbias.Asaconsequence,aperceptual measurewasadoptedtoassessmarketperformance(seee.g. Brouthers,Brouthers,&Werner,2007;Pavlou&Sawy,2010). Priorstudiesdemonstratestatisticallysignificantcorrelations betweenperceptualandcorrespondingobjectivemeasuresof performance(Rosenzweigetal.,2003;Ward,Leong,&Boyer, 1994;Ward,McCreery,Ritzman,&Sharma,1998).

Inthesecondstageoftheprocess,westatisticallyassessed thescales’propertiesusingthesurveydata.Forallourscales, weprovideasummaryofdeﬁnitionsandmeasures,alongwith theresultsofconﬁrmatoryfactoranalyses,inAppendixA.

Samplingandsurvey

As described above, the target respondents of our survey includebothITmanagersandtopbusinessexecutives.Our population of interest consisted of members from three Italianmanagers’ associations (ClubTI,Federmanager, and AICA),associationsidentifiedbyourfocusgroupas particu-larlyrepresentativeanddistinguished.Throughemail,these managers were invitedtofill out our questionnaire,which was availableonline and fully anonymisedfor thereasons describedabove.Ourrespondentsconsistedof1799top man-agers from companies located in Northern Italy. This list includedallmanagersenrolledinatleastoneofthetwomost importantItalianCIOassociations,managersenrolledinan importantItaliantopmanagers’ association,and managers participatinginconferencesandmeetingsorganizedbyone ofthemostimportantItalianbusinessschoolsin2012.The questionnairecollectionprocessbeganinJuly2012and con-cluded inFebruary 2013,atwhichpoint261questionnaires hadbeencollected.Theresponseratewas14.51percent.Only completedquestionnaireswereconsideredfordataanalysis (n=236,90.42percentofreceivedquestionnaires).Appendix Bcontainsdescriptivestatisticsabouttherespondents,firms andindustries.Themanagerswereinvitedtofilloutthe ques-tionnairevia e-mailfromthe associations’presidents.This emailincludedtheURLoftheonlinesurveyquestionnaire,the study’saimandsignificance,andtheprivacyprotectionpolicy. The system automatically checked the IP of each respon-dentinordertoexcludeduplicatesubmissions.Inorderto testnon-responsebias,therespondentswere splitintotwo responsewaves:earlyrepliers(withintwomonths)andlate repliers (more than twomonths). Theresults showed that earlyrespondentsandlaterespondentswerenotsignificantly differentwithrespecttoage,organizationalrole,years’ experi-ence,industryandallotherindependentvariables.Moreover, weconductedaMann–WhitneyUtest(seeAppendixC),and,

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onthebasisoftheseresults,it ispossibletoconcludethat non-responsebiasshould notbea concern(Bagozziet al., 1991).

Results

Independentvariable

Following Cudeck (2000), we conductedan explorative fac-toranalysiswithaVarimaxrotationtostatisticallytestthe soundnessoftheconstruct‘organizationalintegrationofthe ITfunction’.Then,weconductedaconfirmatoryfactor analy-sis(CFA)(DiStefano&Hess,2005;Hair,Black,Babin,Anderson, &Tatham,2010).Theresultssoundlyconfirmedthatthe inde-pendentvariablecanbedividedintothefivesub-dimensions showninFig.1.

Thecorrelationmatrix ofthe 10items ofthe scale(see AppendixD)showsthat 44ofthe45 correlations (approxi-mately97.78%)aresigniﬁcantatthe0.01level,thusproviding anadequatebasistoperformafactoranalysisforeachitem andfortheoverallconstruct.Asaﬁrststep,wetested com-monmethodbiasusingHarman’ssinglefactortest,themost widely-usedmethodintheliterature.Usingexploratoryfactor analysis,weevaluatedtheunrotatedmatrixwithaunique fac-tor.Thetotalvarianceexplainedvalue(initialEigenvalues% ofvariance)was40.662%,(i.e.lessthan50%),asexpected.We analysedthecommonlatentfactor(CLF)throughIBMAMOS beforecomparingthestandardisedregressionweightsfrom thisCFAmodeltothestandardisedregressionweightsofa modelwithouttheCLF.Theresultsshowthatthevaluesare similar(thedifferenceislessthan0.2),asexpected.

WeutilisedIBMAMOSinordertoperformtheCFA. Accord-ingtoBrown(Brown,2012),themainindicesusedinIBMAMOS areChi-square/df(orCMIN/df),p-value,CFI,GFI,RMSA,AGFI andSRMS;previewsindicesaresufﬁcientformodelvalidation. Theresultsofthisconﬁrmatoryfactoranalysisareavailable inAppendixA.

Mediators

Inordertostatisticallytestthesoundnessoftheconstruct utilisedasamediator(thecontributionofITtocompetitive and cooperative capabilitiesofthe ﬁrm), weconducted an explorativefactoranalysisusingaVarimaxrotation,following Cudeck(2000).Wethenconductedaconﬁrmatoryfactor anal-ysis(CFA)(DiStefano&Hess,2005;Hairetal.,2010).Theresults revealedthatthetwoexpecteddimensionsofthemediator arefurtherdividedintofactors:thecontributionofISto com-petitive capabilitiesisdivided into three factors,whilethe contributionofIStocooperativecapabilitiesisdividedinto twofactors.

WefoundthatthefivefactorsidentifiedbytheCFAare con-sistentwiththedimensionsofcompetitiveandcooperative capabilitiessuggestedbytheliterature.Thefirstfactor(M1) includesthe itemsassessing IS’s contributionto face mar-ketchallenges,suchasincreasingsales/marketshares and improvingservicerapidity/time-to-market.Thesecondfactor (M2)includestheitemsassessingIS’scontributiontocustomer orientation,suchasincreasingcustomerloyaltyandcustomer

satisfaction.Thethirdfactor(M3)includestheitemsassessing IS’s contributiontostrategicinnovation,suchasincreasing competitive strategy reactivity (i.e., the capability to adapt price and/or differentiation strategies to evolving market contexts) and improvingproduct/service innovation perfor-mance.Thefourthfactor (M4)includestheitemsassessing IS’s contribution to intra-organizational cooperative capa-bilities, such as the contribution toorganizational climate andcommitment,employees’knowledgesharingand effec-tivecommunication.Theﬁfthfactor(M5)includestheitems assessingIS’scontributiontointer-organizationalcooperative capabilities,suchaseffectivesupplychaincollaborationand theﬁrm’sreputationandtrustworthiness.

Thecompletelistoftheitemsonthisscaleisavailablein AppendixA,alongwiththescaleadoptedfortheindependent and dependent variables and the results of the conﬁrma-tory factor analysis. Wethen decided to test our research modelbyseparatelyconsideringeachofthesemediating sub-dimensions.Thiswasundertakentoachieveamoregranular assessmentofthemediatingeffectswehypothesised.

Modeltesting

Following Hayes and Scharkow (2013) and Henseler et al. (2014),wedecidedtoadoptthebootstrappingmethod(a non-parametric method); it is‘the best test, asit is mosttrust worthyintheconditions[...]whenanindirecteffectexists andthefocusisondetectinganonzeroeffectratherthanon intervalestimation’(Hayes&Scharkow,2013,p.7).The trust-worthinessofthismethodisalsohighlightedbyHenseleretal. (2014,p.198)whoclaimthat‘thepercentilebootstrap conﬁ-denceintervalisagoodcompromise’.Moreover,Zhao,Lynch, andChen(2010)notethatthe‘Sobeltestisverylowinpowerin comparisonwithnewerbootstraptests’.HayesandScharkow (2013)havefurtherextendedandimprovedthebootstraptest method.

Toanalyse themultiplemediation models,weused the softwareIBMAMOS.AdoptingShroutandBolger’sapproach (Shrout&Bolger,2002),weusedbootstrapping(5000times) totesttheindirectandtotaleffectoftheindependent vari-ables. Theremaining effect (or direct effect)was obtained bysubtractingtheindirecteffectfromthetotaleffect(total effect=direct effect+indirect effect). Following Hayes and Scharkow (2013,p.7),weusedthe bias-correctedbootstrap CI.Wealsotestedtheinfluenceofthreeclassicalcontrol vari-ables: industrialsector, firmsize(employees) andfirmsize (revenues).Wefoundnoneofthesefactorstobesignificant. WealsocontrolledfortheCIO’sorganizationalrole (measur-ingwhethertheCIOreporteddirectlytotheCEOornot),and eventhisfactorwasfoundtobeinsignificant.Thedataonthe controlvariablesareshowninAppendixE.Theseresults con-firmallofthetenhypotheses(Table2).Finally,wecompared the totaleffectsofthefivesub-dimensionsofthe indepen-dentvariableonfirmperformanceinordertocompareand contrast the contributions ofeach dimension of organiza-tionalintegrationoftheITfunction.Theresultsofouranalysis reveal that the total effectof the independent variable on market performancearethe following:integrationwiththe TMT=0.368;businessunits=0.501;customers=0.353;non-IT suppliers=0.344;andITproviders=0.396(seeFig.2).

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Table2–Overviewofresultsofmediationmodels.

Code Description Results

Hp1a IntegrationwiththeTMT→Competitivecapabilities→Marketperformance SupportedforallthedimensionsoftheMediator Hp1b IntegrationwiththeTMT→Cooperativecapabilities→Marketperformance SupportedforallthedimensionsoftheMediator Hp2a IntegrationwiththeBusinessUnits→Competitivecapabilities→Market

performance

SupportedforallthedimensionsoftheMediator Hp2b IntegrationwiththeBusinessUnits→Cooperativecapabilities→Market

performance

SupportedforallthedimensionsoftheMediator Hp3a IntegrationwiththeCustomers→Competitivecapabilities→Market

performance

SupportedforallthedimensionsoftheMediator Hp3b IntegrationwiththeCustomers→Cooperativecapabilities→Market

performance

SupportedforallthedimensionsoftheMediator Hp4a Integrationwiththenon-ITSuppliers→Competitivecapabilities→Market

performance

SupportedforallthedimensionsoftheMediator Hp4b Integrationwiththenon-ITSuppliers→Cooperativecapabilities→Market

performance

SupportedforallthedimensionsoftheMediator Hp5a IntegrationwiththeITProviders/Outsourcers→Competitive

capabilities→Marketperformance

SupportedforallthedimensionsoftheMediator Hp5b IntegrationwiththeITProviders/Outsourcers→Cooperative

capabilities→Marketperformance

SupportedforallthedimensionsoftheMediator

Therefore,wecanconcludethatthatalloftheconstruct’s dimensionsaremoreorlessequallyrelevanttoperformance, withaslightlymajoreffectfortherelationshipswiththe busi-nessunits.

Discussion,

limitations

and

further

research

steps

DrawingontheRBV,theliteratureonbusiness-ITalignment andthetheoryoforganizationaldifferentiationand integra-tion,this study hypothesisesthat thecontribution ofIS to organizationalcapabilities and ﬁrmperformance would be inﬂuencedbytheorganizationalintegrationbetweentheIT functionandthewholerangeofkeyactorsintheintra-and inter-organizationalsystemsinwhichtheITfunction opera-tes.

Thisstudy shows that the three theoretical approaches listedabovecomplementeachotherinexplainingthe impor-tanceoftheorganizationalintegrationoftheITfunction.The literatureonbusiness-ITalignmenttraditionallyfocuseson theimportanceoftop-levelrelationships,suchasthosewith theTMT;theliteratureonorganizationaldifferentiationand integrationtraditionallyfocusesonoperational-level relation-ships,suchasthosewiththebusinessunitsandthesuppliers; theRBVandsistertheorieshighlightthevalueofall relation-ships,andparticularlythosewiththecustomers;inaddition, theRBVidentiﬁesorganizationalcapabilitiesasthekey medi-atorbetweenrelationaleffectivenessandperformance.This studyintegrates theseviews andthenprovidesanoriginal, comprehensiveinsightontheimportanceofallthedifferent dimensionsoftheorganizationalintegrationoftheIT func-tion.

Our analysis shows that every type of key relationship oftheITfunction(withtheTMT,businessunits,customers, suppliersandITproviders)hasarelevantandsimilarimpact onperformance.Thisempiricaloutcomeiscompletelynovel andoriginal,conﬁrmingthatthedimensionsofITfunction’s organizational integration that have been overlooked by empirical research to date (i.e. the relationships with the

ﬁrm’scustomersandsupplychainpartners)deserveasmuch attentionasthemostwidely-studiedrelationshipswiththe top executives and internalusers throughoutthe business units.

The geographical limitation of our sample is a possi-ble issue for the generalisation of this study’s outcomes; however, northern Italy (where most respondents work) is sufficiently representative of the situation in western developed countries. Our descriptive statistics reveal an over-representation ofthe manufacturingindustry,but the industrialsectorwasincludedasacontrolvariableandproved insignificant.Perhapsthemostrelevantmethodological limi-tationofthisworkisthatwedecided,duetoourrespondents’ confidentiality concerns,nottoconduct amatchedsurvey; thisdecisionmeantthatwecouldnotcomparequestionnaires frommanagersworkinginthesamefirm.Nonetheless,our focus groupand pilotsurveyconvincedusthat thischoice wouldpermitmoresincereresponsesandlowerself-selection bias.

Thisstudyopensnewpossibleresearchpaths.For exam-ple,interestinglinksmayemergebetweentheorganizational integration of the IT function and organizational learning, organizational agility, and dynamic capabilities. Further, it wouldbeinterestingtoexplorewhetherand howthe orga-nizationalintegrationoftheITfunctionco-evolveswiththe wholeorganizationalsystem’sintegration;longitudinal stud-ieswouldbeparticularlysuitedtopursuethisresearchgoal. More generally, we hope that ourstudy stimulatesfurther researchintohowcross-boundaryorganizationalintegration contributestoﬁrmperformanceintoday’snetworked econ-omy.

Managerial

implications

This study soundly corroboratesthe ideathat IS, far from beingjustacostorameanstoincreaseefficiency,cansupport the strategic capabilities of an organization and can posi-tivelyaffectthefirm’sfinancialandmarketperformance.In orderforthistooccur,itisimportantthattheorganizational

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Indirect effects of the Organisational Integration

between the IT dept. and:

Path Through M1 Through M2 Through M3 Path Through M4 Through M5 The TMT (a) 0,575 (***) 0,544(***) 0,531(***) (b) 0,517 (***) 0,574(***) (a)

The Business Units 0,589 (***) 0,553 (***) 0,534 (***) (b) 0,566 (***) 0,616 (***) (a)

The Firm’s Customers 0,572 (***) 0,534 (***) 0,518 (***) (b) 0,512 (***) 0,575 (***) (a)

The non-IT Suppliers 0,569 (***) 0,554 (***) 0,536 (***) (b) 0,569 (***) 0,607 (***) (a)

The IT Providers / Outsourcers 0,075 (***) 0,563 (***) 0,556 (***) (b) 0,610 (***) 0,222 (***)

Total and Remaining Direct effects of the

Organisational Integration between the IT dept. and:

Total (T) Remaining (R)

The TMT 0,368 0,04

The Business Units 0,273 0,01

The Firm’s Customers 0,353 0,03

The non-IT Suppliers 0,344 0,05

The IT Providers / Outsourcers 0.396 0.00 (b) (a)

(T) Organisational Integration between the IT

function and:

Hp1- the Top Management Team (TMT) Hp2- the business units

Hp3- the firm’s customers Hp4- the non-IT suppliers Hp5- the IT providers/outsourcers

(R)

Market Performance

Contribution of IS to firm’s cooperative capabilities Dimensions:

M4=intra-org. coop. capab. M5=inter-org. coop. capab. Contribution of IS to firm’s competitive capabilities Dimensions: M1=face market challenges M2=customer orientation M3=strategic innovation

Fig.2–Resultsoftheanalysisofthemediationmodel,withindirectanddirecteffects.

design,cultureandincentivesencouragetheITmanagersto developarichnetworkofpurposefulrelationshipswithboth internaland external subjects, suchasthe TMT and busi-nessunitsaswellastheﬁrm’scustomers,suppliersandIT providers.

The measurement items we developed provide execu-tiveswithguidelinestoassesstheirITmanagers’relational capabilities;moreover,executivescanexploittheinsights pro-videdbyourworktoassessandimprovetheorganizational

conditionsinfluencingtheeffectivenessoftheITfunction’s organizationalintegration.Morespecifically,bothour quali-tativeresearch(interviewsandfocusgroup)andoursurvey suggestthatthefollowingorganizationalconditionsare rele-vanttofirmperformance:

• Well-structuredandregularinteractions(e.g.meetings)are scheduledbetweenthetopITmanager(s)andthetop exe-cutives,includingthebusinessunitdirectors;

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• Following well-established policies, the board and TMT involvethetopITmanager(s)instrategicdecisions; • The interaction between the IT managers and the

business units is hard-wired into the organizational design—speciﬁcally,itisintegratedthroughamatrix orga-nizational chart, so thatpeople working inthe business unitsandcoreprocesseskeeptheITmanagerscontinuously informed,indetail,onbusinessneeds;

• TheITmanagersareinvolvedinthetaskforcescreatedfor productandprocessinnovation;

• Awell-structured,constructiveITauditserviceisavailable, tocontinuouslyinformtheITmanagersabouttheinternal users’satisfaction;

• TheITmanagersareencouragedtointeractdirectlywith theﬁrm’scustomersandsuppliers,especiallyinrelationto e-businessprojects.

Wesuggestthattheseorganizationalconditionsare impor-tant forgettingthe mostoutofITmanagers andIS; these conditionswillallowbothcompetitiveandcooperative capa-bilitiesofthewholeorganizationalecosystemtodevelopfor improvedﬁrmperformance.

Appendix

A.

–Scalesadoptedforthedependentvariable,independentvariable,andthemediator.

Dependentvariable

Code Item

Marketperformance Themarketperformanceofourﬁrmisbetterthanourkey competitors’asfor:

(a)Sales (b)Marketshares (c)Proﬁtability

Conﬁrmatoryfactoranalysisoftheindependentvariable–modelﬁtvalue

CMIN/df p-close CFI GFI AGFI SRMR RMSA PCLOSE

1.927 0.06 0.976 0.957 0.906 0.046 0.066 0.160

Independentvariable:organizationalintegrationoftheITfunction

Dimensions Code Items

Integrationwiththe TMT

TMT1 Frequentandin-depthinteractionsoccur(forexample,throughperiodic meetings)betweentheITmanagementandthetopmanagementinour organization.

TMT2 TheITmanagement’sopinionsaboutfeasibility,costs,risksand

opportunitiesaretakenintoconsiderationforstrategicdecisionmakingin ourorganization.

Integrationwiththe businessunits

BU1 TheITmanagementinteractsverystrictlywiththebusinesslinesand/or withtheproductionfunctionsinourorganization.

BU2 SoundauditprocessesareestablishedtosystematicallyassessITusers’ satisfactionandITbreakdownmanagementinourorganization. Integrationwiththe

customers

CUS1 TheITmanagersandthoseinchargeofthecorebusiness(forexample,the managersofthebusinesslines)activelycooperateforprocess/product innovationinourorganization.

CUS2 OurITmanagementeffectivelyinteractswithourorganization’sclients and/ordealers,forthedevelopmentofspeciﬁcprojects.

Integrationwiththe non-ITsuppliers

SUP1 OurITmanagementeffectivelyinteractswithournon-ITsupplierstoshare information,advice,complaints,etc.

SUP2 OurITmanagementeffectivelyinteractswithournon-ITsuppliersto developspeciﬁcprojects.

IntegrationwiththeIT providers

PROV1 Sometimes,IperceivetherelationshipswithourITproviders/outsourcersas anoppressiveaccumulationoflong-termconstraintsandestablished routines,hinderinginnovation.[ReverseItem]

PROV2 TakingcareoftherelationshipswithourITproviders/outsourcersisa priorityforourITmanagement.

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AppendixA–(Continued)

Conﬁrmatoryfactoranalysisofthemediators–modelﬁtvalue

CMIN/df p-close CFI GFI AGFI SRMR RMSA PCLOSE

1.774 0.051 0.986 0.961 0.913 0.031 0.061 0.255

MEDIATOR:contributionofIStoorganizationalcapabilities

Dimensions Code Item

Competitivecapabilities

M1-1 Ourinformationsystemshaveconcretelycontributedtoincreasesales and/ormarketsharesinthelastthreeyears.

M1-2 Ourinformationsystemshavesignificantlycontributedtoourfirm’s reactivityandflexibilityinthelastthreeyears.

M2-1 Ourinformationsystemshavesigniﬁcantlycontributedtoincreasecustomer loyaltyinthelastthreeyears.

M2-2 Ourinformationsystemshaveallowedustocutourpricesand/ortoincrease ourmarginsinthelastthreeyears.

M3-1 Ourinformationsystemshavesupportedorallowedchangesinourﬁrm’s competitivestrategiesinthelastthreeyears.

M3-2 Ourinformationsystemshavesupportedorenabledthedevelopmentofnew productsand/orservicesinthelastthreeyears.

Cooperativecapabilities

M4-1 Ourinformationsystemshavesupported/enabledsigniﬁcantimprovements ininternalcooperation,knowledgesharingand/orcommunicationqualityin ourorganizationinthelastthreeyears.

M4-2 Ourinformationsystemshavesupported/enabledsigniﬁcantimprovements inemployeemotivation,employeeengagementand/ororganizational climateinthelastthreeyears.

M5-1 Ourinformationsystemshavesupported/enabledsigniﬁcantimprovements intheinteractionswithsupplychainpartners(e.g.suppliers,distributors)in thelastthreeyears.

M5-2 Ourinformationsystemshavesupported/enabledsigniﬁcantimprovements inourﬁrm’sreputationand/orimageinthelastthreeyears.

Appendix

B.

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JIK-41; No . of Pa g e s 19 j o u r n a l o f i n n o v a t i o n & k n o w l e d g e x x x (2 0 1 7) xxx–xxx

15 Appendix

C.

–Mann–WhitneyU. Teststatisticsa

TMT1 TMT2 BU1 BU2 PROV1 PROV2 CUS1 CUS2 SUP1 SUP2 OrganizationalRole Gender Age Industry Mann–WhitneyU 3598.00 3122.50 4322.00 3799.50 3920.00 3287.00 3616.50 3710.50 4100.00 3380.00 3619.50 4385.50 3960.50 4205.50 WilcoxonW 5251.00 4775.50 5975.00 5452.50 5573.00 4940.00 5269.50 5363.50 5753.00 5033.00 5272.50 6038.50 5613.50 16295.50

Z −2.21 −3.39 −0.27 −1.67 −1.35 −3.00 −2.13 −1.86 −0.82 −2.85 −2.04 −0.18 −1.21 −0.56 Asymp.Sig.(2-tailed) 0.27 0.17 0.29 0.10 0.18 0.27 0.33 0.25 0.41 0.44 0.41 0.86 0.23 0.57

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16 Appendix

D.

–Correlationmatrixfortheindependentvariable.

TMT1 TMT2 BU1 BU2 CUS1 CUS2 PROV1 PROV2 SUP1 SUP2

TMT1 1 TMT2 0.677** ₁ BU1 0.373** _0.437** ₁ BU2 0.363** _0.383** _0.683** ₁ CUS1 0.483** _0.562** _0.442** _0.478** ₁ CUS2 0.415** _0.307** _0.445** _0.428** _0.611** ₁ PROV1 0.219** _0.294** _0.268** _0.323** _0.304** _0.185** ₁ PROV2 0.335** _0.406** _0.421** _0.450** _0.529** _0.577** _0.712** ₁ SUP1 0.426** _0.577** _0.422** _0.384** _0.409** _0.576** _0.150* _0.444** ₁ SUP2 0.431** _0.590** _0.443** _0.395** _0.459** _0.453** _0.206** _0.398** _0.732** ₁ ∗ _Correlations_signiﬁcant_at_the_0.05_level.

∗∗ _Correlations_signiﬁcant_at_the_0.01_level.

Appendix

E.

–Effectsofcontrolvariables.

Controlvariables EffectsonthemediatorsonthecontributionofITto: Effectsonthedependent variables: Facemarket challenges Customer orientation Strategic innovation Internal socialcapital External socialcapital

Financial&market performance

Industrialsector 0.625 −1.099 −0.628 −0.258 −0.645 0.34

Firmsize(revenues) −0.009 −0.032 −0.037 −0.063 −0.064 −0115 Firmsize(employees) 0.568 −1.159 −0.663 −0.257 −0.624 −0.076 CIOreportingstructure 0.624 −0.014 −0.478 −0.235 −0.396 −0.035

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