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Objective and main results

This article investigates how the interplay between a firm’s IT governance choices (i.e. which department makes what IT decisions) and the IT unit’s and line functions’ peripheral knowledge (i.e. one department’s knowledge in the other’s domain) shapes IT strategic agility.

Main findings:

• An increase in IT unit business knowledge increases the marginal returns to IT strategic agility from decentralizing IT app governance (i.e. decision-making responsibilities for IT applications in line functions).
• An increase in line functions’ technical knowledge increases the marginal returns to IT strategic agility from centralizing IT infrastructure governance (i.e. decision-making responsibilities for IT infrastructure in the IT unit).

Summary of practical implications

The results show that IT governance choices can foster IT strategic agility. This, however, requires careful alignment of knowledge. Allocating responsibilities for IT application decision-making to the line functions (i.e. decentralizing) in order to increase strategic agility requires development of business knowledge in the IT unit. In contrary, allocating responsibilities for IT infrastructure decision-making to the IT unit (i.e. centralizing) requires development of IT knowledge in the line functions. Organizations therefore need to combine IT governance choices with appropriate knowledge building efforts.

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Tags

Strategic flexibility IT governance