Skip to main content
SpringerLink
Log in

Board-level IT governance and organizational performance

  • Research Article
  • Published:
European Journal of Information Systems

Abstract

Research on the strategic management of Information Technology (IT) resources has mostly focused on the oversight provided by the management team as a means to increase organizational performance. In recent years, boards of directors have also increased their involvement in IT matters, and various theoretical lenses suggest that this oversight too has the potential to influence organizational performance. Hence, this study synthesizes the resource-based and contingency views of MIS with corporate governance theories, and examines key antecedents and consequences of board-level IT governance (ITG) using a multi-method approach. Structural Equation Modelling analysis applied to organization-level data collected from 171 board members suggested that the level of ITG exercised by boards was contingent upon the organization's ‘IT use mode’, along the two dimensions of need for (a) fast and reliable IT, and (b) new innovative IT. But, the findings further suggested that the contingency approach may be suboptimal because it can cause new ways of leveraging IT to be ignored. High levels of board-level ITG, regardless of existing IT needs, increased organizational performance. This phenomenon was illuminated with applicability checks. Moreover, content analysis and structured interviews with board members further enriched these insights.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Figure 1
Figure 2
Figure 3

Similar content being viewed by others

References

  • Appleby C (2008) IT & the board: taking responsibility. Trustee 61 (2), 14–17, 1.

    Google Scholar 

  • Armstrong CP and Sambamurthy V (1999) Information technology assimilation in firms: the influence of senior leadership and it infrastructures. Information Systems Research 10 (4), 304–327.

    Article  Google Scholar 

  • Banker RD, Hu N, Pavlou PA and Luftman J (2011) Cio reporting structure, strategic positioning, and firm performance. MIS Quarterly 35 (2), 487–504.

    Google Scholar 

  • Bart CK (1993) General managers control new and existing products differently. Journal of Business Venturing 8 (4), 341–361.

    Article  Google Scholar 

  • Bart CK and Turel O (2010) IT and the board of directors: an empirical investigation into the ‘GOVERNANCE QUESTIONS’ canadian directors ask about it. Journal of Information Systems 24 (2), 147–172.

    Article  Google Scholar 

  • Bharadwaj AS (2000) A resource-based perspective on information technology capability and firm performance: an empirical investigation. MIS Quarterly 24 (1), 169–196.

    Article  Google Scholar 

  • Brynjolfsson E (1993) The productivity paradox of information technology. Communications of the ACM 36 (12), 67–77.

    Article  Google Scholar 

  • Byrd TA, Lewis BR and Bradley RV (2006) Is infrastructure: the influence of senior it leadership and strategic information systems planning. Journal of computer information systems 47 (1), 101–113.

    Google Scholar 

  • Cannella AA and Hambrick D (2001) Upper echelons: Donald Hambrick on executives and strategy. Academy of Management Executive 15 (3), 36–44.

    Article  Google Scholar 

  • Cash JI, McFarlan FW, McKenney JL and Vitale MR (1988) Corporate Information Systems Management: Text and Cases. Irwin, Homewood, IL.

    Google Scholar 

  • Chatterjee D, Richardson VJ and Zmud RW (2001) Examining the shareholder wealth effects of announcements of newly created cio positions. MIS Quarterly 25 (1), 43–70.

    Article  Google Scholar 

  • Chen DQ, Preston DS and Xia WD (2010) Antecedents and effects of cio supply-side and demand-side leadership: a staged maturity model. Journal of Management Information Systems 27 (1), 231–272.

    Article  Google Scholar 

  • CICA (2004) 20 Questions Directors Should Ask About It. Canadian Institute of Chartered accountants (CICA), Toronto, ON, pp 1–16.

  • Daily CM, Dalton DR and Cannella AA (2003a) Introduction to special topic forum corporate governance: decades of dialogue and data. Academy of Management Review 28 (3), 371–382.

    Google Scholar 

  • Daily CM, Dalton DR and Rajagopalan N (2003b) Governance through ownership: centuries of practice, decades of research. Academy of Management Journal 46 (2), 151–158.

    Article  Google Scholar 

  • Dehning B and Richardson VJ (2002) Returns on investments in information technology: a research synthesis. Journal of Information Systems 16 (1), 7–30.

    Article  Google Scholar 

  • Devaraj S and Kohli R (2000) Information technology payoff in the health-care industry: a longitudinal study. Journal of Management Information Systems 16 (4), 41–67.

    Article  Google Scholar 

  • Devaraj S and Kohli R (2003) Performance impacts of information technology: is actual usage the missing link? Management Science 49 (3), 273–289.

    Article  Google Scholar 

  • Donaldson L (1990) The ethereal hand: organizational economics and management theory. Academy of Management Review 15 (3), 369–381.

    Google Scholar 

  • Eisenhardt KM (1989) Agency theory: an assessment and review. Academy of Management Review 14 (1), 57–74.

    Google Scholar 

  • Fama EF and Jensen MC (1983) Separation of ownership and control. Journal of Law and Economics 26 (2), 301–325.

    Article  Google Scholar 

  • Fiedler FE (1964) A contingency model of leadership effectiveness. In Advances in Experimental Social Psychology. (Berkowitz L, Ed.), Academic Press, New York pp 149–190.

    Chapter  Google Scholar 

  • Gaa JC (2009) Corporate governance and the responsibility of the board of directors for strategic financial reporting. Journal of Business Ethics 90 (2), 179–197.

    Article  Google Scholar 

  • Habbershon TG, Williams M and MacMillan IC (2003) A unified systems perspective of family firm performance. Journal of Business Venturing 18 (4), 451–465.

    Article  Google Scholar 

  • Harman HH (1976) Modern Factor Analysis. The University of Chicago Press, Chicago, IL.

    Google Scholar 

  • Hart SL (1995) A natural resource-based view of the firm. Academy of Management Review 20 (4), 986–1014.

    Google Scholar 

  • Hitt LM and Brynjolfsson E (1996) Productivity, business profitability, and consumer surplus: three different measures of information technology value. MIS Quarterly 20 (2), 121–142.

    Article  Google Scholar 

  • Hopkins MS and Brynjolfsson E (2010) The four ways it is revolutionizing innovation. MIT Sloan Management Review 51 (3), 51–56.

    Google Scholar 

  • Huff SL, Maher M and Munro MC (2004) What boards don’t know – but must do – about information technology. Ivey Business Journal (September/October), 1–4.

  • Huff SL, Maher M and Munro MC (2005) Adding value: the case for adding it-savvy directors to the board. Ivey Business Journal (November/December), 1–5.

  • ISO (2008) ISO/IEC Standard 38500: Corporate Governance of Information Technology. International Organization for Standardization (ISO), Geneva, Switzerland.

  • IT Governance Institute (2003) Board Briefing on it Governance. IT Governance Institute, Rolling Meadows, IL.

  • Johnson AM and Lederer AL (2010) Ceo/cio mutual understanding, strategic alignment, and the contribution of is to the organization. Information & Management 47 (3), 138–149.

    Article  Google Scholar 

  • Johnson JL, Daily CM and Ellstrand AE (1996) Boards of directors: a review and research agenda. Journal of Management 22 (3), 409–438.

    Article  Google Scholar 

  • Kohli R and Devaraj S (2003) Measuring information technology payoff: a meta-analysis of structural variables in firm-level empirical research. Information Systems Research 14 (2), 127–145.

    Article  Google Scholar 

  • Kohli R and Grover V (2008) Business value of it: an essay on expanding research directions to keep up with the times. Journal of the Association for Information Systems 9 (1), 23–39.

    Google Scholar 

  • Krippendorff K (1980) Content Analysis: An Introduction to its Methodology. Sage Publications, Beverly Hills, CA.

    Google Scholar 

  • Kroll M, Walters BA and Wright P (2008) Board vigilance, director experience, and corporate outcomes. Strategic Management Journal 29 (4), 363–382.

    Article  Google Scholar 

  • Laux V (2010) Effects of litigation risk on board oversight and ceo incentive pay. Management Science 56 (6), 938–948.

    Article  Google Scholar 

  • Lewis BR and Byrd TA (2003) Development of a measure for the information technology infrastructure construct. European Journal of Information Systems 12 (2), 93–109.

    Article  Google Scholar 

  • Lindell MK and Whitney DJ (2001) Accounting for common method variance in cross-sectional research designs. Journal of Applied Psychology 86 (1), 114–121.

    Article  Google Scholar 

  • Mata FJ, Fuerst WL and Barney JB (1995) Information technology and sustained competitive advantage: a resource-based analysis. MIS Quarterly 19 (4), 487–505.

    Article  Google Scholar 

  • McAfee A and Brynjolfsson E (2008) Investing in the it that makes a competitive difference. Harvard Business Review 86 (7–8), 98–107.

    Google Scholar 

  • McFarlan FW, McKenney JL and Pyburn P (1983) Information archipelago: plotting a course. Harvard Business Review 61 (1), 145–161.

    Google Scholar 

  • McGuire JB, Sundgren A and Schneeweis T (1988) Corporate social responsibility and firm financial performance. Academy of Management Journal 31 (4), 854–872.

    Article  Google Scholar 

  • Melville N, Kraemer K and Gurbaxani V (2004) Review: information technology and organizational performance: an integrative model of it business value. MIS Quarterly 28 (2), 283–322.

    Google Scholar 

  • Minichilli A, Zattoni A and Zona F (2009) Making boards effective: an empirical examination of board task performance. British Journal of Management 20 (1), 55–74.

    Article  Google Scholar 

  • Mueller GC and Barker VL (1997) Upper echelons and board characteristics of turnaround and nonturnaround declining firms. Journal of Business Research 39 (2), 119–134.

    Article  Google Scholar 

  • Mukhopadhyay T, Kekre S and Kalathur S (1995) Business value of information technology: a study of electronic data interchange. MIS Quarterly 19 (2), 137–156.

    Article  Google Scholar 

  • Nolan R and McFarlan FW (2005) Information technology and the board of directors. Harvard Business Review 83 (10), 96–106.

    Google Scholar 

  • O’Donnell E (2004) Discussion of director responsibility for it governance: a perspective on strategy. International Journal of Accounting Information Systems 5 (2), 101–104.

    Article  Google Scholar 

  • O’Shannassy T (2010) Board and ceo practice in modern strategy-making: how is strategy developed, who is the boss and in what circumstances? Journal of Management & Organization 16 (2), 280–298.

    Google Scholar 

  • Otley DT (1980) The contingency theory of management accounting: achievement and prognosis. Accounting, Organizations and Society 5 (4), 413–428.

    Article  Google Scholar 

  • Pavlou PA, Liang HG and Xue YJ (2007) Understanding and mitigating uncertainty in online exchange relationships: a principal-agent perspective. MIS Quarterly 31 (1), 105–136.

    Google Scholar 

  • Peteraf MA (1993) The cornerstone of competitive advantage: a resource-based view. Strategic Management Journal 14 (3), 179–191.

    Article  Google Scholar 

  • Preston DS, Leidner DE and Chen D (2008) Cio leadership profiles: implications of matching cio authority and leadership on it impact. MIS Quarterly Executive 7 (2), 57–69.

    Google Scholar 

  • Raghunathan B and Raghunathan TS (1990) Planning implications of the information-systems strategic grid: an empirical investigation. Decision Sciences 21 (2), 287–300.

    Article  Google Scholar 

  • Raghunathan B, Raghunathan TS and Tu Q (1998) An empirical analysis of the organizational commitment of information systems executives. Omega - International Journal of Management Science 26 (5), 569–580.

    Article  Google Scholar 

  • Raghunathan B, Raghunathan TS and Tu Q (1999) Dimensionality of the strategic grid framework: the construct and its measurement. Information Systems Research 10 (4), 343–355.

    Article  Google Scholar 

  • Raghupathi W (2007) Corporate governance of it: a framework for development. Communications of the ACM 50 (8), 94–99.

    Article  Google Scholar 

  • Ravichandran T and Lertwongsatien C (2005) Effect of information systems resources and capabilities on firm performance: a resource-based perspective. Journal of Management Information Systems 21 (4), 237–276.

    Google Scholar 

  • Ray G, Barney JB and Muhanna WA (2004) Capabilities, business processes, and competitive advantage: choosing the dependent variable in empirical tests of the resource-based view. Strategic Management Journal 25 (1), 23–37.

    Article  Google Scholar 

  • Read TJ (2004) Discussion of director responsibility for it governance. International Journal of Accounting Information Systems 5 (2), 105–107.

    Article  Google Scholar 

  • Rosemann M and Vessey I (2008) Toward improving the relevance of information systems research to practice: the role of applicability checks. MIS Quarterly 32 (1), 1–22.

    Google Scholar 

  • Santhanam R and Hartono E (2003) Issues in linking information technology capability to firm performance. MIS Quarterly 27 (1), 125–153.

    Google Scholar 

  • Strebel P (2004) The case for contingent governance. MIT Sloan Management Review 45 (2), 59–66.

    Google Scholar 

  • Tallon PP (2010) A service science perspective on strategic choice, it, and performance in us banking. Journal of Management Information Systems 26 (4), 219–252.

    Article  Google Scholar 

  • Tallon PP and Kraemer KL (2007) Fact or fiction? A sensemaking perspective on the reality behind executives' perceptions of it business value. Journal of Management Information Systems 24 (1), 13–54.

    Article  Google Scholar 

  • Tallon PP, Kraemer KL and Gurbaxani V (2000) Executives' perceptions of the business value of information technology: a process-oriented approach. Journal of Management Information Systems 16 (4), 145–173.

    Article  Google Scholar 

  • Topi H, Valacich JS, Wright RT, Kaiser K, Nunamaker Jr. JF, Sipior JC and de Vreede GJ (2010) Is 2010: curriculum guidelines for undergraduate degree programs in information systems. Communications of the Association for Information Systems 26 (Article 18), 359–428.

    Google Scholar 

  • Trites G (2004) Director responsibility for it governance. International Journal of Accounting Information Systems 5 (2), 89–99.

    Article  Google Scholar 

  • Tukana S and Weber R (1996) An empirical test of the strategic-grid model of information systems planning. Decision Sciences 27 (4), 735–765.

    Article  Google Scholar 

  • Turel O, Serenko A and Giles P (2011) Integrating technology addiction and use: an empirical investigation of online auction users. MIS Quarterly 35 (4), 1043–1061.

    Google Scholar 

  • Turel O and Serenko A (2012) The benefits and dangers of enjoyment with social networking websites. European Journal of Information Systems 21 (5), 512–528.

    Article  Google Scholar 

  • Vance SC (1968) The Corporate Director: A Critical Evaluation. Dow Jones-Irwin, Homewood, IL.

    Google Scholar 

  • Wade M and Hulland J (2004) Review: the resource-based view and information systems research: review, extension, and suggestions for future research. MIS Quarterly 28 (1), 107–142.

    Google Scholar 

  • Weill P (2004) Don’t just lead, govern: how top-performing firms govern it. CISR WP No. 341, Center for Information Systems Research, Massachusetts Institute of Technology, Sloan School of Management, Cambridge, MA, pp 1–21.

  • Weill P and Olson MH (1989) An assessment of the contingency theory of management information systems. Journal of Management Information Systems 6 (1), 59–85.

    Article  Google Scholar 

  • Weill P and Ross JW (2004) It Governance: How Top Performers Manage it Decision Rights for Superior Results. Harvard Business School Press, Boston, MA.

    Google Scholar 

  • Wiggins RR and Ruefli TW (2002) Sustained competitive advantage: temporal dynamics and the incidence and persistence of superior economic performance. Organization Science 13 (1), 82–105.

    Article  Google Scholar 

  • Wilkin CL and Chenhall RH (2010) A review of it governance: a taxonomy to inform accounting information systems. Journal of Information Systems 24 (2), 107–146.

    Article  Google Scholar 

  • Wilkinson D (2004) The cica's it competency model. International Journal of Accounting Information Systems 5 (2), 245–250.

    Article  Google Scholar 

  • Zahra SA and Pearce JA (1989) Boards of directors and corporate financial performance: a review and integrative model. Journal of Management 15 (2), 291–334.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Steven G. Mihaylo College of Business and Economics, California State University, Fullerton, CA, U.S.A.

    Ofir Turel

  2. DeGroote School of Business, McMaster University, Hamilton, Ontario, Canada

    Chris Bart

Authors
  1. Ofir Turel
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Chris Bart
    View author publications

    You can also search for this author in PubMed Google Scholar

Additional information

3Both authors contributed equally to this work

Appendix A

Appendix A

Recommended IT issues to be discussed by the board (CICA, 2004)

For each question/issue please state whether the board of directors of the organization you selected raised or considered this question/issue (or a similar one) (Yes/No)

illustration

figure a

Rights and permissions

Reprints and permissions

About this article

Cite this article

Turel, O., Bart, C. Board-level IT governance and organizational performance. Eur J Inf Syst 23, 223–239 (2014). https://doi.org/10.1057/ejis.2012.61

Download citation

  • Received:

  • Revised:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/ejis.2012.61

Keywords

Search

Navigation