Innovation, Information Systems Strategic Alignment and Business Value

Abstract

For more than two decades the strategic alignment of information systems (IS) is one of the most important issues that IS and business managers face and at the same time a major research topic in the IS domain. In this paper the authors present an empirical study of the business value of IS strategic alignment, which examines IS strategic alignment both at the strategy formulation and implementation level. Also, investigated in this paper are the effects of adopting an innovation strategy on IS strategic alignment. The study is based on firm-level data from Greek companies, which are used for estimating econometric models of firm output based on the Cobb-Douglas production function. It is concluded that IS strategic alignment, both at the strategy formulation and implementation level, generates significant business value, increasing considerably the contribution of ICT investment to firm output. Finally, the adoption of innovation strategy has a positive effect on the strategic alignment of IS both at the strategy formulation and implementation level, as it puts pressure on firms to direct their IS investment towards the support of their new innovative products/services, and increases the involvement of organizational units.