Technology alignment and business strategy: a performance measurement and Dynamic Capability perspective

Abstract

Rapid changes in market structures and technology lead to misalignment between strategy and operations. Whist this phenomenon is most prevalent in technology-based manufacturing industries, utility organisations (e.g. electricity and telecoms) provide a useful context to explore the Performance measurement (PM) and technology alignment challenges from a Dynamic Capabilities Theory perspective where there is a progressive shift towards deregulated markets. The aim of this paper is twofold: first, to explore the role of Dynamic Capabilities Theory and PM approaches in improving the alignment between business strategy and technology strategy (Level 1 alignment); second, to explore the role of Dynamic Capabilities Theory and PM approaches in aligning technology strategy with operational technology routines and practices (Level 2 alignment). In the absence of overarching theory, an inductive approach draws upon Dynamic Capabilities theory. Four longitudinal case studies are used leading to the development of a conceptual framework and propositions for multilevel technology alignment. Data from 38 interviews and 8 separate focus groups, documentation and participant observations (over a three-year period) are used. The theory-building process shows the need to identify and develop PM-based technology alignment Dynamic Capabilities (PM-DCs) which help in improving and maintaining alignment between business strategy and technology strategy (Level 1 alignment) and between technology strategy and technology practices (Level 2 alignment). This approach requires critically reflective action-learning approaches to identify and nurture these PM-DCs.