The Effect of Strategic Alignment of Complementary IT and Organizational Capabilities on Competitive Firm Performance

Abstract

This study explores how firm performance can be explained from the strategic alignment of information technology (IT) and organizational capabilities, i.e., IT flexibility, dynamic capabilities, and absorptive capacity. We build upon dynamic capabilities theory and conceptualize our research model through the lens of strategic alignment methods. Then, we empirically test our main hypothesis using PLS-SEM analysis on a sample of 322 international firms. Outcomes show that measurements and indicators of all first-order and higher-order constructs are reliable and valid. Results also indicate that there is a positive relationship between strategic alignment and competitive firm performance. This study highlights the importance of alignment between IT and organizational capabilities. Strategic alignment can, therefore, be seen an important facilitator of competitive firm performance in constantly changing environments. We conclude with a discussion and conclusion, outline limitations of the current study and present some directions for future research.