The Role of Alignment Between IS Strategy and Social Capital on the IS Capability and Business Performance Relationship: A Cross-Sectional Survey

Mahendra Adhi Nugroho,Noor Akma Mohd Salleh,Ruzita Jusoh

doi:10.1109/access.2020.3018036

Abstract

This study explored the relationship between the information system (IS) capability with the alignment of IS strategy and social capital and the relationship between the alignment of IS strategy and social capital with business performance. Moreover, this study also aimed to investigate the mediating role of the alignment of IS strategy and social capital in the relationship between IS capability and business performance. A cross-sectional field study (i.e. questionnaire survey) was conducted on 179 national scale bank branches across Indonesia. Partial least square (PLS) is utilized to test all of the research hypotheses. The result of the study showed that there are significant relationships between IS capability with the alignment of IS strategy and social capital and significant relationships between the alignment of IS strategy and social capital with business performance. Besides, this study also proved that the alignment of IS strategy with social capital has a significant role in mediating the relationship between IS Capability and Business Performance. This study contributes to the theory development by analyzing the research gap from the previous researchers considering social capital as the strategic factor in the relationship between IS capability and business performance. The findings of this study can provide a reference for companies (i.e. board of directors) in determining investment and information system use policy.

Highlights

There is a definite trend of technology-based information system adoption to support banks’ daily operations within the banking industry in Indonesia [1]
Based on the previous studies results, this study proposes these following hypotheses: H3: information system (IS) Strategy – Social Capital alignment mediates the relationship between IS Capability and Business performance
This study examined one mediating variable in the model, namely IS strategy – social capital alignment, which mediates the relationship between IS capability and business performance (H3)

Summary

Introduction

There is a definite trend of technology-based information system adoption to support banks’ daily operations within the banking industry in Indonesia [1]. A survey conducted by PricewaterhouseCoopers (PwC) on the Indonesian banking industry in 2017 indicated that bank managers in Indonesia have not been able to define and explain how IS strategy can influence business performance [7]. Several studies explored the direct relationship between IS capability and business performance without considering the contextual factors (such as strategy, and social capital) into the analysis [13]–[16]. A strategy is an eminent organization element due to its role to determine the direction of the organization and its ability to affect business performance [17]–[19].

Objectives

Methods

Findings

Conclusion