Strategic IT-business alignment capability and organizational performance: roles of organizational agility and environmental factors

This study aims to test a model in which the effect of strategic information technology (IT)-business alignment capability (hereafter referred to as “strategic alignment”) on organizational performance is examined via the mediating role of organizational agility [studied as operational adjustment agility (OAA) and market capitalizing agility (MCA)] along with the moderating influence of environmental uncertainty.

The research uses survey data accumulated from 220 managers (IT and bank managers) working in the regional rural banks of Odisha, India. A structural equation modelling approach is used to investigate the strategic alignment-performance relationship.

The findings demonstrate the positive effect of strategic alignment on agility (studied as OAA and MCA). This paper finds the positive effects of strategic alignment and both OAA and MCA on organizational performance. The moderation analysis reveals that in an uncertain environment, strategic alignment has more impact on MCA than OAA. However, the test of mediation exhibits OAA as a more significant mediator promoting the strategic alignment-performance linkage, than MCA. This was further validated from the moderated-mediation analysis.

Although previous research studies (mostly conducted in the context of developed countries) have reported about the positive strategic alignment-agility-performance linkages, yet the literature is silent regarding the influence of external contingent factors on these relationships from a rural banking perspective in a developing country setting (such as India). The research extends the strategic alignment-agility-performance theories and provides empirical support for these unique associations in the context of rural banking in India and thereby, greatly contributes to the existing strategic alignment literature.