IT governance and agility: Organizational information processing perspective

The competitive business environment is leading firms to a new agility-based paradigm. Owing to the rapid advancement and penetration of information technology (IT), firms are interested in the use of IT in achieving agility, which solidifies business performance. They recognize that the critical dependency on IT is not only about technology but also about how IT should be governed and structured for realizing expected rewards. Hence, research on the role of IT and its governance mechanism on organizational agility is expected to help a company stand against fierce business competition and uncertainty. Drawing upon the organizational information processing theory (OIPT), the current study aims to resolve the organizational problem of how and why IT and its governance mechanisms help organizations in identifying and adapting to market changes in a rapid manner. Specifically, it elucidates the role of IT-enabled communication capability in the mechanism of how IT governance contributes to organizational agility.;Data from a survey of 111 organizations were used to test the proposed structural model using partial least squares. The result indicates that IT governance has a positive association with IT-enabled communication capability; IT-enabled communication capability is positively associated with organizational agility. In the theoretical sense, the current study contributes to the body of IT governance literature by resolving the mechanism by which the effectiveness of IT governance can result in enhanced organizational agility. Second, it extends OIPT by specifying the relationship between mechanistic model, information processing capability, and business performance. Third, the current study proposes a new dimension of IT capability, that is, IT-enabled communication capability, which is a fundamental objective of IT. Fourth, this study finds that the relational dimension of IT governance enhances the explanatory power of the research model. Practically, this study helps industrial professionals understand the path of value creation of IT and its governance mechanism. Furthermore, the newly developed construct --- IT-enabled communication capability --- provides practitioners with some general guidelines on the design of an IT system. Lastly, the research model explains how different IT governance mechanisms create IT capability and provides certain guidance to organizations on the design of governance practices.