The Complementarity of Corporate IT Alignment and Business Unit IT Alignment: An Analysis of Their Joint Effects on Business Unit Performance

Alignment between IT and business strategy is a perennial challenge for IT executives, in part due to the evolving nature of organizational structure. In multi-business organizations (MBOs), a pressing issue for IT executives is how to improve the performance of each strategic business unit (SBU). In this paper we examine how IT alignment in MBOs affects SBU performance. We distinguish between IT alignment at the corporate and SBU levels and propose that these two types of IT alignment are complementary and exert joint effects on SBU performance. Two hypotheses related to these joint effects are developed and tested using data collected from an international survey of IT executives. Our findings indicate that complementarities between corporate IT alignment and SBU IT alignment enhance SBU performance. The primary contribution of this paper is explaining how different types of IT alignment in MBOs - individually and jointly - affect SBU performance