Comparing the Operational Integration of a Core Information System in Insourcing and Outsourcing Firms

IT business alignment is widely acknowledged as an important driver for effectively applying information systems in a business context and for increasing the performance of the supported business process. But how does this structural integration of enterprise systems and business processes change when firms outsource the provision of their IT? We empirically compare how the value impact of structural IT business alignment on core financial processes in banks with an internal IT is different from banks that have their enterprise systems outsourced. It turns out that outsourcing substantially changes the ways operational alignment influences business process performance

A Social Linkage View on the Business Value of IT

Our research intends to explore whether a social perspective on IT business alignment can help shed light on the IT value creation process by considering different facets of interpersonal linkage. In this paper, we develop a theoretical model which could be discussed at the JAIS workshop. Further, we use some empirical data from 149 US banks in order to find first empirical evidence whether our research focus represents a promising direction. We find initial support for our main hypotheses that communication, cross-domain knowledge and mutuality among and between IT and business staff significantly impact IT usage and business process outcomes. The final results of our research could contribute to our understanding of how the IT resource should be understood and used to measurably contribute to firm goals. The initial findings support the caveat of recent studies suggesting that informal aspects of alignment might be quite notable (e.g. Chan, 2002) and show that our theoretical understanding of alignment should be extended to better incorporate social aspects of daily work life

Loss of control vs. risk reduction: decision factors for hiring non-family CFOs in family firms

Objectives: We examine decision factors of family firm owners for hiring a non-family Chief Financial Officer (CFO). We explore the perceptions of family firm owners towards external managers by analyzing how their family-specific and company-specific goals relate to the employment of a non-family CFO. Furthermore, we analyze the consequences of hiring a non-family CFO on financial policies such as the use of strategic financial plans and initiatives to improve relationships with external capital providers. Prior work: Prior research has acknowledged that the attitude to external managers is a major concern for family firms because of potential problems due to a separation of ownership and management. However, it was shown that non-family CFOs positively influence the operational performance of privately-held family firms. Little knowledge exists to date to explicitly link the decision to hire an external CFO to the goals of family firm owners. Approach: Our study is based on a survey of 237 small- and medium-sized privately-held German family firms in 2007. We use logistic regression analysis to test our theory-driven hypotheses on the relationship between family-specific as well as company-specific goals of the family and the employment of a non-family CFO. Furthermore, we use OLS and logistic regression analysis to analyze hypotheses on how non-family CFOs influence financial policies. Results: The results suggest that family firm owners are reluctant to hire non-family CFOs because of agency type of problems. They decide against an external CFO when their goal of independence and control is high. Furthermore, they do not seem to trust external managers to act in accordance to their goal of enterprise value growth. However, they seem to realize that non-family CFOs are likely to decrease financial risk through the provision of additional capabilities. Non-family CFOs are shown to influence financial policies and, thereby, to bring in value creating resources. Implications: Family firm owners can use the results to understand the relevant factors they should consider when employing an external CFO. In particular, they should focus on establishing incentive structures for external managers to follow goals of the family. Candidates for non-family CFOs are able to better comprehend the underlying objectives of family firm owners in the hiring decision. Value: Our findings are relevant to further disentangle the relationship between external managers and family firm owners. By applying both the agency theory and the resource based view, we are able to offer explanations for and against the decision to hire non-family CFOs in family firms. --CFO,family firms,financial policy,entrepreneurial finance,corporate governance

The Role of Information Technology Business Alignment in Value Creation: A Multiple Case Study among German Banks

A key question in Information Systems research is how information technology creates business value. In this paper, our aim is to help reveal the role of alignment between IT and business resources in business value creation. In particular, we propose that the contribution of IT to business process performance should be investigated in the context of actual IT usage, with IT business alignment as a moderating variable. Also, IT flexibility should be explicitly considered. Using five case studies from the German financial services industry based on a causal model of IT business value creation reveals that the process of IT business value creation indeed strongly depends on the alignment between business and IT. But it also turns out that actual presence of business competencies is crucial and that even superior IT cannot compensate for business competency deficiencies

How to Achieve IT Business Alignment? Investigating the Role of Business Process Documentation in US and German Banks

It is increasingly acknowledged that generating value from IT requires strategic and operational IT business alignment. But it remains difficult to give concrete suggestions on what drives alignment in day-to-day business. Thorough process documentation might enable cross-departmental transparency and thereby serve as antecedent of operational alignment. We suggest that business process documentation is a straightforward and actionable antecedent of operational IT business alignment. Using data from 200 US and German banks it is shown that indeed documentation strongly drives operational alignment, but surprisingly only in US banks. The implications and avenues for further research on operational alignment are discussed

IT Outsourcing Relationship Quality Dimensions and Drivers: Empirical Evidence from the Financial Industry

This work contributes to outsourcing research by shedding some light on IT outsourcing relationships. A theoretical model is developed that shows the influence of determinants on relationship quality. Relationship quality is captured by a set of five dimensions from previous literature and enhanced by two new dimensions (communication quality, forbearance). Determinants from the literature are extended by two new elements (interaction structure, service quality). By using a case study approach from the German financial industry, we show the applicability of interaction structures and service quality as relationship quality determinants. Interaction structures like employee trainings or transfer of staff have a strong positive impact on communication quality and mutual business understanding, whereas service quality mainly influences the level of conflict in a relationship. The results regarding the two proposed relationship quality dimensions are mixed. Communication quality is a good measure for capturing relationship quality and shows strong connections to interaction intensity and interactions structures. The applicability of forbearance as a relationship quality dimension is ambiguous. Some banks see forbearance as dimension of relationship quality, while others use forbearance as a strategic element to force the provider into delivering additional or better services