We analyze the influence of IT governance on IT investment performance using a sample dataset from Fortune 1000 firms. A key challenge in the study is that the appropriate IT governance mode varies across firms and across business units. We address the challenge by developing an empirical model based on earlier studies on multiple contingency factors of IT governance. We use the model to predict the appropriate IT governance mode for each business unit and use the difference between the predicted and observed IT governance mode to derive a measure of a firm’s IT governance misalignment. We find that firms with high IT governance misalignment receive no benefits from IT investments, while firms with low IT governance misalignment obtain two to three times the value from IT investments compared to firms with average IT governance misalignment. Our results highlight the importance of IT governance in realizing value from IT investments.
Gu, Bin; Xue, Ling; and Ray, Rautam, "IT Governance and IT Investment Performance: An Empirical Analysis" (2008). ICIS 2008 Proceedings. 30.