IT Committee Design and IT Performance
Rui Huang
Binghamton University, P. O. Box 6000, Binghamton, NY, U.S.A.
Keywords: IT Governance, IT Committee Design, IT Performance.
Abstract: In order to improve IT performance and ultimately business-IT alignment, organizations have given
increased attentions to IT committees as a governance structure. Looking through the lens of network
embeddedness and role theories, this study focuses on the design issues related to IT committees and argues
that there is an optimal point in terms of an IT committee’s size and its composition. Empirical validation of
the research arguments using secondary data will be the next step. If empirical support can be received, this
study will generate both theoretical and practical implications to the IT governance literature.
1 INTRODUCTION
In order to improve IT performance and ultimately
business-IT alignment, organizations have given
increased attentions to IT committees as a
governance structure. At least one IT committee is
used in many organizations to create a forum for
identifying IT needs, prioritizing IT projects,
establishing IT policies and procedures, making IT
decisions, and coordinating IT-related activities.
Looking from a network embeddedness perspective,
IT committees act as a social form of governance
and engender both structural and relational
embeddedness (Granovetter, 1992). By structurally
positioning relevant managers in a network and
cultivating relational ties among them, IT
committees bridge information gaps and shape
collective understandings and behaviours.
Nevertheless, given the social positions each
member holds within and outside the IT committee,
managers from various managerial levels are likely
to focus on different aspects of IT (Biddle, 1986).
For example, enterprise-level managers tend to have
a strategic orientation in terms of IT-related issues,
while operational-level managers are geared toward
operative dimensions. A balance between strategic
and operational focus is desirable for optimal IT and
business performance (Sorenson and Sorensen,
2001), which requires a balanced design of IT
committees. Furthermore, the size of the committee
also matters as too small a committee may limit
social interactions and information exchange across
divergent domains of knowledge/practice, whereas
too large a committee may challenge group identity
and consequently relational development within the
committee (Moran, 2005).
Hence, this article intends to discuss issues
related to the design of IT committees. The position
of the article is that there should be an optimal point
in terms of an IT committee’s size and its
composition. With the ongoing theoretical and
empirical exploration, the study will identify the
most favourable number of members to be included
on a committee, and the best mix of enterprise-level
and operational-level managers as committee
members.
The article proceeds as follows. Background
literature and theories are discussed prior to the
presentation of research propositions. Ideas for
empirical testing are then proposed, followed by a
conclusion highlighting the key points of the article.
2 IT COMMITTEES AS A
GOVERNANCE MECHANISM
As organizations continue to invest in information
technologies (IT), they constantly face the challenge
of aligning business and IT, i.e., applying IT in
harmony with the overall business objectives and
strategies (Luftman and Brier, 1999). Factors
contributing to this challenge are related to
knowledge exchange between business and IT
leaders, lack of awareness of corporate and industry
strategies, bounded rationality and locus of control,
and dynamic organizational and business
244
Huang R..
IT Committee Design and IT Performance.
DOI: 10.5220/0004098202440248
In Proceedings of the 14th International Conference on Enterprise Information Systems (ICEIS-2012), pages 244-248
ISBN: 978-989-8565-12-9
Copyright
c
2012 SCITEPRESS (Science and Technology Publications, Lda.)
environment (Chan and Reich, 2007). The multi-
dimensional nature of business-IT alignment further
amplifies the challenge, given the need for aligning
strategically/intellectually, structurally, socially and
culturally (Reich and Benbasat, 1996). Many
practitioners and researchers have tried to identify
possible solutions to enhance the business-IT
alignment, including but not limited to strategic fit
between internal and external strategies and
functional integration between organizational and IT
infrastructure and processes (Henderson and
Venkatraman, 1991), communication/relationships
between IT and business executives and connections
between IT and business planning (Reich and
Benbasat, 2000), locus of control for systems
approval (Brown and Magill, 1994), top
management support (Lederer and Mendelow,
1989), and simultaneous development and
implementation of IT and business strategies
(Smaczny, 2001).
Among the various solutions proposed, increased
attentions are given to IT governance, which uses a
mix of structures (e.g., roles and responsibilities,
steering committees), processes (e.g., service level
agreements), and relational mechanisms (e.g., active
participation and collaboration between principal
stakeholders) (cf. De Haes and Van Grembergen
2005) to enable social interactions between different
stakeholders for achieving business-IT alignment
(Reich and Benbasat 2000). As a governance
structure, IT steering committees provide a formal
forum for regular discussion of IT-related issues and
function as a specific sphere for IT decision-making.
From a network embeddedness perspective, IT
committees facilitate a social form of IT governance
as they enable both structural and relational
embeddedness. Rooted in Granovetter’s original
conceptualization of embeddedness, IT committees
serve as a social system allowing for coordination
and interactions between stakeholders who are not
bounded by contractual relationships (Granovetter,
1992). "Embeddedness refers to the fact that
economic action and outcomes ... are affected by
actors' dyadic (pairwise) relations and by the
structure of the overall network of relations"
(Granovetter, 1992: 33). Structurally, IT committees
offer a network architecture emphasizing
information exchange about the actions of
committee members through their structural
positions in the network (Jones, Hesterly and
Borgatti, 1997). Via indirect connections of a dyad’s
mutual contacts, behaviours of one member can be
easily discussed and spread over the entire network,
which allows values, norms, and common
understandings to quickly move among stakeholders
and consequently shapes their behaviours.
Relationally, IT committees improve the quality and
depth of relational ties within the network by
promoting personal relations among committee
members (Moran, 2005). These relations cultivate
trust and information sharing, encourage
stakeholders to consider one another’s needs and
goals, and engender robust individual and collection
actions reinforcing norms and shared believes. As a
result, IT committees institute structural
embeddedness through the fashioning of norms and
practices at group level, as well as relational
embeddedness through the building of trust at the
dyadic level (Rowley, Behrens and Krackhardt,
2000).
2.1 Committee Composition and Focus
Existing research has suggested that designs of IT
committees, in terms of their specifications of intent,
activities to be engaged in, and participants in these
activities, are likely to influence the functions of
these committees. For example, committees that
clarify intent early on tend to work better (Reich &
Benbasat, 2000), and compositions of enterprise-
level and/or operational-level managers tend to lead
to different IT focus and consequently IT
performance (Weill and Ross, 2005).
The theoretical lens of network embeddedness
puts focus on committee composition, as structural
and relational embeddedness are likely to vary with
the number of members involved in a committee and
their engaged roles. First, although managers on a
committee are motivated by their vested interests
(Jensen and Meckling, 1976), they also share the
intention align individual goals with organizational
objectives through collective behaviours (Davis,
Shoorman and Donaldson, 1997). Thus, they are
organizationally centred and place high value on
cooperation, whereas IT committees provide a
channel for them to negotiate and make decisions
they perceive are in the best interest of their
organizations. The stewardship actions are best
facilitated when the governance structure give them
high authority and discretion (Donaldson and Davis,
1991).
Yet at the same time, committee members
engage in social positions and their behaviours are
guided by expectations held both by the individual
and by other people (Biddle, 1986). Therefore,
although acting in the best interest of their
organizations, committee members still behave in
ways that are different and predictable by their
ITCommitteeDesignandITPerformance
245
respective social identities. For example,
top/enterprise-level managers such as board of
directors, chief executives and managing director
manage goals and policies for an enterprise, whereas
middle/operational-level managers are responsible to
the top management for the functioning of their
department and they devote more time to
organizational and directional functions. In terms of
their preference with IT when contributing to the
discussion on IT committees, it is not surprising then
that enterprise-level managers are oriented toward
strategic aspects of IT (e.g., future IT directions, and
IT brining transformative effects to the organization)
while operational-level managers are geared toward
operative aspects of IT (e.g., current application and
implementation of IT and IT emphasizing business
automation and information transfer). Taken
together, the following propositions are suggested.
P1a. IT committees consisting of more
enterprise-level managers are likely to have a
strategic orientation of IT.
P1b. IT committees consisting of more
operational-level managers are likely to have an
operational orientation of IT.
Improved IT performance will be unlikely if a
committee is solely oriented toward either strategies
or operations. In order for IT to truly provide
support to business functions and achieve business
objectives, organizations need to emphasize on both
incremental improvement of existing IT routines to
enhance operational efficiency and discovery of
potentially useful resources and technologies. With
an operative focus, organizations develop
experiences with IT to exhibit distinctive
capabilities, whereas with a strategic focus,
organizations optimize operational routines by
staying alert to changes in the environment
(Sorenson and Sorensen, 2001). Hence, ideal IT
performance arises from a balance of strategic and
operational orientations.
P2. A balance between strategic and operational
orientation of IT will lead to improved IT
performance.
2.2 Committee Size and IT
Performance
Because of the fact that managers social positions
lead to variations in their IT orientations, IT
governance researchers have advocated the benefits
of a committee comprising both enterprise-level and
operational-level managers as it ensures the
alignment of enterprise-level and operational-level
IT-related activities over time, although on the other
hand, such a committee may also generate
challenges for members to reach consensus and
make decisions as stakeholders hold divergent
cognitive frames creating barriers for knowledge
exchange and information sharing (Huang, Zmud
and Price, 2010). When a single IT committee
consists of members performing different
managerial/social roles, it is also desirable that a
balanced design is achieved in terms of the
committee size.
A committee that is too small, such as one with
only two members, will hinder its effective
facilitation of structural and relational
embeddedness. Specifically, assuming both
members are enterprise-level (or operational-level)
managers, given that they are from the same
managerial level, these two members tend to share
redundant ties in the network and have access to
redundant sources of information and resources
(Burt, 1992). The resulted weaker structural
embeddedness may lead to bias of the committee,
compromising its goal of achieving business-IT
alignment. On the other hand, if one member is an
enterprise-level manager and the other represents the
operational level, structural embeddedness may be
strengthened due to the absence of ties and sparse
social networks within the committee, which
stimulates the brokerage and dissemination of
information (Granovetter, 1973). Nevertheless, the
lack of tie strength also hampers the development of
relational embeddedness within the committee.
Similar defects may be expected from a
committee that is too large, such as one with twenty
members. Particularly, although larger committees
enable structural holes beneficial for exploiting
unconstrained network positions, they also amount
to uncertainties within the network that challenge
social relations and group identity (Coleman, 1990).
Therefore, relational embeddedness, if not structural
embeddedness, will suffer from the large size of the
committee. In summary, neither a small nor a large
committee is a good option, and an optimal size of
the IT committee ought to be identified.
P3. There will be a curvilinear relationship
between committee size and IT performance.
3 RESEARCH DESIGN
Secondary data will be used to empirically validate
the positions proposed in this article. IT committee
and financial performance data from 100 plus public
ICEIS2012-14thInternationalConferenceonEnterpriseInformationSystems
246
firms have been collected for the year of 2009.
Annual reports and letters to shareholders from these
companies will be coded to retrieve the signals
indicating IT orientations (e.g., strategic and
operational) of each firm. There are two focal
independent variables of this study: the number of
members on each company’s IT committee
(capturing committee size), and whether the member
is an enterprise-level or operational-level manager
(as indicated by their job titles). The dependent
variables include (1) financial performance, as
reflected by a series of financial measures such as
ROA, ROI, and earnings per share, etc and (2) the
number and nature of IT signals transmitting either a
strategic or operational focus.
The study is currently at the data collection stage.
Once all the annual reports and letters to
shareholders are coded, various steps of multiple
regressions will be run to test the research
propositions. With robust empirical analysis, it is
also expected that an optimal size and composition
of the committee will be identified.
4 CONCLUSIONS
With improved knowledge about committees as a
governance structure, organizations are giving IT
committees an increasingly important role in
achieving business-IT alignment. However, IT
committees should not be setup using a random
fashion. Rather, the design of these committee
matters for the performance of IT. Using network
embeddedness and role theories, this article proposes
a position that there is an optimal design in terms of
an IT committee’s size and its composition.
Specifically, a committee with too small or too large
a size tends to hamper IT performance. Also,
because of the diverse focus of enterprise-level and
operational-level managers, a balanced mix of both
will improve the effectiveness a committee.
Secondary IT committee and financial data, as
well as coding of annual reports and letters to
shareholders will be used to empirically test the
propositions of this article. If supported, these
propositions will generate insights to the roles of IT
committee design in achieving superior IT
performance and ultimately business-IT alignment.
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