This paper examines the match between chief information officer (CIO) characteristics and the organization's business strategy and how this match influences the organization's business performance. Based on the theoretical underpinnings of typologies of business strategy, alignment between IT strategy and business strategy and upper echelon theory, this study proposes a research model. This study uses survey data from 81 CIOs/IT managers to test the model empirically. The results indicate that a match between business strategy and CIOs of certain repertoires of competencies, experiences and personalities could lead to better organizational performance. The business performance in “matched” organizations is significantly better than that in “mismatched” ones.
In a diverse and ever-changing marketplace, organizations are constantly seeking to harness technology to improve their core competency and gain competitive advantage, because the agility of an organization to respond to changes in the competitive environment is highly dependent on its leverage on information technology (IT) (Peppard, 2010). Explicitly, knowing how to apply IT in an appropriate and timely way and in harmony with business strategies, goals, and needs could bring the organization closer to business success (Luftman and Brier, 1999 and Tallon, 2007). In other words, aligning IT strategy with business strategy has become a critical issue in most organizations (Adcock et al., 1993 and Asato et al., 2009).
Some studies seek to understand the linkages between business strategy and IT strategies (Chan and Huff, 1993, Sabherwal and Chan, 2001 and Thomas and Hans Georg, 2004). For instance, some prior studies advocate the importance of considering the role of strong partnerships and mutual understanding and support between IT managers and top business managers (Johnson and Lederer, 2010 and Keen, 1996), the competitive use of IT to transform business strategies (Boynton et al., 1996 and Roland and Francine, 2006), and the importance of aligning IT strategy with business strategy for organizations across different industries (Goh, 2007 and Rathnam et al., 2004).
The person in an organization who knows technology and business sufficiently well is the chief information officer (CIO). With the increasing importance of IT in transforming business, the role of a CIO has evolved significantly during the past two decades to reflect both the firm's IT infrastructure and IT strategy (Chun & Mooney, 2009). To-date, a CIO is both an executive-level manager who focuses on the firm's strategy and a technical manager who focuses on minimizing costs by rationalizing and leveraging the existing IT infrastructure (Chun & Mooney, 2009). CIOs wield the greatest organizational power to influence the exploitation of IT in their organizations since they have the best knowledge of the technology progression and characteristics. Furthermore, they are the key strategic decision makers who plan and direct the organization's IT strategy and its implementation (Earl & Feeny, 1994). Evidently, people believe that they are now the masterminds in driving business transformation and innovation in organizations (Peppard, 2010).
Previous researches (e.g. Guthrie and Datta, 1997, Thomas and Ramaswamy, 1994 and Thomas and Ramaswamy, 1996) have investigated on the match between organization's top managers, for example the chief executive officer (CEO), and the organization's business strategy. They posit that a “fit” or “match” between these two will yield better organizational performance. However, given the increasingly important role played by the CIO in shaping an organization's IT strategy (Smaltz, Sambamurthy, & Agarwal, 2006), transforming an organization's business strategy (Peppard, 2010) and the need to align IT with business strategy, researchers have not paid sufficient attention to how characteristics of the CIO (who defines, manages and monitors the entire organization's IT development) will match the organization's business strategy and whether this match will influence the organization's business performance. This study strives to fill this gap in the extant literature. Specifically, the study here seeks to answer: How CIOs with different characteristics will match organizations with different business strategies?
Drawing on the theoretical underpinnings of topologies of business strategy (Miles & Snow, 1978), alignment between IT and business strategy (Sabherwal & Chan, 2001) and upper echelon theory (Hambrick & Mason, 1984), this study proposes a research model 1) to examine the match between CIO characteristics and the organization's business strategy and 2) to assess whether this match will influence the organization's business performance. This research empirically tests this model with survey data from 81 CIOs/IT managers in different organizations.
With IT becoming more omnipresent in organizations, the recruitment of a top manager who can architect and manage the IT within an organization in order to match the organization's business strategy becomes more critical. This begs the question of what characteristic traits this IT person needs to possess. Through a survey of 81 CIOs/IT managers in different organizations, this study finds support for the notion of considering the match between business strategy and CIO characteristics, as well as the impact of such a match on organizational performance. Specifically, the results indicate that a prospector organization tends to have a younger CIO with higher level of extraversion and openness than a defender organization. Such a theory-based profile developed for CIOs and the quantified findings from this research will enable top executives to better recruit and develop CIOs and better influence the contribution made by IT to their organizations. This study will also provide a foundation for future research on the CIO profiling and its relationship with organization's business strategy and business performance.
