Strategic use of IT among SMEs has gained much attention recently as both
reseachers and practitioners view this as one of the avenues for smaller firms to
compete successfully. However, very little empirical work has been done to
understand the issue. This study helps to fill this gap in the important research area
by exploring the alignment of business strategy and IT strategy among UK
man facturing firms with less than 150 employees. A mail survey of Chief Executive
Officers generated 256 responses to an eight page questionnaire.
Factor analysis of the nine business strategy and the nine IT strategy variables
yielded three business strategy factors and three IT strategy factors which could be
sensibly identified with strategy areas and which clearly showed a fit between the two
sets. Based on these two set offactors, the measurement of IS alignment was explored
using two methods: (1) the 'moderation' or interaction approach, and (2) the
'matching' or difference approach. The finding of this study provides support for past
observation that the `moderation' approach of measuring fit' is more meaningful
when the performance criterion is included in the research model.
By using a multistep cluster analysis, two distinct groups of SMEs are identified based
on the alignment between quality-oriented, product-oriented, and market-oriented
business strategy and IT strategy which support these strategies. The group of SiviEs
which has a high degree of alignment for the three strategy areas are found to achieve
better organisational performance than the group of SÄLIEs with a low degree of IS
alignment. Interestingly, the findings of this study also indicate that the degree of
alignment between business strategy and IT strategy is related to the level of IT
sophistication and the level of CEO's commitment to IT.
In summary, this study has extended our understanding of IS alignment and has
provided useful insights for CEOs of small and medium-sized companies in planning
their IT utilisation.
A Doctoral Thesis. Submitted in partial fulfillment of the requirements for the award of Doctor of Philosophy of Loughborough University.