Effect of IT Capabilities and Business-IT Strategic Alignment on Business Agility Saroj Wirattanapornkul

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EFFECT OF IT CAPABILITIES AND BUSINESS-IT STRATEGIC ALIGNMENT ON BUSINESS AGILITY

SAROJ WIRATTANAPORNKUL

A Thesis Submitted in Partial Fulfillment of the Requirements For the Degree of Master of Business Administration

Department of International Business International College

University of the Thai Chamber of Commerce 2012

iv

Thesis Title Effect of IT capabilities and business-IT strategic alignment on business agility

Name Mr. Saroj Wirattanapornkul

Degree Master of Business Administration

Major Field International Business

Thesis Advisor Dr. Phusit Wonglorsaichon

Graduation Year 2012

ABSTRACT

Due to the recent crisis market situation in many regions around the worlds, the

firms must improve themselves to increase their business agilities to respond to

unprecedented changes under the volatile business environment. The management

teams in the firm need to find out the efficient way on how to utilize IT to improve the

business agility. Their questions are to increase the IT capabilities or encourage the

participations of IT and business managements to improve business-IT strategic

alignment so as to increase the business agility of the firm. So, the purpose of this

study is to identify the effect of IT capabilities and business-IT strategic alignment on

business agility. This study referred to the knowledge based theory of the firm. It would

give more understanding on how knowledge managements are related to the

participation level between IT and business management is.

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Structural Equation Model (SEM) statistics technique was used to find out the

answer of the objectives in this study. 432 employees answered the questionnaires and

responded back. The goodness of fit statistics revealed the fit of the model. The chi-

square value was 9.27 with the degree of freedom of 8 (p=0.31982). Goodness of Fit

Index (GFI) was equal to 0.99 and Adjusted Goodness of Fit Index (AGFI) was equal to

0.98 which support the model was fit. While the error indexes, Root Mean Square

Residual (RMR) and Root Mean Square Error of Approximation (RMSEA) were 0.0028

and 0.019 accordingly which were low and approached to zero.

The result of SEM analysis exposed that IT’s participation on the business

planning had the positive effect on business-IT strategic alignment (β = 0.52; t-value =

15.95; p = 0.001) and business’s participation on the IT planning had the positive effect

on business-IT strategic alignment (β = 0.72; t-value = 15.95; p = 0.001). It also

revealed that business-IT strategic alignment had the positive effect on the business

agility (β = 0.60; t-value = 2.29; p = 0.05). Also, IT capabilities had the positive effect

on the business agility (β = 0.25; t-value = 5.35; p = 0.001). However, the magnitude

on the effect of business-IT strategic alignment on business agility (β = 0.60) was much

more than the magnitude on the effect of IT capabilities on business agility (β = 0.25).

The implication of the study revealed that how the management teams are able

to utilize IT resources in order to increase the business agility. The management team

can consider on IT capabilities to increase the business agility. However, they should

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take the consideration on how to increase the participation level of IT and business

managements as the priority. This would improve IT-business strategic alignment which

would positively effect to the business agility.

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หวขอวทยานพนธ การศกษาผลกระทบของความสอดคลองกนระหวางกลยทธทางดาน

ธรกจและการพฒนาระบบสารสนเทศและประสทธภาพของระบบ

สารสนเทศทมผลตอความสามารถในการปรบตวขององคกรตอการ

เปลยนแปลงทรวดเรว

ชอนกศกษา นาย สาโรช วรตนพรกล

ปรญญา: บรหารธรกจมหาบณฑต

สาขาวชา ธรกจระหวางประเทศ

อาจารยทปรกษา ดร.ภษต วงศหลอสายชล

ปทส าเรจการศกษา 2555

บทคดยอ

ภายในหลายปทผานมาหลายประเทศทวโลกมการประสบปญหาทางดานเศรษฐกจ

บรษทตางๆ จ าเปนตองมการปรบตวเพอเพมความคลองตวในการบรหารจดการในธรกจของ

ตนเองเพอสามารถตอบสนองตอความเปลยนแปลงทไมคาดคดตางๆ ภายใตภาวะเศรษฐกจท

ไมสามารถคาดเดาได ระบบสารสนเทศไดกลายเปนสวนส าคญในการขบเคลอนการด าเนนการ

ธรกจของบรษทตาง ๆ ในปจจบน อยางไรกตาม ผบรหารในบรษทตาง ๆ จ าเปนตองหาวธทม

ประสทธภาพในการบรหารทมงานระบบสารสนเทศใหเกดประสทธผลสงสด จงไดเกดค าถามใน

สถานการณปจจบนตอผบรหารระดบสงวาควรจะใหความส าคญตอการขยายประสทธภาพของ

ระบบสารสนเทศหรอควรจะสงเสรมใหมความรวมมอกนระหวางผบรหารทางดานสารสนเทศ

และผบรหารในสวนงานธรกจตางๆเพอเพมระดบความสอดคลองกนระหวางกลยทธทางดาน

ธรกจและการพฒนาระบบสารสนเทศและจะสงผลตอความสามารถของการปรบตวขององคกร

viii

ตอความเปลยนแปลงอยางรวดเรว ดงนนบทวจยนมจดประสงคเพอทจะศกษาความสอดคลอง

กนระหวางกลยทธทางดานธรกจและการพฒนาระบบสารสนเทศและประสทธภาพของระบบ

สารสนเทศทมผลตอความสามารถในการปรบตวขององคกรตอการเปลยนแปลงทรวดเรว โดย

การศกษานไดอางถงทฤษฏ Knowledge-Based Theory of the Firm ในดานการจดการองค

ความรในองคกรในสวนของความรวมมอกนระหวางฝายบรหารทางดานสารสนเทศและฝาย

บรหารทางดานธรกจ

เทคนคทางดานสถตโดยแบบจ าลองสมการโครงสรางไดถกน ามาใชในในการหาค าตอบ

ของจดประสงคของการศกษาครงน ค าตอบของแบบสอบถามจ านวน 432 ชดไดถกน ามา

วเคราะห ผลลพธทางดานสถตไดแสดงถงความความเขากนดของแบบจ าลอง คา chi-square

เทากบ 9.27 ท degree of freedom เทากบ 8 (p=0.31982) คาสถต Goodness of Fit Index

(GFI) เทากบ 0.99 และคาสถต Adjusted Goodness of Fit Index (AGFI) เทากบ 0.98 ซง

สนบสนนวาแบบจ าลองเขากนไดดในระดบทยอมรบได ขณะทตววดทางดานความผดพลาด

Root Mean Square Residual (RMR) และ Root Mean Square Error of Approximation

(RMSEA) คอ 0.0028 และ 0.019 ตามล าดบ เขาหาศนยจงมระดบทต ามาก

ผลวเคราะหทางดานการวเคราะหแบบจ าลองโครงสรางแสดงใหเหนถงความรวมมอของ

ผบรหารสารสนเทศในการวางแผนทางดานธรกจวามผลกระทบอยางมนยส าคญในเชงบวกตอ

ความสอดคลองกนระหวางกลยทธทางดานธรกจและการพฒนาระบบสารสนเทศ (β = 0.52; t-

value = 15.95; p = 0.001) และความรวมมอของผบรหารในหนวยงานตางๆตอการวางแผน

ทางดานสารสนเทศวามผลกระทบอยางมนยส าคญในเชงบวกตอความสอดคลองกนระหวางกล

ยทธทางดานธรกจและการพฒนาระบบสารสนเทศ (β = 0.72; t-value = 15.95; p = 0.001)

ix

นอกจากนการศกษานไดแสดงใหเหนวาความสอดคลองกนระหวางกลยทธทางดานธรกจและ

การพฒนาระบบสารสนเทศ มผลกระทบอยางมนยส าคญในเชงบวกตอความสามารถของการ

ปรบตวขององคกรตอความเปลยนแปลงอยางรวดเรว (β = 0.60; t-value = 2.29; p = 0.05)

ขณะทประสทธภาพของระบบสารสนเทศมผลกระทบอยางมนยส าคญในเชงบวกตอ

ความสามารถของการปรบตวขององคกรตอความเปลยนแปลงอยางรวดเรว (β = 0.25; t-value

= 5.35; p = 0.001) แตหากวเคราะหในรายละเอยดจะเหนไดวา ความส าคญในสวนของ ความ

สอดคลองกนระหวางกลยทธทางดานธรกจและการพฒนาระบบสารสนเทศนนมมากกวา

ประสทธภาพของระบบสารสนเทศ

การศกษานไดเสนอขอแนะน าตอผบรหารเพอทจะสามารถใชประโยชนในสวนของ

ระบบสารสนเทศไดเกดประโยชนสงสดในแงของการเพมขดความสามารถของการปรบตวของ

องคกรตอความเปลยนแปลงอยางรวดเรว ผบรหารสามารถพจารณาถงการเพมประสทธภาพ

ของระบบสารสนเทศเพอเพมขดความสามารถของการปรบตว แตอยางไรกตามผบรหารควรจะ

พจารณาถงการเพมความรวมมอกนระหวางผบรหารระบบสารสนเทศกบของผบรหารใน

หนวยงานตางๆ เปนอนดบตนๆ จะชวยเพมระดบความสอดคลองกนระหวางกลยทธทางดาน

ธรกจและการพฒนาระบบสารสนเทศ ซงจะเพมระดบความสามารถของการปรบตวขององคกร

ตอความเปลยนแปลงอยางรวดเรว

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ACKNOWLEDGEMENTS

I would like to thank all the people who have been help and support on this

thesis including the advisors, teachers, my friends from KMITL, my colleagues in many

companies and my family.

Initially, I really would like to thank my advisor, Dr. Phusit Wonglorsaichon. He

opened up my vision on the research world that I rarely have a chance to know the way

to conduct the research in my daily working life. He gave me the valuable advices for

the whole processes on how to do the research. He spent and devoted his personal

time to support me since the early phase of the thesis preparation.

I would like to thank you the committees, Dr. Pussadee Polsaram, Dr. Suthawan

Chirapanda, Dr. Theeranuch Pusaksrikit, Dr. Theeranuch Pusaksrikit and Assoc. Prof.

Sriaroon Resanond who gave me the suggestions and guidances on the thesis papers.

Thank you for all of my friends including the friends from KMITL and the

colleagues from many companies, my brothers, sisters and my wife. I really appreciated

your helps to distribute the questionnaire links to many respondents.

Finally, thanks my wife and my family again, to finalize the study, I have to

devote family time. I am appreciated on my wife’s realization my situation all along.

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TABLE OF CONTENTS

Page ENGLISH ABSTRACT………..…….……………..…....................................................... iv

THAI ABSTRACT……………….…….……………..…..................................................... vii

ACKNOWLEDGEMENTS……...…….……………..…..................................................... x

TABLE OF CONTENTS…….……....……………..…..................................................... xi

LIST OF TABLES…………….……....……………..…..................................................... xv

LIST OF FIGURES……………….....……………..…..................................................... xvi

CHAPTER 1: INTRODUCTION…….……………..…..................................................... 1

1.1 Background……………………………….................................................... 1

1.2 Statement of problems………………………………………………………… 5

1.3 Objectives of the study................................................................................ 6

1.4 Research questions .................................................................................... 6

1.5 Scope of the study....................................................................................... 7

1.6 Expected benefits ....................................................................................... 7

1.7 Operation definitions ……………………….…………………………………. 8

1.8 Organization of the study ….…………………………………………………. 10

CHAPTER 2: LITERATURE REVIEW…….……..….......................................................11

2.1 Resource-Based theory ……………………………………………..……….. 12

2.2 Knowledge-Based theory of the firm ……………………………………….. 15

xii

TABLE OF CONTENTS (CONTINUED)

Page 2.3 Business - IT strategic alignment ……………………………………………. 16

2.4 Business - IT management’s participation on the planning …………....... 20

2.5 IT capabilities …………………………………………………………………… 22

2.5.1 IT infrastructure capacity ……………………………………………………. 24

2.5.2 IT business spanning capacity ……………………………………………. 26

2.5.3 IT proactive stance ……………………………….…………………………. 27

2.6 Business agility ………………………………………………………………… 28

2.7 Literature framework………………………………………………………….. 31

2.8 Conceptual framework …………………………………………………………. 32

CHAPTER 3: RESEARCH METHODOLOGY….…....................................................... 33

3.1 Research design………………………………………………………………… 34

3.2 Population and sample …………………………………………...…………… 34

3.3 Variables of the research…………………………………………..…………. 36

3.4 Research instrument…………………………………………………………..... 36

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TABLE OF CONTENTS (CONTINUED)

Page 3.5 Questionnaire design ………………………………………………………….. 37

3.6 Pretest of research instrument …………………………………….………… 39

3.7 Measurement of variable …………………………………………………….. 44

3.8 Data collection …………………………………………………………………. 44

3.9 Data analysis……………………………………………………………….……. 45

CHAPTER 4: RESULT OF THE ANALYSIS…….…..................................................... 49

4.1 Summary of the demographic data………………………………………..… 50

4.2 Level of agreement analysis of the sample data…………………………… 51

4.3 Data analysis and findings……………………………………………………. 54

4.3.1 Correlation analysis……………………………………………..……………. 54

4.3.2 Factor analysis …..…………………………………………….……………... 55

4.3.3 Model adjustment and Goodness of fit approach …..…………………... 59

4.3.4 Path analysis…………………………………………………….……………. 60

4.3.5 Hypothesis testing……………………………………………………………. 68

xiv

TABLE OF CONTENTS (CONTINUED)

Page CHAPTER 5: CONCLUSION, DISCUSSIONS AND RECOMMENDATIONS............... 72

5.1 Conclusion………………………………………………………………………. 73

5.2 Discussion………………………………………………………………………. 75

5.2.1 Business - IT management’s participation on the planning ……………. 75

5.2.2 Business - IT strategic alignment …………………………………………. 77

5.2.3 IT capabilities………………………………………………..….……..………. 80

5.2.3.1 IT infrastructure capacity…………………………..….……..…………..... 80

5.2.3.2 IT business spanning capacity ………………………….………………... 82

5.2.3.3 IT proactive stance………………………………………………...………. 83

5.2.4 Business agility….…………………………………………………….………. 84

5.3 Implication of the study………………………………………………………… 85

5.4 Limitation of the study……………………………………..…………………… 87

5.5 Recommendation for the future research…………………………………… 88

BIBILOGRAPHY……..……………………………………………………..…………........... 89

xv

TABLE OF CONTENTS (CONTINUED)

Page APPENDICES…….……………………………………………..…...................................... 99

APPENDIX A: ITEM OBJECTIVE CONGRUENCE….…….….......................................100

APPENDIX B: SURVEY QUESTIONNAIRE ……………….…....................................... 110

APPENDIX C: GOODNESS-OF-FIT INDICES………….…........................................... 120

BIOGRAPHY…….……………………………………………..…........................................ 123

xvi

TABLE OF TABLES

Page Table 3.1 Validity test using IOC……………….............................................................. 42

Table 3.2 Reliabilities test using Cronbach's alpha……................................................ 43

Table 3.3 Fit indices and acceptable thresholds ……............................................. 47

Table 4.1 Demographic characteristics data analysis................................................... 51

Table 4.2 Level of agreement …………………………………………………………….. 53

Table 4.3 Description of latent and observed variables................................................ 54

Table 4.4 Correlation matrix between the observed variables...................................... 55

Table 4.5 KMO and Bartlett’s Test................................................................................. 56

Table 4.6 Extractions of communalities......................................................................... 57

Table 4.7 Total Variance Explained…............................................................................ 58

Table 4.8 Component Matrix …..................................................................................... 59

Table 4.9 Goodness of fit statistics…………………………………................................. 60

Table 4.10 Parameters of Statistics table..................................................................... 61

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TABLE OF TABLES (CONTINUED)

Page Table 4.11 Effect KSI on ETA and the effect ETA on ETA....................................... 54

Table 4.12 Squared Multiple Correlations for Observed Variables - X........................ 66

Table 4.13 Squared Multiple Correlations for Observed Variables - Y......................... 66

Table 4.14 Squared Multiple Correlations for Latent Variables…………...................... 67

Table 4.15 Correlation of ETA and KSI ……………………………………...................... 67

Table 4.16 Path Analysis Summary…….…………………………….……...................... 69

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TABLE OF FIGURES

Page Figure 2.1 Literature Framework………………….......................................................... 31

Figure 2.2 Conceptual Framework…………………...…….............................................. 32

Figure 4.1 Screen Plot (Factor Analysis)....................................................................... 58

Figure 4.2 SEM standardize solution............................................................................. 60

1

CHAPTER 1

CHAPTER 1

INTRODUCTION

1.1 Background

Due to the recent crisis market situation in many regions around the world, it is

increasing the concerns to the firms especially in the financial market in some countries

Europe which impact to the global economics. It seems to be the butterfly effect to other

markets. This crucial event is leading the challenge condition for the firms which need

to increase their ability to respond to the change to serve the volatile consumer

demand, and rapid product obsolescence. The business agility is introduced to be

defined on how the firm can detect and respond to opportunities and threats with ease,

speed, and quickness. It is also determined as a key business imperative (Galliers,

2007; Hitt, Keats and DeMarie, 1998; Overby, Bharadwaj, and Sambamurthy, 2006;

Rai, Patnayakuni, and Seth, 2006; Sambamurthy, Bharadwaj, and Grover, 2003; Weill,

Subramani, and Broadbent, 2002).

It is very challenge for the firms that they must find out the way to be survived in

the crucial competitive markets. Information technology is considered as the key engine

for the business strategy driven. Management team must execute the business strategy

plan and need to ensure that all departments will have the strategy which aligns to the

2

organization strategy. Not just only that under the volatile business environments, the

firm must ensure that they can handle the extreme changes, unprecedented threats, the

capitalization on the emerging business opportunities (Prahalad, 2009) Therefore, firm

cannot avoid to concentrate on information technology. There are many studies

supporting the business agility to speed up the decision making so as to be able to

respond the change rapidly (Lucas and Olson, 1994). The rapid unanticipated change,

agility, has been defined to respond the opportunities and threats with ease, speed, and

dexterity, has emerged, next to alignment, as a key business imperative (Galliers 2007;

Hitt et al. 1998; Overby et al. 2006; Rai et al. 2006; Sambamurthy et al. 2003; Weill et

al. 2002).

In order to increase the business agility, information technology would be

considered as the part of business strategic driven nowadays, many researches

generally supported that information technology is able to increase the agility to speed

up decision making, facilitate communication among the departments in the organization

and respond quickly to rapid changing conditions (Lucas and Olson 1994) and by

building digital options (Sambamurthy et al. 2003). On the other hand, information

technology can impede the business agility in another way. Business operation may get

the impact from the limitations of inflexible legacy IT systems, rigid IT architectures, or

complicated set of different their technology and application portfolios so much. It would

imply that IT becomes an obstacle for business agility (Van, Waarts, and Van, 2006).

These questions have been raised to the top management’s minds to find out the way

to utilize their IT resources to be able to improve the business agility.

3

With regard to the IT capabilities dimension, it is vital for a firm to realize

business value and seek out the way to remain competitive advantage. Many

researchers have begun to link firm-wide IT capability to competitive advantage

(Bharadwaj 2000; Bhatt and Grover 2005; Mata, Fuerst, and Barney, 1995; Ross,

Beath, and Goodhue, 1996). Especially, there was a research concentrated on the

effect of IT capabilities on business agility recently to find out whether IT capabilities

can impede or enhance the ability of the organization and took the consideration on IT

spending as well (Lu and Ramamurthy, 2011) Not just only that, the strategic

importance of building a highly capable IT infrastructure – the base foundation of IT

capability shared across the firm – has been identified as a critical item for the

management (Kayworth et al., 2001) The firm’s infrastructure can enable the strategic

innovation in business processes, which is the characteristics of its competitors'

infrastructures may inhibit them from imitating the innovations rapidly (Duncan , 1995)

We can say that the strategic business agility really need the IT infrastructure

capabilities as the key part of the plan (Weill et al., 2002).

Information technology capabilities have been considered as the part of firm-

wide business strategy. It is a firm’s ability to acquire, deploy, combine, and reconfigure

IT resources in order to support the business operation processes and enhance the

business strategies (Sambamurthy and Zmud 1997). Also, it facilitates business value

and sustains competitive advantage (Bharadwaj 2000; Bhatt and Grover 2005; Mata et

al. 1995; Ross et al. 1996). Lu and Ramamurthy (2006) developed the research to let

us understand more precisely on how information technology capabilities are able to

4

enable market capitalizing agility and operational adjustment agility. Their findings also

showed that IT capability is vital to achieve agility and IT capability may offer a possible

resolution to the questions on how contradictory of IT effect on agility: More IT spending

does not mean that agility level will be increased. It depends on how the firms can

successfully manage and leverage their IT resources to build agile organizations rather

than just spending IT resources solely.

As mentioned above, the firms must take the consideration on how they

manage IT resources properly. The executives in many firms have been considering on

how information technology would be fit to the business strategy. It is defined as

Business-IT strategic alignment (Tallon and Pinsonneault, 2011; Kearns and Sabherwal,

2006). Due to the increasingly strategic role of IT, the limitation on resource constraints

and enhanced need for integration of new and existing systems, IT strategic

management has continued to receive attention from researchers and managers

(Kearns and Lederer 2003). Tallon and Pinsonneault (2011) mentioned in their studies

to get clearer understanding on how IT – Business Alignment facilitate the business

agility on the process level. Their research provides another perspective on the value of

alignment, facilitating a deeper understanding and appreciation of the link between

strategic IT alignment and business agility. They focused on value chain activities and

their results support that the firms can improve the fit between business and IT strategy

by showing how efforts to improve alignment in a given process can deliver a stream of

benefits along the value chain.

5

In order to improve Business-IT strategic alignment, the firms have to take into

account on the knowledge-based theory. The success of Business-IT strategic

alignment rely on how the firm can integrate the knowledge of IT and Business

Perspectives together to achieve the organization goal which need to be able to

respond to the rapid change that has been defined as business agility. Participation of

business managers in strategic IT planning and participation of IT managers in business

planning create “cross-function interfaces” which is the key factor of the alignment

success (Cohen and Levinthal, 1990)

1.2 Statement of the Problems

Even though there are the studies mentioned about the effect on the IT strategic

alignment on business agility and also stated about the effect on the IT capabilities on

the agility of the organization solely. However, there are some questions related to the

how both business-IT strategic alignment and IT capabilities effect on business agility.

This would bring up the benefit to the executives to focus on IT investment under the

aggressive competitive environment which needs to utilize the scarce resources

efficiently.

According to this literature review, the study would addressed that there are a

few researches mentioned about the effect of Business-IT strategic alignment and IT

capabilities and how both of them facilitate or impede to the business agility from the

employee’s perceptions. This study is designed to attempt gap fulfillment of the

researches. The research reveals how important of IT on the business agility, in the

6

dimension of alignment and the capabilities which may impact to the organization

resources. The management would be able to focus on the investment on information

technology so as to increase its capabilities and how to execute the technology plan to

the organization properly. It would enhance the ability of the organization to be able to

increase the competitive advantage to survive under the crisis business environment.

1.3 Objectives of the study

1. To study the effect of IT management’s participation on business planning on

business-IT strategic alignment.

2. To study the effect of business management’s participation on IT planning on

business-IT strategic alignment

3. To study the effect of Business - IT strategic alignment on the business agility

4. To study the effect of IT capabilities on the business agility

1.4 Research questions

1. How the effect of IT management’s participation on business planning on

business-IT strategic alignment is?

2. How the effect of business management’s participation on IT planning on

business-IT strategic alignment is?

3. How the effect of business-IT alignment on the business agility is?

4. How the effect of IT capabilities on the business agility is?

7

1.5 Scope of the Study

This study is intended to investigate the effect of IT capabilities on business

agility and the effect of business-IT strategic alignment on the business agility from the

employee’s perception. Therefore, this research focused on the employees who have

worked for companies which are using IT to facilitate the business under the volatile

industry and had a chance to participate in business planning or IT planning before.

1.6 Expected Benefits

1. The study would bring up more understanding to the stakeholders on how IT

strategic alignment can enable the organization agility. We can also apply the theory

and literatures which are related to IT strategic alignment and see what need to be

concerned. Moreover, the executives could take the consideration to the impact of IT on

agility and execute IT-business strategic alignment plan properly under the volatile

business environment to improve the flexibilities on the operation of the firm.

2. The result of the research would be beneficial for the management to invest

on IT capabilities. We would see whether IT capabilities can fulfill the demands for

rapid-response, special requests from the customer and see whether it would quickly

scale up or scale down our production/service levels to support fluctuations in demand

from the market. We would also finally see whether IT capabilities can improve the

business agility.

3. Executives would be able to consider the business strategic plan along with

IT strategic plan and see how they would spend IT efforts to the organization units more

8

precisely. In some organization that the executives do not focus on IT investment, they

would realize that information technology is treated as the key criteria to increase the

competitive advantage in term of the speed and flexibility. They would keep their

process to be innovative all the time.

1.7 Operation Definition

1. Business - IT strategic alignment reflect on how the firm can integrate the

knowledge of Information technology managers with the business managers together to

achieve the organizational strategic goal. It would be derived from cognitive

development of corporate strategies. The level of the business–IT alignment can be

measured by how the integration level of both functionalities. For example, the

assessment on how IT plans aligns with the company’s mission, goals, objectives, and

strategies

1.1 IT management’s participation on business planning is the extent on how

IT manager attend the business meetings and involve on the business planning and

business strategic goals, it would also reflect on how IT manager attend the meeting in

early phase

1.2 Business management’s participation on IT planning reflect on how

business manager involve on IT planning to evaluate the future business need, and

involve on the IT objectives and strategies, and reflect on how they participate on the

major IT investment

9

2. IT capabilities can be defined as the three sub-dimensions as following: IT

infrastructure capacity, IT business spanning capacity and IT proactive stance. It reflects

how the firm can manage IT resources to support and enhance the business operation

process and the strategy. We can determine the level of Information technology

Infrastructure capabilities by these 3 dimensions

2.1 IT Infrastructure capacity is the ability of the firm to which the firm is good

at managing the sharable data management services, architecture, network

communication services, the application portfolios and service

2.2 IT business spanning capacity is the ability of how the firm can manage IT

resources to support the business operation and strategic objective. Also, it reflect how

the firm can develop the clear IT strategic visions to IT human resources and how they

can integrate the business into IT strategic planning and encourage the managements

to understand the value of IT investments

2.3 IT proactive stance is the firm ability to proactively seek the way on IT

innovation or utilize IT resources to create the business opportunities. It implies on how

the firm take the action on the extent of IT resource utilization to continuously research

on the new IT as necessary. It is also reflect whether the firm can find out the way to

keep research the new information technology way and foster the innovative

environment to support the business operation with IT effectively

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3. Business agility refers to ability that the firm can speed up on the response

to environmental threats and opportunities. It also implies on the ability that how easily

and quickly firms are able to re-act their behaviors based on unpredictable situation in

the market.

1.8 Organization of the Study

This thesis is structured in five chapters. The first chapter describes about

background and problems statement, objective, research the question, scope of

this study, expected benefits, and operation definition. The second chapter represents

reviews the concept of knowledge management, Business-IT Strategic Alignment, IT

Management’s participation on business planning, Business management’s participation

on IT planning, IT capabilities and business agility measuring from the relevant

literature, literature framework and the conceptual framework. The third chapter focuses

on the explanation of the research methodology, population and sample, research

instrument, data collection and data analysis. The fourth chapter represents the detail of

the summary of demographic data by the descriptive statistics, the level of agreement

analysis, SEM analysis and the hypothesis testing. The final chapter represents the

conclusions, the discussions, the implication of the study, the limitation of the study and

the recommendation for the future research.

CHAPTER 1

CHAPTER 2

LITERATURE REVIEW

This chapter represents the literature reviews of the related theories, the

definition of Business – IT strategic alignment, IT capabilities, and business agility from

the prior researches and relevant literatures. The following are topics in this chapter;

2.1 Resource-Based theory

2.2 Knowledge-Based theory of the firm

2.3 Business - IT strategic alignment

2.4 Business - IT management’s participation on the planning

2.5 IT capabilities

2.5.1 IT infrastructure capacity

2.5.2 IT business spanning capacity

2.5.3 IT proactive stance

2.6 Business agility

2.7 Literature framework

2.8 Conceptual framework

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2.1 Resource-Based theory

To understand the source of sustained competitive advantage of the firm is the

major research in the strategic management field (Porter, 1985; Rumelt, 1984). The

resource-based view theory (RBV) was initially promoted by Penrose (1959) and it was

later further developed by others (Wernerfelt, 1984; Barney 1991; Conner 1991).

Resource-based view theory stated that the basis of the competitive advantage of the

firm is primarily in the application of the bundle of valuable resources of the firm

disposal (Wernerfelt, 1984; Rumelt, 1984; Penrose, 1959).

Barney (1991) stated that the key points of the resource-based view theory are

following by the steps as below.

1. Firstly, the firm need to identify the potential key resources

2. The firm must evaluate their own resources whether they are fit to the following

criteria referred to as (VRIN):

- Valuable: A resource can be the source of the competitive advantage when

they enable a firm to conceive of or implement strategies that improve its

efficiency and effectiveness. Firm attributes must be valuable in order to be

considered resources (and thus as possible sources of sustained

competitive advantage) points to and important complementarily between

environmental models of competitive advantage and the resource-based

model.

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- Rare: If each of the firms has the capability to exploiting the valuable

resources in the same way, thereby implementing a common strategy that

give no on firm a competitive advantage anymore. Therefore, to be of value,

a resource must be rare by definition.

- In-imitable: even valuable and rare organizational resources can be the

source of competitive advantage. It may be describing the first-mover

advantage situation. However, valuable and rare organizational resources

can only be the sources of sustained competitive advantage if the firms that

do not possess these resources cannot obtain them. These resources must

be imperfectly imitable for one or a combination of three reasons:

a) The ability of a firm to obtain a resource is dependent upon unique

historical conditions

b) The link between resources possessed by a firm and a firm’s

sustained competitive advantage is casually ambiguous

c) The resource generating a firm’s advantage is socially complex

- Non-substitutable: This is the last requirement for the firm resource to be the

source of sustained competitive advantage. There must be no strategically

equivalent valuable resources that are themselves either not rare or imitable.

Substitutability can take at least two forms. First, it may not be possible for

the firm to imitate another resource exactly, it may be able to substitute a

14

similar resource in order to conceive of and implement the same strategies.

Second, very different firm resources can also be strategic substitutes. The

strategic substitutability of firm resources is always a matter of degree. It is

the case however that substitute firm resources need not have exactly the

same implications for an organization in order for those resources to be

equivalent from the point of view the strategies that firm can conceive of and

implement.

3. The firm must care and protect these resource that possess these evaluations

In the later time, Priem and Butler (2001) argued on resource-based theories

that they were wondering whether the resource-based view is a useful perspective for

strategic management research. They mentioned that the elemental resource-based

view {RBV) is not currently a theoretical structure and stated that this theory may yet

make more important contributions to knowledge in strategic management, in part

because thorny and messy strategic problems might not be amenable to solution

through elegant theory.

Barney (2001) encountered the argument in his research again and stated that

the conclusion from Priem and Butler (2001) was toward to say ‘Yes’ to their research

questions. However, he also stated in his paper that the theory may need to be

reviewed because some definitions specified in the original one which was wrote 10

years ago may need to be amended.

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2.2 Knowledge-Based theory of the firm

The resource-based view of the firm was initiated to explain on why some firms

are able to remain positions of sustainable competitive advantage and earn superior

returns. To the extent that it focuses upon knowledge as the most strategically

important of the firm's resources, it is an outgrowth of the resource-based view. the

knowledge based view concerns itself extend beyond the traditional concerns of

strategic management—strategic choice and competitive advantage—and address some

other fundamental concerns of the theory of the firm, notably the nature of coordination

within the firm, organizational structure, the role of management and the allocation of

decision-making rights, determinants of firm boundaries, and the theory of innovation

(Grant, 1996).

Grant (1996) stated in his research that the primary role of the firm is to

integrate the specialist knowledge into goods and services. The primary task of the

management is to establish the coordination necessary for the knowledge integration. In

contrast to the earlier literatures, knowledge is viewed residing within the individual and

the primary role of the organization is knowledge application rather than knowledge

creation. He also mentioned in another study and focused on the knowledge based

theory in the view of organization capabilities. The theory is used to explore the linkage

between the knowledge input and the product output and see the firm potential to

establish the firm competitive advantage under the dynamic market conditions. In the

study showed that the specialized knowledge is fundamental to their ability to create

16

and sustain competitive advantage and revealed the implication in term of the

competitive advantage under the hypercompetitive market (Grant, 1996)

However, while many researchers would focus on how efficiency of the

hierarchy in economizing on knowledge exchange, Nickerson and Zenger (2004)

researched in another way to focus on the efficiency of alternative organization form in

generating the knowledge or capability. Their theory predicted that efficiency demands

that these governance alternatives be matched in a discriminating way to problems

based on their associated benefits and costs in governing solution search. Thus, our

theory is among the first to simultaneously treat both the boundary choice (i.e., internal

versus external) and the choice among alternative internal approaches to organizing.

2.3 Business - IT strategic alignment

Nowadays, business - IT strategic alignment which is reflecting to how good

mixture of the business strategy and IT support is. It keeps being in the top priorities in

the business and IT executives. Many researchers explained the phenomenon how

important of information technology which is supporting the business strategies and

operations (Tallon, 2010; Tallon and Kreamer, 2007). It become the competitive

advantage regardless the size of the firm (Tallon, 2010). Information technology

facilitates the firm to find out the intimacy way with the customers. In financial service

which is the key contributors to U.S. Gross Domestic Product currently, a fact from the

report reveal that small banks with under $100 million in assets continue to report

higher profit margins than large banks with over $100 million in assets. However, both

17

large banks and small banks have also been utilizing IT to support their strategies in

different prospective. The large banks are focusing on the productivities, while the small

banks are focusing on the service oriented business strategies. From the context in the

study, it confirms that IT alignment could improve the competitive advantage; profit and

market share of the firm (Tallon, 2010). However, the researcher stated that even

creating an IS strategy is the first step but realizing the strategy is also critical.

Managers should not only think about the term of their planned IS portfolio and

infrastructure investments. They have to monitor the systems that are in place to make

sure that it comes to the term with the strength and weaknesses of the support that

they currently are, not just only providing (Chan, Huff, Barclay and Copeland, 1997)

Even senior executives have realized that the IT strategic alignment facilitates

business effect of IT and that contextual factors affect business–IT alignment. However,

the knowledge and behaviors of the executives are related to the success of IT

alignment as well. It means that top management ought to have enough IT knowledge

to support their decisions. Moreover, regarding business – IT alignment, business

managers must participate in strategic IT planning. Vice versa, IT manager must also

involve in the business planning as well. Both of these planning would effect to

business-IT strategic alignment. Translating the alignment will be considered to enhance

IT-effect on business performance. So, it can imply that the knowledge management is

also vital for the IT – business alignment as well. (Kearns and Sabherwal 2006)

18

There are some studies mentioning about the fit of IT alignment in other

dimensions. In the detail of the business value chain which composes of the key 5

business processes as following: SR (supplier relations), PO (production and

operations), PSE (product and service enhancement), MS (marketing and sales), and

CR (customer relations), Researcher tried to get understanding on how IT alignment

facilitates the intra process in the firm rather than the firm level and see how IT is used

to drive the business value within that process. He also identified the three value

disciplines (OE: operational excellence, CI: customer intimacy, and PL: product

leadership) denoting possible strategic foci. Therefore, alignment is separately examined

in each process for each of these strategic foci. As a result, it reveals that there is the

positive relationship between alignments and perceived IT business values in each five

primary process in the business value chain. Furthermore, the result emphasize that

managers need to take a look in the deeper detail closely at how IT can support

individual process rather than at how IT support the entire strategy. (Tallon, 2007)

To make sure that IT strategic alignment is consistent with the business strategy

for long term, management people must precisely understand to find out the flexibility

way on how they would plan for the IT future enhancement and remain the high level of

the business – IT alignment. Some literatures support that IT flexibility has the positive

relationship with the strategic alignment. For example, the recent study from Malaysia

focusing exporting area, the researchers found out that it requires the need for

organizations to use strategic information systems planning to consistently monitor the

relationship between IT flexibility and alignment. Doing so during periods of increased

19

change in dynamic and uncertain environments reduces the risk of being ensnared by

rigidity traps that could transform IT into an inhibitor rather than an enabler of change.

(Jorfi, Nor, Najjar, and Jorfi, 2011) In SME context, the researcher also mentioned

about the relationship between IT infrastructure flexibility as measured in four

dimensions (connectivity, compatibility, modularity, and IT personnel competency) and

IT responsiveness (Chung, Rainer, and Lewis, 2003; Zhang, Li, and Ziegelmayer,

2009). IT responsiveness is vital for their business operations to determine whether they

can survive in the market or not. While only half of SMEs survive more than four years,

they are able to quickly adjust to change which is critical for their survival.

Responsiveness is the one competitive advantaged which is reflecting to SME’s

sustainability and growth. The findings from the study confirmed that there was the

positive relationship between IT infrastructure flexibility and IT responsiveness. It also

provided the evidences that the impact of connectivity and compatibility on IT

responsiveness is fully mediated by modularity and IT personnel competency, which

effect to IT responsiveness directly (Zhang et. al 2009)

Furthermore, application implementation is also included as a part of information

technology nowadays to create the business opportunities (Earl, 1989; Rockart and

Scott-Morton, 1984; Smith and McKeen, 1993), to improve customer service and to

enhance the product and service quality. Therefore, the recent study mentioned about

the relationship between IT flexibilities and IT strategic alignment along with the extent

of application implementation. In the concept of ‚application implementation‛, it includes

the business application as following: Transaction processing systems, Management

20

information systems, Executive information systems, Decision support systems, Expert

systems, Data warehousing, Data Mining, Inter-organizational information systems (e.g.,

electronic data interchange), Knowledge Management, Network Management, Disaster

Recovery

The result from the study shows that connectivity, modularity, and IT personnel

has the positively impact on IT strategic alignment significantly and also, the four

components (connectivity, compatibility, modularity, and IT personnel competency) have

the positive impact on the application implementations. It implied that IT flexibilities also

enable the organization to develop the new application and modify the existing the

application more quickly and easily that would support the rapid business change

environments which is the key of the company competitive advantages (Chung et. al

2003)

2.4 Business - IT management’s participation on the planning

As mentioned earlier in Business – IT strategic alignment context, the major

important of the knowledge integration between IT and Business is to link the IT

strategic planning to the business goal and objective (Kearns and Sabherwal, 2006)

In the dimension of IT involvement on the business planning, Reich and

Benbasat (1996) revealed the establishment of the business and information technology

objectives. They clarified the nature of the linkage construct can be clarified into two

dimensions.

21

1. Intellectual: the contents of IT and business planning output are internally

consistent. For example, IT missions, objectives and plans chosen must be

consistent with the stated business missions and objectives. Moreover, the

contents of IT and business planning output are also externally valid. It

means that they are comprehensive and balanced with respect to external

business and IT environments.

2. Social: the IS and business executives understand each other’s' objectives

and plans.

They concluded that the understanding of current objectives and shared vision

for the utilization of information technology are proposed as the most promising

potential measures for short- and long-term aspects of the social dimension of linkage,

respectively.

Reich and Benbasat (2000) also studied on the several factors on the social

dimensions of alignments which are refer to the state in which IT and business

executives understand and are committed to the business and IT missions, objectives

and plans. They found out four factors (shared domain knowledge. IT implementation

success, communication between business and IT executives, and connections between

business and IT planning) were found to influence short-term alignment. However, only

shared domain knowledge was found to influence long-term alignment. A new factor,

strategic business plans, was found to influence both short and long-term alignment.

22

The result from Reich and Benbasat’s studies also supported that the shared

domain knowledge is the key of long term alignment which is the implication of

knowledge-based theory as well.

With regard to the normal practice of the strategic information system planning

(SISP), the investigation from the study stated five different SISP approaches:

Business-Led, Method-Driven, Administrative, Technological, and Organizational. Each

approach has different characteristics and, therefore, a different likelihood of success.

However, organizational approach appear to be the most effective way (Earl, 1993)

2.5 IT Capabilities

In today’s business environment, IT has been considered as the key of the firm

success so that the firm is be able to handle the changes, the external threats and the

capitalization on the emerging opportunities. As mentioned before, it depends on the IT

capabilities that the firm has. It is the ability that the firm can acquire, deploy, combine

and reconfigure IT resources to support the business strategies enhancement and work

processes (Sambamurthy and Zmud 1997). However, some researchers still have the

questions to get more understanding of how IT capabilities related to the agility in the

volatile business environments. The recent research tried to find out whether IT

capabilities enhance or impede the agility and how IT capacity complements other

organizational resources (IT spending) to enhance agility. In the study, the researchers

refine and conceptualize the measurement of IT capacity in three dimensions: IT

Infrastructure capacity, IT business spanning capacity and IT proactive stance. They

23

also conceptualize the organization agility into two types called market capitalizing

agility and operation adjustment agility. The result of the study reveals that IT capacity

has the positive relationship with two types of organization agility. It also shows the

evidence that the positive joint effect of IT capacity and IT spending on operational

adjustment agility but not on market capitalizing agility. It confirms that firm must

continuously develop the firm-wide IT capacity to manage and leverage IT resources to

build the agile organization successfully. (Lu and Ramamurthy, 2011)

Within IT components, IT personnel capacity is the main part of the whole IT

capacity. Human IT capabilities are served as the mortar to bind the physical IT

components into robust and functional IT services. IT personnel capabilities can be

conceptualized as a transformation mechanism to convert the static input of physical

components into dynamic output of IT services. The recent research find out the answer

to see whether the technical, behavior, business capacities of IT personnel positively

affects IT capabilities or not. Also, the researchers would like to see if IT capabilities

positively affect IT-dependent system, information and strategic agility or not. Fink and

Neumann (2007) found out that IT infrastructure capabilities affect to IT-dependent

strategic agility is direct, as well as mediated by IT-dependent system and information

agility.

Some researchers determine IT capabilities in different terminology. IT

management capability, IT personnel expertise and IT infrastructure are combined and

determined as IT capabilities. The research analysis shows that IT capabilities can

24

contribute indirectly to the perceived financial performance as process oriented dynamic

capabilities is increased. Also, it reveals the component of IT capabilities in the detail

that human resource in the IT expertise perspective and IT infrastructure are also

important. IT management capabilities would fill in the gap between IT personnel and IT

infrastructure together which would strengthen a firm financial achievement (Kim, Shin,

Kim, and Lee, 2010)

Even export-focused small and medium-sized enterprises (SME) under the

hypercompetitive market in China, IT is examined to be the key organizational

capabilities. They must leverage the scarce resources as much as possible. In their

definitions, IT capabilities consist of IT business partnerships, External IT linkages,

Business IT strategic thinking, IT business process integration, IT management, IT

infrastructure. The result of the research concluded that IT capabilities have the positive

impact on the improvement of the operational and strategic performance. However, it

required IT investment in order to enhance IT capabilities. The IT capabilities

enhancement is recommended for export-focused Chinese SMEs (Zhang, Sarker, and

Sarker, 2008)

2.5.1 IT infrastructure capabilities

IT infrastructure capability is the base foundation of IT portfolios which reflect to

the ability that the firm can manage their technology architecture, the data management

service, application portfolios and services effectively. It also implies how the firm can

share IT portfolios throughout the firm in form of the reliable services. It includes both

25

the technical and management knowledge so as to provide the reliable physical

services and extensive electronic connectivity within and outside the firm (Broadbent,

Weill, and Neo, 1999; Lu and Ramamurthy, 2011)

With regard to business process redesign (BPR), IT infrastructure capability is

also the important part of business process redesign implementation. The finding from

the previous study revealed that all the firms which need to implement BPR need to

have a basic level of IT infrastructure capability. Higher level of IT infrastructure

capability also enables the extensive change on business process redesign with the

short time frames. It would bring up the ability of the firm to transfer the information and

process the complex transactions inside and outside the firm. It is vital that the

managers should verify their own IT infrastructure capabilities before embarking on any

form of BPR (Broadbent et. al, 1999)

Even in e-commerce area, the empirical analysis from some studies revealed

the strong positive relationship between IT infrastructure and e-commerce business

capability. The complementary of IT infrastructure can positively contribute to the sales

per employees, inventory turnover, and cost reduction. There is also the empirical

evidence to complementary synergy between frontend e-commerce capabilities and

backend IT infrastructure which is increasingly effective in producing the business value.

The integration of the resources between frontend e-commerce capabilities and

backend IT infrastructure need to be enhanced in order to reap the benefit of e-

commerce investments (Zhu, 2004)

26

Under the turbulent environments which is unpredictable from the unexpected

changes in the market demand and consumer preference, the new technology

innovation and the technological breakthroughs. IT infrastructure capabilities also can

enable the business operational capabilities (ability in process execution), dynamic

business capabilities (the planned ability to reconfigure operational capabilities) and

improvisational capabilities (the learned ability to spontaneously reconfigure operational

capabilities). There are three types of the emerging IT infrastructure which are

mentioned as following: event drive, service-oriented and self-learning (El Sawy and

Pavlou, 2008).

In the recent research, IT infrastructure capabilities also facilitate the firm on the

customer agility in order to increase the competitive advantage. IT is playing as the

important role so as to facilitate ‚Knowledge Creating‛ synergy which is derived from the

interaction between a firm’s web-based customer infrastructure and its analytical ability.

Web-based customer infrastructure can facilitate the firm’s customer-sensing capability

which analytical ability positively moderates the relationship. Also, the system integration

also positively moderates the relationship between inter-functional coordination and a

firm’s customer-responding capability (Roberts and Grover, 2012)

2.5.2 IT business spanning capabilities

IT business spanning capability is the ability how the firm can manage and

envision their IT resources in order to support and enhance business objectives. It also

means that the management’s ability to enable IT resource to understand the value of

27

IT investments. (Lu and Ramamurthy, 2011) IT investment is related to IT capabilities

which does also effect to the market valuation, profitability, cost and innovation. There is

the empirical study mentioned about the impact of IT assets, IT capabilities, and their

combination on market valuation, profitability, cost, and innovation of the company. The

difference on IT investment allocations and organizational IT capabilities can reflect to

the market valuation, profitability, cost, and innovation difference. Even though, firms’

total IT investment is not associated with performance, but investments in specific IT

assets explain performance differences along dimensions consistent with their strategic

purpose. (Arul and Weill, 2007)

From meta-analysis techniques which studies on the return on IT investments,

the relationship between IT investments and financial performance is often stronger in

studies that employ accounting measures rather than market measures of the

performance. This difference is driven by research that focuses on the process level

impacts of IT investment. Furthermore, the relationship is also stronger when IT

investment is measured as IT strategy or spending, rather than IT capability. (Lim,

Dehning, Richardson, and Smith, 2011)

2.5.3 IT proactive stance

IT proactive stance is a firm’s ability to proactively find out for ways to adapt IT

innovations or perform the experiment on existing IT resources to create business

opportunities—this is the characteristics that the firm keep trying to extent the current

capabilities with IT innovations, continues to experiment with new IT under the firm

28

capacities, continuously look for the new approaches in order to increase its

effectiveness of IT utilization, and encourage the firm’s resources to utilize the new

ways of using IT (Lu and Ramamurthy, 2011)

However, there are some questions from the researchers that the firms should

be focusing on the efficiency on their IT portfolios or the innovation. Actually, it is

related to the nature of the competitiveness among the firms in the particular industries.

For the lower levels of dynamism, competitiveness, and complexity, IT asset portfolios

are focusing on an efficiency oriented rather than the innovation. In contrast, in the

industries which have the higher levels of complexity by nature, IT asset portfolios are

prone to the innovation oriented approach (for example, the new product development

and processes, and the growth opportunities exploration). The result from the recent

studies provides the understanding on how firms could realize strategic alignment by

tailoring their IT asset portfolios toward an efficiency or innovation focus (Xue, Ray, and

Sambamurthy 2012)

2.6 Business Agility

In volatile business environment, the firms must have the speed and the quick

response to the threats and opportunities. Agility of the firm can refer to how easily and

quickly that firm can revise the behaviors based on the marketplace events. Many

researchers tried to find out the way to improve the business agility. The recent study

found out the relationship between IT strategic alignment and see whether it negatively

or positively impact to the business agility. They use the model in which business agility

29

as the mediation between IT strategic alignment and performance under varying

conditions of IT infrastructure flexibility and environmental volatility. The result of the

study show that the effect of alignment on performance is fully mediated by agility, that

environmental volatility positively moderates the link between agility and performance,

and that agility has a greater impact on operational and market performance in more

volatile markets. While IT infrastructure flexibility does not moderate the link between

alignment and agility, except in a volatile environment, we reveal that IT infrastructure

flexibility has a positive and significant main effect on agility. In fact, the effect of IT

infrastructure flexibility on agility is as strong as the effect of alignment on agility. (Tallon

and Pinsonneault, 2011). Some researchers were focusing how to utilize the information

technology in the supply chain and supply chain organization initiative. They

investigated whether it facilitated the business agility and performance in the

manufacturing firms. The study reveals the agility is the full mediator related to the

performance. It also reflects that the supply chain information technology and supply

chain organization initiative can enhance the business agility (Vickery et. al 2010)

There are many methodologies to support that the business agility to find out

the factors of the business agility. L3Y2T model was used in order to analyze and

prioritize the agility factors based on innovation factors. The result revealed the relation

of internal and external factors with innovation in the product. It showed that the

organization must regulate its strategy in a way to be pioneer in introduction of new

products to the market and takes action towards improving of products of successful

organizations. Also about external factors, supporting basic researches in the

30

organization and developing of inter-organizational communicative networks are

necessary in order to enhance innovation (Shahin, Nikjoo, and Nilipour, 2011)

In the production manufacturing recently, some companies also applied the

agility model on their operations called agile manufacturing (Eshlaghy, Mashayekhi,

Rajabzadeh, and Razavia 2011). The change from mass production style toward the

customized production approach in order to highly customized products when

customers require them. From the study, it shows the path analysis in Iranian industrial

organization. This reveals the importance and priority of achieved model factors in

organization agility are as following: Leadership, Organization commitment system, Job

satisfaction, Empowerment and improvement, Planning and evaluating performance,

Organizational structure-certainty, Team working, Organizational culture, Progressive

design and manufacturing technology, Information technology, Virtual organization,

Organizational structure-formality and complexity.

Also, in some manufacturing firms, they take the advantage on the technology

innovation in RFID technology in order to increase their business agility. Adoption of

RFID technology utilization directly and positively impacts organizational agility which in

turn directly and positively impacts both operational and logistics performance.

Additionally, operational performance directly and positively impacts logistics

performance. The implementation of RFID technology can result in improved

organizational agility resulting in improved performance (Zelbst, Sower, Green and

Abshire 2011)

31

2.7 Literature framework

Figur

e 2.1

Lite

ratur

e Fr

amew

ork

32

2.8 Conceptual framework

According the literature reviews on many IT factors such as business-IT

strategic alignment, IT capabilities, process innovation, IT investment, and the usage of

modern technology, etc., which impact to business agility. There are the interesting

points on how business-IT strategic and IT capabilities will affect to business agility

because there are a few researches studies on these factors together and there are

enough supporting literatures which would be the references.

This study would focus on the effect of business-IT strategic alignment and IT

capabilities on business agility. The independent variables are IT capabilities (which are

measured by IT infrastructure capacity, IT business spanning capacity and IT proactive

stance), IT management’s participation on business planning, and business

management’s participation on IT planning. The dependent variables are the business-

IT strategic alignment and business agility.

Figure 2.2 Conceptual Framework

CHAPTER 3

RESEARCH METHODOLOGY

The purpose of this chapter is to present the methodology of collecting and

interpreting data of this study. The following are topics in this chapter;

3.1 Research Design

3.2 Population and Sample

3.3 Variables of the research

3.4 Research Instrument

3.5 Questionnaire Design

3.6 Pretest of Research Instrument

3.7 Measurement of Variable

3.8 Data Collection

3.9 Data Analysis

34

3.1 Research Design

This study investigates the effect of Business-IT strategic alignment and IT

capabilities on business agility. Therefore, the research is designed to use the

quantitative research method and collect the primary data by survey research with

structured questionnaires that referred to the prior studies according to objectives of the

study.

The structural equation model (SEM) which was used in this study is

quantitative research technique. SEM is used to show the causal relationships between

variables. The relationships shown in SEM represent the hypotheses of the researchers.

Typically, these relationships can't be statistically tested for directionality. Most often,

SEM is used for research that is designed for confirmation rather than to explore or

explain a phenomenon. SEM produces data in a visual display and this is part of its

appeal. When using SEM, the researcher gets a tidy visual display that is easy to

interpret, even if the statistics behind the data are quite complex. Moreover, it was

examined the relationship of the postulated hypothesis by using LISREL program.

3.2 Population and Sample

The unit of analysis in this study is at the employee level. Therefore, the target

populations are employees who work for the firms and had a chance to participate in

business planning or IT planning before. With regard to the sample, the employee must

work for the firm that has utilized Information Technology resources as part of their

35

business strategy. Therefore, snowball sampling technique was used in this study to

spread out the questionnaire through the web link.

With regard to the size of the sample group that is unknown clearly, therefore,

this research employs the formula for calculating the size of the sample group with

confidence level provided at 95% and allowable error provided at 5% (Kanlaya

Wanichbancha. 2006: 14) as follows:

n = Z2 / 4e2

n = size of the sample group

Z = confidence level provided at 95% ( = 0.05)

e = allowable error provided at 5%

n = 1.962 / 4(0.05)2

n = 3.8416 / 0.01

n = 384.16

From the calculation, the result of the sample size is 384.16 for obtaining the allowable

error of no more than 5%, from at least 385 samples. Therefore, the researcher uses

the sample size of 400 people in this study.

36

3.3 Variables of the research

Based on the literature review and research journals, the following variables are

used for the study:

3.3.1 The independent variables are the demographic factors of the employee

who are working for the public companies which utilize IT as the part of organization

strategy, IT capabilities of their companies which are measured by three dimensions (IT

infrastructure capacities, IT business spanning capacities and IT proactive stance) and

the participation levels between business and IT managers.

3.3.2 The dependent variables are Business-IT strategic alignment, business

agility.

3.4 Research Instrument

The questionnaire was designed underlying the objective of the study. An effort

has been put for making more comprehensive and maintaining a desirable length with

an attempt to create the questionnaire with conceptually clear and concise statements.

In order to ensure the accuracy of content validity and reliability, the questionnaire is

developed through the process as follows:

1. Review of academic literature, text and research articles, and identified the

variables that related to the study.

37

2. Draft questionnaire based on review of literature, variables and information

needs, and consultation with expert person to comment on the questionnaire design

content and adjust the questionnaire according to the expert person suggestions.

3. Pre-test the questionnaire with employees who were presently working the

firms as the sample groups. Purposive sampling method is used for testing with 30

samples in order to evaluate the understanding of questionnaire answer before the real

applying.

3.5 Questionnaire Design

The research instrument for this study is the questionnaire which can be divided

into 6 parts with 36 questions.

Part 1: Employee Profile Information

This part captures on the employee profiles such as gender, age, education

level and income per month. These items are in nominal and ordinal.

Part 2: IT Capabilities

This variable was measured by three sub dimensions. The first dimension is

related to IT infrastructure capacities which would be measured by four items (V5-V8)

which reflects the extent to which a firm deploys a set of shareable platforms (Lu and

Ramamurthy 2011). The questionnaires about IT infrastructure capacities are adopted

by Bharadwaj et al. (1998), Ross et al. (1996) and Weill et al. (2002).

38

The second dimension is related to IT Business Spanning Capacities was

measured with four items that reflect the ability of a firm’s management to envision and

exploit its IT resources to support and enhance business objectives (Lu and

Ramamurthy 2011). The questionnaires about IT Business Spanning Capacities are

adopted by Bharadwaj et al. (1998) and Mata et al. (1995)

The third dimension is related to IT Proactive Stance was measured using four

items that capture the extent to which the firm proactively searches for ways to explore

or exploit IT resources to address and create business opportunities (Lu and

Ramamurthy 2011) The questionnaires about IT Proactive Stance are adopted by

Fichman (2004), Weill et al. (2002)

Part 3: IT Management’s Participation on Business Planning

This variable was measured by three items. Two items—measuring the extent to

which IT managers regularly attend business meetings and participate in setting

business goals and strategies are based on a five-item measure used to evaluate IT

managers participation in business planning (Kearns and Lederer, 2003) whereas the

third item reflects IT managers’ early involvement in business projects (Lederer and

Mendelow, 1989). The questionnaire about IT management’s participation on Business

Planning is adopt by Kearns and Sabherwal (2006)

39

Part 4: Business Management’s Participation on IT Planning

This variable was measured based on a prior measure of “planning

participation” (Segars et al. 1998). We focus on IS planning in only two items. In the

remaining three items, we explicitly identify tasks related to IT planning—evaluating

future business needs, setting IT objectives and strategies, and selecting major IT

investments. The questionnaire about IT Management’s Participation on Business

Planning is adopt by Kearns and Sabherwal (2006)

Part 5: Business-IT Strategic Alignment

This variable was measured adapted from Segars and Grover’s (1999) four-item

measure of “planning alignment.” They used items focusing on activities that facilitate

alignment, such as “understanding” and “educating,” our measure includes items that

assess the level of integration between business and IT.

Part 6: Business Agility

This variable was measured adapted from Tallon and Pinsonneault (2011). 7

agility items were added in the survey with the request that respondents give the rate of

their agreement with each item.

3.6 Pretest of Research Instrument

3.6.1 Validity

An evaluation using the index of item-objective congruence (Rovinelli and

Hambleton, 1977) is a process where content experts rate individual items on the

40

degree to which they do or do not measure specific objectives listed by the test

developer. More specifically, a content expert evaluated each item by giving the item a

rating of 1 (for clearly measuring), -1 (clearly not measuring), or 0 (degree to which it

measures the content area is unclear) for each objectives. 4 experts who are the

lecturers in UTCC had reviewed the validity of the questionnaires. The experts are not

told which constructs the individual items are intended to measure, thus they remain

independent and unbiased evaluators.

After the experts complete an evaluation of the items, the ratings are combined

to provide indices of item-objective congruence measures for each item on each

objective. The range of the index score for an item is -1 to 1 where a value of 1

indicates that all experts agree that the item is clearly measuring only the objective that

it is hypothesized to measure and is clearly not measuring any other objective. A value

of -1 would indicate that the experts believe the item is measuring all objectives that it

was not defined to measure and is not measuring the hypothesized objective. The

formula developed by Rovinelli and Hambleton is used under the assumption that there

is only one valid objective being measured by each item. If an item is measuring

multiple objectives, then the index value would be less than one. The premise of the

index is to have high positive values on the objectives an item is intended to measure

and values close to -1 on all of the remaining objectives. The index of item-objective

congruence developed by Rovinelli and Hambleton (1997) is computed using the

equation:

41

Iik = ∑Sik / N

Iik = the index of item-objective congruence for item I on objective k

N = the number of specialists (j = 1, 2 … N)

Sik = the rating (1, 0, -1) of item i as a measure of objective k by content specialist.

Hambleton (1977) mentioned that this should be done creating the poorest of

content specialist’s ratings that the test developer was willing to accept as evidence that

item within the content domain of interest. After the compute index for this set minimally

acceptable rating, the result index serves as the index cut-off score for judging the

validity of the items. It serves as criterion against which each item within the measure is

judged, based on its index of item objective congruence, which resulted from content

specialists’ ratings. If, for instance, the index cut-off is 0.75 then all items with an index

of item objective congruence below 0.75 are deemed non-valid, while those index are

more than 0.75 are considered valid. Those with an index below 0.75 are discarded

from the measure or analyzed and revise to improve their valid. The validity test using

IOC is presented in table 3.1:

42

Table 3.1 Validity test using IOC

Items Variables IOC 1 IT Capabilities

1.1 IT Infrastructure Capabilities 0.94 1.2 IT Business Spanning Capabilities 0.94 1.3 IT Proactive Stance 0.94

2 IT Management's participation on Business Planning 0.92 3 Business Management's participation on IT Planning 1.00 4 Business-IT strategic alignment 1.00 5 Business Agility 0.89

3.6.2 Reliability

Reliability is the correlation of an item, scale or instrument with a hypothetical

one which truly measures what is supposed to. Since the true instrument is not

available, reliability is estimated in one of four ways, there are internal consistency,

split-half reliability and inter-rater reliability. In this study, was chosen internal

consistency which estimated based on the correlation the variables comprise the set.

Typically, it use Cronbach’s alpha model.

Cronbach’s alpha is the most common form of internal consistency reliability

coefficient. Alpha equals 0 when the true score is not measured at all and there is only

an error component. Alpha equals 1.0 when all items measure only the true score and

there is no error component.

43

Cronbach’s alpha can be interpreted as the percent of variance of the observed

scale would explained in the hypothetical true scale composed of all possible items in

the universe. Alternatively, it can be interpreted as the correlation of the observed scale

with all possible other scales measuring the same thing and using the same number of

items. Cronbach’s alpha has cut-off criteria, by convention, a lenient cut-off .60 is

common in exploratory research; alpha should be at least .70 or higher to retain an item

in an ‚adequate‛ scale and many researchers require a cut-off .80 for a ‚good scale‛.

(Cronbach, 1951) The following table 3.2 presents the reliability for all the factors for the

pre-test and the final.

Table 3.2 Reliabilities test using cronbach's alpha

Item Variables Amount of items

Cronbach's Alpha

(Pretest) (Final)

1

IT Capabilities

1.1 IT Infrastructure Capabilities 4 0.935 0.809

1.2 IT Business Spanning Capabilities 4 0.950 0.793

1.3 IT Proactive Stance 4 0.907 0.840

2 IT Management's participation on Business Planning 3 0.947 0.745

3 Business Management's participation on IT Planning 5 0.948 0.814

4 Business-IT strategic alignment 4 0.952 0.795

5 Business Agility 7 0.959 0.877

44

3.7 Measurement of Variable

The measurement of the questionnaire items in this study use the five-point

Likert scale from 1-5 rating from ‚strongly disagree‛ to ‚strongly agree‛.

Interpretation of questionnaire with 5 point scales, the interval for breaking the

range in measuring each variable is calculated by:

5 – 1 / 5 = 0.80

It means items with scores fall between the ranges of:

The score among 4.21 – 5.00 are considered as most agreement

The score among 3.41 – 4.20 are considered as high agreement

The score among 2.61 – 3.40 are considered as neutral

The score among 1.81 – 2.60 are considered as low agreement

The score among 1.00 – 1.80 are considered as least agreement

3.8 Data Collection

The data collections conducted from online questionnaires with quantitative

analysis were employed for analyzing the collected data from August to October 2012.

In this study, questionnaires with multiple choices and five-point Likert scale level was

used to measure respondents’ evaluation and to analyze the business agility.

45

The online questionnaires web link as following were spread out via the emails

https://docs.google.com/spreadsheet/viewform?formkey=dC04anB4VFNLVFpJV2I4VGU0

ZUdxU2c6MQ#gid=0 to the employees in the firms who had a chance to involve in

business planning and IT planning. Snowball sampling technique or chained referral

sampling was used in this study so as to send the questionnaires to the stakeholders.

The questionnaire which was originally created in the English language was sent to the

employees who are not Thai. Another version were provided Thai version for the

purpose of the survey to Thai people. In addition, there are two reasons for the

translation of the questionnaire: the first reason was not respondents were fluent in

English and the second reason was to avoid misinterpretations and miscommunication

for Thai people.

3.9 Data Analysis

The researcher analyzes data variables from questionnaire which processed by

statistic program for the results. The results of respondents were presented as follows:

The below hypotheses were constructed in order to analyze the effect of IT

capabilities and business-IT strategic alignment on business agility. Also, according to

Business-IT strategic alignment, the study also investigated the effect of IT

management’s participation on business planning on business-IT strategic alignment

and the effect of business management’s participation on IT planning on business-IT

strategic alignment.

46

Hypothesis 1:

Ho1: IT management’s participation on business planning has no effect on

Business-IT Strategic Alignment.

Ha1: IT management’s participation on business planning positive effect on

business-IT strategic Alignment

Hypothesis 2:

Ho1: Business management’s participation on IT planning has no effect on

business-IT strategic alignment

Ha1: Business management’s participation on IT planning positive effect on

business-IT strategic alignment

Hypothesis 3:

Ho1: Business - IT strategic alignment has no effect on business agility.

Ha1: Business - IT strategic alignment has positive effect on business agility.

Hypothesis 4:

Ho1: IT capabilities have no effect on business agility.

Ha1: IT capabilities have positive effect on business agility.

Once the data were collected, the descriptive statistical techniques were used to

describe demographic characteristics which were gender, age, education and income

per month. The descriptive statistics were used including frequency, mean, standard

deviation. To test the hypothesis, structural equation model was used by using LISREL.

The following goodness of fit indices, such as chi-square (2), goodness of fit index

(GFI), and average goodness of fit index (AGFI), and root means square error of

47

approximation (RMSEA).The fit indices and acceptable thresholds were stated as below

table.

Table 3.3 Fit indices and acceptable thresholds

FIT Index Acceptable threshold levels

Description

Absolute Fit Indices χ

2 Low χ2 relative to df with an significant p-value (0.05)

The small χ2 and failure to reject the null hypothesis is a sign of a good model fit, while the large χ2 and the rejection of null hypothesis is sign that model is not a good fit.

RMSEA Value < 0.05 Root Mean Square Error of Approximation < 0.05: represent excellent fit. 0.05-0.08: the model is match with data. 0.08-0.10: the model is quite match with data 0.10 <: the model doesn’t match with data.

Absolute Fit Indices GIF Value > 0.95 Goodness of Fit Index

The scale is range between 0 - 1. The higher values represent the model fit.

AGFI Value > 0.95 Adjusted Goodness of Fit Index Adjust the GFI base on the number of parameters in the model.

RMR Good model have small RMR

Root Mean Square Residual The small of RMR indicates the good fit of model.

SRMR Value < 0.05 Standardize version of the RMR < 0.05: it indicates the good fit of model.

EVCI Value < EVC (SM, IM)

Expected Cross-Validation Index In order to test cross-validation index EVCI should below EVCI for Stand Model and EVCI for Independence Model.

48

FIT Index Acceptable threshold levels

Description

AIC Value < Saturate AIC

Akaike’s information criterion In order to test the model fit, the value of Model AIC should below Saturated AIC.

Incremental Fit Indices NFI Value > 0.95 Normed Fit Index

The scale is range between 0 - 1. The higher values represent the model fit.

NNFI Value > 0.95 Non-Normed Fit Index The scale is range between 0 - 1. The higher values represent the model fit.

CFI Value > 0.95 Comparative Fit Index The scale is range between 0 - 1. The higher values represent the model fit.

Parsimony Fit Indices Normed χ

2 (χ2 /df) Value within 1-2 range

The normed chi-squared of the parsimonious fit measure <1: it indicates over fitted model. >2: it indicates model required improvement.

CHAPTER 4

DATA ANALYSIS AND RESULTS

The analysis and the interpretation of the collected data, obtained from

the research questionnaires which based on the conceptual framework of the research,

are presented in this chapter. Descriptive statistics is employed to describe the different

demographic characteristics of the respondents by frequency distribution such as

percentage, mean, standard deviation, correlation analysis, model adjustment, and

hypothesis testing by computer programs. The following are topics in this chapter:

4.1 Summary of the demographic data using by the descriptive statistics

4.2 Level of agreement analysis of the sample data

4.3 Data analysis and findings

4.3.1 Correlation analysis

4.3.2 Factor Analysis

4.3.3 Model adjustment and Goodness of fit approach

4.3.4 Path analysis

4.3.5 Hypothesis testing

50

4.1 Summary of the demographic data using by the descriptive statistics

Due to the distribution of questionnaires through email channel, there were the

responses back from 423 samples from which could be analyzed by the descriptive

statistics data analysis as shown in table 4.1

Regarding the above tables, the group of the characteristics which were

analyzed are gender, employee age (years), education level and income per month

(Baht). According to the gender category, most of the samples are female (235 samples

or 55.66 %). while 188 samples are male or 44.44%.

According to employee age category, the analysis showed that the highest

sample has the age between 30-39 years (244 samples or 57.68%) while the second

rank were the samples which had the age between 20 - 29 years (102 samples or

24.11%)

Looking into education level, the highest samples had bachelor degree level

were 256 samples or 60.52%. While there were 143 samples or 33.81% who had the

master degree level (or above) and others are 24 samples or 5.67%.

For the income per month category, the demographic analysis shows that most

of the samples had the income per month between 25,001 and 35,000 Baht (172

samples or 40.66%). The second rank of the samples had the income per month

between 35,001 and 55,000 Baht (108 samples or 25.53%) However, there were a few

samples that had the income per month less than 15,000 Baht (20 samples or 4.73)

51

Summary demographic data

Table 4.1 Demographic characteristics data analysis

Characteristics Frequency Percentage Gender Male 188 44.44 Female 235 55.66 Age (Years) 20 - 29 years 102 24.11 30 - 39 years 244 57.68 40 - 49 years 75 17.73 More than 50 years 2 0.47 Education Level Bachelor Degree 256 60.52 Master Degree or Above 143 33.81 Others 24 5.67 Income per Month (Baht) Below 15,000 Baht 20 4.73 15,001 - 25,000 Baht 83 19.62 25,001 - 35,000 Baht 172 40.66 35,001 - 55,000 Baht 108 25.53 More than 55,001 Baht 40 9.46

4.2 The analysis level of agreement of the sample on IT infrastructure capacity,

IT business spanning capacity, IT proactive stance, IT management’s participation

on business planning, Business management’s participation on IT planning,

Business-IT strategic alignment, and Business agility

52

The analysis demonstrated degree of agreements on IT Infrastructure Capacity,

IT Business Spanning Capacity, IT Proactive Stance, IT Management’s Participation on

Business Planning, Business Management’s Participation on IT Planning, Business-IT

Strategic Alignment, and Business Agility factors to the hypothesis test imply to

populations. The level of agreement for each variables were presented as shown table

4.2

IT infrastructure capabilities showed the agree level of the agreement with the

mean of IT infrastructure capabilities was equal to 3.744 and standard deviation was

0.597.

IT business spanning capabilities indicated agree level of the agreement with

the mean of IT business spanning capabilities was equal to 3.719 and standard

deviation was 0.563.

IT proactive stance showed the agree level of the agreement with the mean of

IT proactive stance was equal to 3.729 and standard deviation was 0.630.

IT management's participation on business planning showed the agree level of

the agreement with the mean of IT Management's participation on business planning

was equal to 3.725 and standard deviation was 0.573.

Business management's participation on IT planning showed the agree level of

the agreement with the mean of Business management's participation on IT planning

was equal to 3.707 and standard deviation was 0.536.

53

Business - IT strategic alignment showed the agree level of the agreement with

the mean of Business - IT strategic alignment was equal to 3.765 and standard

deviation was 0.555.

Business agility showed the agree level of the agreement with the mean of

Business agility was equal to 3.755 and standard deviation was 0.592.

Table 4.2 The level of agreement of IT Infrastructure Capacity, IT Business Spanning

Capacity, IT Proactive Stance, IT Management’s Participation on Business Planning,

Business Management’s Participation on IT Planning, Business-IT Strategic Alignment,

and Business Agility

Variable Min. Max. Mean S.D. Level of Agreement

IT infrastructure capacity 1.00 5.00 3.744 0.597 Agree

IT business spanning capacity 1.25 5.00 3.719 0.563 Agree

IT proactive stance 1.00 5.00 3.729 0.630 Agree

IT management's participation on business planning

1.33 5.00 3.725 0.573 Agree

Business management's participation on IT planning

1.20 5.00 3.707 0.536 Agree

Business - IT strategic alignment 1.00 5.00 3.765 0.555 Agree

Business agility 1.43 5.00 3.755 0.592 Agree

Note: a) n = 423

b) 5-point rating scale, where 1 = strongly disagree to 5 = strongly agree.

54

4.3 Data Analysis and Findings

The data analysis was being started with the correlation analysis, the model

adjustment, path analysis, hypothesis testing result accordingly.

Regarding the analysis, LISREL was used to analyze the structural equation

model. Latent variables and observed variables were defined as shown in table 4.3

Table 4.3 The description of latent and observed variables

Latent Variable Observed Variables ITCAP IT Capabilities ITCAP1 IT Infrastructure Capacity

ITCAP2 IT Business Spanning Capacity ITCAP3 IT Proactive Stance

ITINVBS IT management’s participation on business planning

ITINVBS1 IT management’s participation on business planning

BSINVIT Business management’s participation on IT planning

BSINVIT1 Business management’s participation on IT planning

ITALIGN Business - IT Strategic Alignment ITALIGN1 Business - IT Strategic Alignment BSAGILE Business Agility BSAGILE1 Business Agility

4.3.1 Correlation analysis

The analysis of the correlation is the statistics to measure the relationship

between two variables in the linear fashion. The correlation coefficient (r) describes the

direction and the magnitude of the relationship between the variables. The coefficient

values can be started from -1 to 1. The weakest relationship is indicated by the

coefficient to zero.

According to the research, only IT capabilities latent variables had multiple

observed variables. Therefore, the correlation of the observed variables IT capabilities

were analysis to ensure that these variables had correlated to each other. The analysis

revealed that IT infrastructure capacity (ITCAP1) had the positive correlation with IT

55

business spanning capacity (ITCAP2) and also had the positive correlation with IT

proactive stance (ITCAP3) with the coefficient (r) value equal to 0.724 (p=0.01) and

0.688 (p=0.01). While IT business spanning capacity (ITCAP2) had the positive

relationship with IT proactive stance (ITCAP3) with the coefficient (r) equal to 0.787

(p=0.01). Therefore, the result concluded that these variables were correlated to each

other significantly. While other latent variables (ITINVBS, BSINVIT, ITALIGN and

BSAGILE) had only one observed variables, they had the coefficient (r) equal 1. So, the

next step, the goodness of fit of the model statistics would be analyzed.

Table 4.4 Correlation matrix between the observed variables

Variables ITCAP1 ITCAP2 ITCAP3 ITINVBS1 BSINVIT1 ITALIGN1 BSAGILE1 ITCAP1 1.000 ITCAP2 0.724** 1.000 ITCAP3 0.688** 0.787** 1.000

ITINVBS1 0.535** 0.617** 0.602** 1.000 BSINVIT1 0.520** 0.648** 0.643** 0.698** 1.000 ITALIGN1 0.642** 0.716** 0.700** 0.622** 0.762** 1.000 BSAGILE1 0.604** 0.673** 0.708** 0.577** 0.683** 0.749** 1.000

** Correlation is significant at the 0.01 level (2-tailed).

4.3.2 Factor analysis

The factor analysis was used to be the techniques which use the linear

combination of the variables to explain the set of the observations on many variables. It

would be utilized in order to reduce larger number of variables to the smaller set of

factors. Regarding the principal components, the intrinsic interest was in the observed

variables. For this study, the variables which were related to IT capabilities were

focused.

56

Looking into Kaiser-Meyer-Olkin measure of sampling adequacy and Bartlett’s

test of sphericity, the KMO statistics varies between 0 and 1. Kaiser (1974)

recommended the accepting values should be greater than 0.5. Moreover, if the values

which are between 0.7 and 0.8 are good and the values which are between 0.8-0.9 are

great and values above 0.9 are superb. For this study, the value is 0.737 which are still

in the good range. Also, Bartlett’s measure tests the null hypothesis which the original

correlation matrix is an identity matrix. If the R-matrix were an identity matrix then all

correlation coefficients would be zero. Therefore, the test needs to be significant (or the

significant value should be less than 0.05), from the result of the analysis, it showed the

value was equal to 0.000 which was less than 0.05 and highly significant (p < 0.001),

so, the factor analysis is appropriate.

Table 4.5 KMO and Bartlett’s Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy 0.737 Bartlett’s Test of Sphericity Approx. Chi-Square 751.044 df 3 Sig 0.000

The factor loadings are the correlation coefficients between variables and

factors. The factor analysis model did not extract all the variances, only the proportions

of the variances were extracted due to the common factors is called communality. In the

complete principal components analysis with no factors dropped, the communality would

be equal to 1.0 or 100% of the variance of given variable.

57

The eigenvalue were computed as the sum of the squared factor loadings for all

variables. If the factor has the low eiganvalue, it reflects to the little contribution of the

explanation of the variances of may be ignored. Due to this study, there were three

components which are IT Infrastructure capabilities (ITCAP1), IT business spanning

capabilities (ITCAP2) and IT proactive stance (ITCAP3). The table 4.6 showed the

information on how much of the variances in the items were explained. It the

communalities were less than 0.3, it would represent that the item does not fit well with

its component (Hair et al., 1998). The items in table 4.6 revealed that all the

components including IT infrastructure capabilities, IT business spanning capabilities

and IT proactive stance did fit with IT capabilities.

Table 4.6 Extractions of communalities

Variables Components Initial Extraction

ITCAP ITCAP1 1.000 0.778 ITCAP2 1.000 0.838 ITCAP3 1.000 0.848

For the various rotations, the VARIMAX method is used which is the most

common methodology. The purpose of the rotation strategies is to obtain the clear

pattern of loadings such as the factors are somehow clearly marked by high loading for

some variables and low loading for other variables which is called simple structure.

However, only one component was extracted, the solution cannot be rotated. 1

component can explain 82.190% of total variances.

58

Table 4.7 Total Variance Explained

Component

Initial Eigenvalues Extraction Sums of Squared Loading

Total % of Variance

Cumulative% Total % of Variance

Cumulative%

1 0.879 82.190 82.190 2.464 82.148 82.148 2 0.119 11.099 93.289 3 0.072 6.711 100.000

Figure 4.1 Screen Plot (Factor Analysis)

According to the component matrix, the factor loading information was revealed.

IT Infrastructure capabilities (ITCAP1) had the loading on IT capabilities (ITCAP) which

was equal to 0.882. IT business spanning capabilities (ITCAP2) had the loading on IT

capabilities (ITCAP) which was equal to 0.916. And, IT proactive stance (ITCAP3) had

the loading on IT capabilities (ITCAP) which was equal to 0.921.

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Table 4.8 Component Matrix

Variable Factor Loading ITCAP ITCAP1 0.882

ITCAP2 0.916 ITCAP3 0.921

4.3.3 Goodness of Fit Statistics of the model

Following by the above diagram, it did support the conceptual framework in the

literature review of the study. Looking into the detail to see how goodness of fit for the

model, many statistics items reflected the fit of the model. The chi-square with the p-

value is 0.31982 which is more than 0.05 (standard value). The goodness of fit index

(GFI) and adjusted goodness of fit index (AGFI) were closed to 1 which supported the

fit of the model as well. According to the error dimension, Root mean square residual

(RMR) and root mean square error of approximation (RMSEA) were 0.0028 and 0.019

respectively which were closed to zero. They reflect to the model fit with the low errors

as well. After the goodness of fit was analyzed, the path analysis would be performed in

the next stage.

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Figure 4.2 SEM standardize solution

The goodness of fit statistics were analyzed and displayed in the table 4.6

Table 4.9 the goodness of fit statistics

Statistics Chi-Square df p-value GFI AGFI RMR RMSEA

Value 9.27 8 0.31982 0.99 0.98 0.0028 0.019

** p=Normal Theory Weighted Least Squares Chi-Square; df = Degrees of freedom; GFI = Goodness

of Fit Index; AGFI = Adjusted Goodness of Fit Index; RMR = Root Mean Square Residual; RMSEA =

Root Mean Square Error of Approximation

4.3.4 Path analysis

The path analysis were broken down into 5 stages as following, the parameter

of statistics analysis, effect of KSI on ETA (and ETA on ETA), squared multiple

correlations for observed variables, squared multiple correlations for structural equation

model for latent variables and correlation matrix of ETA and KSI.

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According to the parameter of statistics analysis, there were 4 sections which

were analyzed in this step (LAMBDA - X, LAMBDA - Y, GAMMA and BETA). LAMBDA -

X was determined on how weight of observed variable measurements on the latent

variables on the independent variables. While LAMBDA - Y was determined on how

weight of observed variable measurements on the latent variables on the dependent

variables side.

Table 4.10 Parameters of Statistics table

Matrix LAMBDA - X b St SE t ITCAP

ITCAP1 0.47 0.79 0.02 19.18 ITCAP2 0.50 0.90 0.02 23.14 ITCAP3 0.55 0.88 0.02 22.48

ITINVBS ITINVBS1 0.57 1.00 0.02 29.05

BSINVIT BSINVIT1 0.54 1.00 0.02 29.07

Matrix LAMBDA - Y b St SE t ITALIGN

ITALIGN1 0.51 0.92 <--> <--> BSAGILE

BSAGILE1 0.59 1.00 <--> <--> Matrix BETA b St SE t BSAGILE

ITALIGN 0.60 0.60 0.11 5.35 Matrix GAMMA b St SE t ITALIGN

ITINVBS 0.52 0.52 0.03 15.95 BSINVIT 0.72 0.72 0.03 22.04

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Matrix GAMMA b St SE t BSAGILE

ITCAP 0.47 0.79 0.02 19.18 Note: LAMBDA=Relationship between observed variables; b = LISREL Estimates

(Maximum Likelihood); St= Completely Standardized Solution; SE= error; t= Regression

co-efficiency

Regarding the analysis on Matrix LAMBDA-X, the LISREL estimates from

maximum likelihood method (b value) reflect that the weight of IT infrastructure capacity

(ITCAP1) on IT capabilities (ITCAP) was 0.47 (St = 0.79, SE = 0.02 and t = 19.18). It

could be described that IT Infrastructure Capacity could present as 47% of IT

capabilities. The weight of IT business spanning capacity (ITCAP2) on IT capabilities

(ITCAP) was 0.50 (St = 0.90, SE = 0.02 and t = 23.14). It could be described that IT

Business Spanning Capacity could present as 50% of IT capabilities. The weight of IT

Proactive Stance (ITCAP3) on IT capabilities (ITCAP) was 0.55 (St = 0.88, SE = 0.02

and t = 22.48). It could be described that IT Proactive Stance could present as 55% of

IT capabilities. While the weight of observed variable for IT management’s participation

on business planning (ITINVBS1) was 0.57 (St = 1.00, SE = 0.02 and t = 29.05) of its

latent variable (ITINVBS) or could be said that ITINVBS1 could present as 57% of

ITINVBS. In another way, the weight of observed variable for Business management’s

participation on IT planning (BSINVIT1) was 0.54 (St = 0.88, SE = 0.02 and t = 22.48)

of its latent variable (BSINVIT) or could be said that BSINVIT1 could present as 54% of

BSINVIT.

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Regarding the analysis on Matrix LAMBDA-Y, looking into the weight observed

variable on latent variables for the dependent variables area. The observed variable of

Business - IT Strategic Alignment (ITALIGN1) was 0.51 (St = 0.92) of its latent variable

(ITALIGN) or could be said that ITALIGN1 could present as 51% of ITALIGN. For

another variable, the weight of observed variable for Business Agility (BSAGILE1) was

0.59 (St = 1.00) of its latent variable (BSAGILE) or could be said that BSAGILE1 could

present as 59% of BSAGILE.

According to the parameter analysis on Matrix BETA, the weight among

dependent latent variables, Business IT Alignment (ITALIGN) on Business Agility

(BSAGILE) was 0.60 (St = 0.60, SE = 0.11 and t = 5.35). It could be described that

Business-IT Strategic Alignment could present as 60% of business agility.

In the last stage of parameter of statistics analysis, the analysis on Matrix

GAMMA, the weight of the independent latent variables to the dependent latent

variables, the weight of latent variable for IT management’s participation on business

planning (ITINVBS) on Business-IT strategic alignment (ITALIGN) was 0.52 (St = 0.52,

SE = 0.03 and t = 15.95) or could be said that ITINVBS could present as 52% of

Business-IT Strategic Alignment (ITALIGN). While the weight of latent variable for

Business management’s participation on IT planning (BSINVIT) on Business-IT strategic

alignment (ITALIGN) was 0.52 (St = 0.52, SE = 0.03 and t = 15.95) or could be said

that ITINVBS could present as 52% of Business-IT Strategic Alignment (ITALIGN).

Looking into another relationship, the LISREL estimate value (b) showed that the weight

of IT Capabilities (ITCAP) on Business Agility (BSAGILE) was 0.25 (St = 0.25, SE =

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0.11 and t = 2.29). It could be said that IT Capabilities could present as 25% of

Business Agility.

The next step of the correlation analysis, to analyze on the effect of KSI on ETA

and effect ETA on ETA as well, the table 4.7 showed the direct effects and the indirect

effects of IT management’s participation on business planning (ITINVBS), and Business

management’s participation on IT planning (BSINVIT) on Business-IT strategic

alignment (ITALIGN) and Business Agility (BSAGILE) as below.

Table 4.11 the effect KSI on ETA and the effect ETA on ETA

DV IV

ITALIGN BSAGILE TE IE DE TE IE DE

ITINVBS β 0.52 <--> 0.52 0.31 0.31 <--> SE 0.03 <--> 0.03 0.06 0.06 <--> St 0.52 <--> 0.52 0.31 0.31 <-->

BSINVIT β 0.72 <--> 0.72 0.43 0.43 <--> SE 0.03 <--> 0.03 0.08 0.43 <--> St 0.72 <--> 0.72 0.43 0.43 <-->

ITCAP β <--> <--> <--> 0.25 <--> 0.25 SE <--> <--> <--> 0.11 <--> 0.11 St <--> <--> <--> 0.25 <--> 0.25

ITALIGN β <--> <--> <--> 0.60 <--> 0.60 SE <--> <--> <--> 0.11 <--> 0.11 St <--> <--> <--> 0.60 <--> 0.60

Note: TE = Total Effect; IE = Indirect Effect; DE = Direct Effect

Referring to the literature review, Business-IT Strategic Alignment (ITALIGN)

was dependent variable and also it was the mediator between IT management’s

participation on business planning (ITINVBS), Business management’s participation on

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IT planning (BSINVIT) and business agility (BSAGILE) as well. So, in above table, it

was treated as the dependent variable and independent variable depending on the

paired variables.

Going back on the analysis on the effect of KSI on ETA and effect ETA on ETA,

IT management’s participation on business planning (ITINVBS), Business

management’s participation on IT planning (BSINVIT) were directly effect on Business -

IT Strategic Alignment (ITALIGN) as 0.52 (SE = 0.03 and St = 0.52) and 0.72 (SE =

0.03 and St = 0.72) respectively. There were no other variables which indirectly effect

on Business - IT strategic alignment (ITALIGN).

Regarding the business agility (BSAGILE), IT Capabilities (ITCAP) directly effect

on the business agility as 0.25 (SE = 0.11 and St = 0.25) and Business - IT Strategic

Alignment (ITALIGN) directly effect on the business agility (BSAGILE) as 0.60 as well

(SE = 0.11 and St = 0.60) Also, IT management’s participation on business planning

(ITINVBS) and Business management’s participation on IT planning (BSINVIT) were

indirectly effect on Business Agility (BSAGILE) as 0.31 (SE = 0.06 and St = 0.31) and

0.43 (SE = 0.08 and St = 0.43) respectively.

According to the squared multiple correlations for observed variables, it would

provide how reliability observed variable can predict the latent variables. Squared

Multiple Correlations for X - Variables was analyzed first as shown as below table.

The reliabilities of IT Infrastructure Capacity (ITCAP1) which could measure IT

Capability (ITCAP) were 0.63 or 63%. The reliabilities of IT Business Spanning Capacity

(ITCAP2) which could measure IT Capability (ITCAP) were 0.80 or 80%. The reliabilities

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of IT Proactive Stance (ITCAP3) which could measure IT Capability (ITCAP) were 0.77

or 77%. The reliabilities of the observed variable of IT management’s participation on

business planning (ITINVBS1) which could measure its latent variable (ITINVBS) were

1.00 or 100%. And also, the reliabilities of the observed variable of Business

management’s participation on IT planning (BSINVIT1) which could measure its latent

variable (BSINVIT) were 1.00 or 100%.

Table 4.12 Squared Multiple Correlations for Observed Variables - X

Observed Variables - X ITCAP1 ITCAP2 ITCAP3 ITINVBS1 BSINVIT2 R- Square 0.63 0.80 0.77 1.00 1.00

Squared Multiple Correlations for Y - Variables was analyzed. The reliabilities of

the observed variable of Business-IT Strategic Alignment (ITALIGN1) which could

measure its latent variable (ITALIGN) were 0.84 or 84%. The reliabilities of the

observed variable of Business agility (BSAGILE1) which could measure its latent

variable (BSAGILE1) were 1.00 or 100%.

Table 4.13 Squared Multiple Correlations for Observed Variables - Y

Observed Variables - Y ITALIGN1 BSAGILE1 R- Square 0.84 1.00

Regarding the analysis of squared multiple correlations for latent variables; it

showed the percent of the variance in the latent dependent variable(s) accounted for by

the latent independent variables which were represented as below.

The reliabilities of the independent latent variables which could measure

Business-IT Strategic Alignment (ITALIGN1) and Business Agility (BSAGILE) were 0.95

and 0.68 or 95% and 68% accordingly which were quite high.

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Table 4.14 Squared Multiple Correlations for Structural Equations for latent

variables

Latent Variables ITALIGN BSAGILE R- Square 0.95 0.68

Finally, the correlation of ETA and KSI was analyzed so as to the analysis of

the correlation among latent variables. Business-IT strategic alignment (ITALIGN) and IT

capability (ITCAP) was highly correlated with Business Agility (BSAGILE) with the

correlation value as 0.82 and 0.77 (82% and 77%) accordingly. While IT management’s

participation on Business planning (ITINVBS) and Business management’s participation

on IT planning (BSINVIT) were not highly correlated with the business agility

(BSAGILE). Looking into Business-IT Strategic Alignment, it did highly correlate with

Business management’s participation on IT planning (BSINVIT) much more than IT

management’s participation on Business planning (ITINVBS). The correlation of both

values showed 0.83 (83%) and 0.68 (68%) accordingly. While the correlation between

both variables, ITINVBS and BSINVIT, was quite low (0.23 or 23%)

Table 4.15 the correlation of ETA and KSI

Latent Variables ITALIGN BSAGILE ITCAP ITINVBS BSINVIT ITALIGN 1.00 <--> <--> <--> <--> BSAGILE 0.82 1.00 <--> <--> <-->

ITCAP 0.87 0.77 1.00 <--> <--> ITINVBS 0.68 0.58 0.68 1.00 <--> BSINVIT 0.83 0.68 0.73 0.23 1.00

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4.3.5 Hypothesis Testing

There were 4 research questions in the chapter 1 that need to be sorted out as

following. The first question was to study the effect of IT management’s participation on

Business planning on Business - IT strategic alignment. The second question was to

study the effect of Business management’s participation on IT planning on Business - IT

strategic alignment. The third question was to study the effect of Business - IT strategic

alignment on the business agility and the final question was to study the effect of IT

Capability on the business agility.

Therefore, there were 4 hypotheses that need to be considered as below.

Hypothesis 1:

Ho1: IT management’s participation on business planning has no effect on

Business-IT Strategic Alignment.

Ha1: IT management’s participation on business planning positive effect on

business-IT strategic Alignment

Hypothesis 2:

Ho1: Business management’s participation on IT planning has no effect on

business-IT strategic alignment

Ha1: Business management’s participation on IT planning positive effect on

business-IT strategic alignment

Hypothesis 3:

Ho1: Business - IT strategic alignment has no effect on business agility.

Ha1: Business - IT strategic alignment has positive effect on business agility.

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Hypothesis 4:

Ho1: IT capabilities have no effect on business agility.

Ha1: IT capabilities have positive effect on business agility.

To support the description of the analysis, there was the summary from the path

analysis displayed as below.

Table 4.16 path analysis summary

Path from To Estimated

(B) Standardize

(β) t-value

IT management’s participation on Business planning

Business - IT strategic alignment

0.52 0.52 15.95 ***

Business management’s participation on Business planning

Business - IT strategic alignment

0.72 0.72 22.04 ***

Business - IT Strategic Alignment

Business Agility 0.60 0.60 2.29 *

IT Capabilities Business Agility 0.25 0.25 5.35 *** Note : *significance at 0.05 level 1.96 ≤ p < 2.58; **significance at 0.01 level 2.58 ≤ p < 3.28;

significance at 0.001 level 3.28 ≤ p

Test of Hypothesis 1:

Ho1: IT management’s participation on Business planning has no effect on

Business-IT Strategic Alignment.

Ha1: IT management’s participation on Business planning has positive effect on

Business-IT Strategic Alignment

The result from the above table indicated that IT management’s participation

variable had the significant at B coefficient of 0.52 (β=0.52) with t-value of 15.95 which

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was more than critical value as 3.28 (at 0.001 significance level). Therefore, the null

hypothesis which stated IT management’s participation on Business planning has no

effect on Business-IT Strategic Alignment was rejected. The result confirmed that IT

management’s participation on Business planning had the positive effect on Business-IT

strategic alignment

Test of Hypothesis 2:

Ho1: Business management’s participation on IT planning has no effect on

business-IT strategic alignment.

Ha1: Business management’s participation on IT planning has positive effect on

business-IT strategic alignment

The result from the above table indicated that business management’s

participation variable had the significant at B coefficient of 0.72 (β=0.72) with t-value of

22.04 which was more than critical value as 3.28 (at 0.001 significance level).

Therefore, the null hypothesis which stated business management’s participation on IT

planning has no effect on business-IT strategic alignment was rejected. The result

confirmed that business management’s participation on IT planning had the positive

effect on business-IT strategic alignment

Test of Hypothesis 3:

Ho1: Business - IT strategic alignment has no effect on business agility.

Ha1: Business - IT strategic alignment has positive effect on business agility.

The result from the above table indicated that Business-IT strategic alignment

variable had the significant at B coefficient of 0.60 (β=0.60) with t-value of 2.29 which

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was greater than 1.96 but less than 2.58 (at 0.05 significance level). Therefore, the null

hypothesis which stated Business - IT strategic alignment has no effect on business

agility was rejected. The result confirmed that Business - IT strategic alignment had the

positive effect on Business Agility.

Test of Hypothesis 4:

Ho1: IT capabilities have no effect on business agility.

Ha1: IT capabilities have positive effect on business agility.

The result from the above table indicated that IT capabilities variable had the

significant at B coefficient of 0.25 (β=0.25) with t-value of 5.35 which was more than

critical value as 3.28 (at 0.001 significance level). Therefore, the null hypothesis which

stated IT capabilities has no effect on business agility was rejected. The result

confirmed that IT capabilities had the positive effect on business agility

CHAPTER 5

CONCLUSION, DISCUSSION AND RECOMMENDATION

This chapter presents the following topics

5.1 Conclusion

5.2 Discussion

5.2.1 Business - IT management’s participation on the planning

5.2.2 Business - IT strategic alignment

5.2.3 IT capabilities

5.2.3.1 IT Infrastructure Capabilities

5.2.3.2 IT Business Spanning Capabilities

5.2.3.3 IT Proactive Stance

5.2.4 Business agility

5.3 Implication of the study

5.4 Limitation of the study

5.5 Recommendation for the future research

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5.1 Conclusion

The research studied on the effect of IT capabilities and Business-IT strategic

alignment on business agility in the perspective of the employee perception level.

Deeping down into IT capabilities, it was broken down into 3 sub categories, IT

infrastructure capacity, IT business spanning capacity and IT proactive stance. In

another dimension, the study was to investigate on the effect of IT's management's

participation business planning and Business management's participation on IT planning

on Business-IT strategic alignment. 423 samples were collected from the employees

who worked in the companies and had ever involved in business's planning and IT's

planning. Computer programs were used as the statistics software to analyze the data.

SPSS was used to analyze the descriptive statistics analysis, while LISREL was used

as the tool to analyze the structural equation model (SEM).

Regarding the descriptive statistics, most of the samples which were collected

had the age between 30 -39 years (57.68%), the majority of the samples had the

income per month more than 25,000 Baht (75.65%). More than a half of the collected

samples who answered the questionnaire survey were female (55.67%)

The level of agreement of the following variables, IT infrastructure capacity, IT

Business spanning capacity, IT proactive stance, IT management's participation on

business planning, Business management's participation on IT planning, Business-IT

strategic alignment and business agility were falling into agree level. The chi-square

value was 9.27 with the degree of freedom of 8 (p=0.31982). Goodness of Fit Index

(GFI) was equal to 0.99 and Adjusted Goodness of Fit Index (AGFI) was equal to 0.98

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which support the model was fit. While the error indexes, Root Mean Square Residual

(RMR) and Root Mean Square Error of Approximation (RMSEA) were 0.0028 and 0.019

accordingly which were low and approached to zero. It reflects the fitness of the model

with low error as well. For other measurements, Non-Normed Fit Index (NNFI,) Normed

Fit Index (NFI) and Comparative Fit Index (CFI) were above 0.90 which also supported

the goodness of fit of the model.

Regarding the path analysis, IT infrastructure capacity, IT business spanning

capacity and IT proactive stance had the correlation with IT capabilities. It reflected from

R-Square values of these items which were 0.63, 0.80 and 0.77 accordingly. Also, the

matrix revealed that the observed variables of IT's management's participation in

business planning and Business management's participation in IT planning had the

positive correlation with their latent variables as well with the correlation value were

equal to 1.00. Looking into dependent observed variables, Business-IT Strategic

alignment and business agility items, the result also reveal that it had the positive

correlation with their latent variables as well with the correlation value were equal to

0.84 and 1.00 accordingly.

From the finding the research, both IT's management's participation in business

planning and Business management’s participation in IT planning positively effect to

Business-IT strategic alignment. IT-Business strategic alignment also effect to the

business agility. In another dimension, IT capabilities also effect to the business agility

as well. It implies that if there were the high level of the participation between IT

business and IT managements. It would increase the efficiency of IT business strategic

75

alignment which would increase the business agility. In another way, if IT capabilities

were increased, it would also increase the business agility as well.

5.2 Discussion

5.2.1 Business - IT management’s participation on the planning

As mentioned earlier, Business-IT involvement on the planning revealed the

establishment of the business and information technology objectives. The management

teams should have enough IT knowledge to their decisions. To achieve business – IT

alignment goal, business management teams have to participate in strategic IT

planning. Vice versa, IT managers have to involve in the business strategic planning as

well. Both of these planning would effect to business-IT strategic alignment. However,

the knowledge and behaviors of the management teams are related to the success of

Business-IT alignment (Kearns and Sabherwal 2006). The several factors on the social

dimensions of alignments which are refer to the state in which IT and business

executives understand and are committed to the business and IT missions, objectives

and plans (Reich and Benbasat 1996). The establishments of the business and

information technology objectives were clarified the nature of the linkages into two

dimensions, Intellectual which is the contents of IT and business planning output are

internally consistent such as IT missions, objectives and plans chosen must be

consistent with the stated business missions and objectives. Moreover, the contents of

IT and business planning output are also externally valid and social which is IT and

business executives understand each other’s' objectives and plans. Not just only that,

Reich and Benbasat (2000) also stated and further research in four factors in the detail

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(shared domain knowledge, IT implementation success, communication between

business and IT executives, and connections between business and IT planning). These

components were found to influence short-term alignment. However, only shared

domain knowledge was found to influence long-term alignment

The result of the research exposed most of the employees agreed that IT

managers regularly attend business meetings with the mean was value equal to 3.713.

IT managers in the organization had participated in setting business goals and

strategies were agreed with the mean value was equal to 3.732. They also agreed that

IT managers were involved early in meetings for major projects with the mean value

were equal to 3.728. This reflected to the IT management's participation on business

planning with the overall mean value which was equal to 3.725.

In another way, employees thought that a variety of business managers were

actively involved in the process of IT planning with mean value equal to 3.759. Also,

they agreed with many questions which support that business management teams

involved in IT planning such as the level of participation in IS planning by diverse

interests of the organization was high (Mean = 3.631), IT planning involves an

evaluation of future information needs of business managers (Mean = 3.771), business

managers from several areas were involved in the selection of major IT investments

(Mean = 3.671), a variety of business managers participate in setting IT objectives and

strategies (Mean = 3.704). They also supported that business management's

participation on IT planning effected with the overall mean value which was equal to

3.707.

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Therefore, above results reflected the level agreements of the establishments

that the employees also agreed the business managers and IT managers involved in

each other planning which followed the result of the previous studies that Reich and

Benbasat (1996) stated. However, the key points of the participations that both business

management and IT management teams should take the consideration are the

intellectual and social components. Both items would reflect the consistency and

understanding of the IT and business planning as well. Also, both IT and business

managers could take the consideration on the detailed components, the shared domain

knowledge is important to align the business-IT strategic alignments as well (Reich and

Benbasat 2000)

5.2.2 Business - IT strategic alignment

Business - IT strategic alignment refers how good mixture of the business

strategy and IT support is. They must ensure that IT strategic is consistently aligning

with the business strategy in the long run, the management team should keep the

business – IT alignment in the high level and management people should look for the

flexible way on how they would plan for the IT enhancement in the future. As stated in

the literature review sections, there are many studies stated the important of information

technology on how it support the business strategies and operations (Tallon et al. 2010;

Tallon and Kreamer 2007). Both of these planning would effect to business-IT strategic

alignment. The Business-IT strategic alignment can be considered as the enhancement

of IT which impact to business performance. Not just only that, Business-IT strategic

78

alignment to be successful, it requires the good knowledge management as well.

(Kearns and Sabherwal 2006).

Looking into the result of the study, the employees agreed that IT plan aligned

with the company’s mission, goals, objectives, and strategies with the mean value which

was equal to 3.794. They also agreed that IT plan contains quantified goals and

objectives (Mean = 3.730), IT plan contains detailed action plans/strategies that support

company direction (Mean = 3.792), and the management team prioritized major IT

investments by the expected impact on business performance (Mean = 3.745). They

also agreed that their own organizations had the business-IT strategic alignment with

the overall mean value which was equal to 3.765.

The result from SEM analysis showed that IT management's participation on the

business planning had the positive effect on Business-IT strategic alignment significantly

(β = 0.52; t-value = 15.95; p = 0.001). The research also showed the result that

business management's participation on IT planning had the positive effect on

Business-IT strategic alignment significantly as well (β = 0.72; t-value = 15.95; p =

0.001). So, the analysis also confirmed what the previous studies as well that they

stated IT management's participation on the business planning and business

management's participation on IT planning had the positive effect on Business-IT

strategic alignment (Kearns and Sabherwal 2006)

The result of the study was also consistent with the previous study that Tallon et

al. (2010) mentioned, in the study, it confirms that IT alignment could improve the

79

competitive advantage; profit and market share of the firm. However, to ensure that the

business-IT strategic alignment would be executed properly, Even Information

Technology is the early step but the management team must realize how the company

business strategy is. The managers should take the consideration on the planning on

the IT portfolios and infrastructure investment which would reflect to the consideration

on company strength and weakness as well (Chan et al. 1997)

The study may not drill down into the detail of the business value chain that

Tallon (2007) mentioned in his research. He revealed the business value chain into 5

key business processes, SR (supplier relations), PO (production and operations, PSE

(product and service enhancement) MS (marketing and sales) and CR (customer

relations), his research reflected the overall result that business-IT alignment can

facilitate the intra-process of the firm which would reflect to the firm business strategy

that can improve the agility of the firm as well. The study also confirmed the result of

his research in term of the employee’s perceptions that business-IT alignment can

facilitate the firm’s business agility. However, to improve the IT strategic alignment to be

consistent with the business strategy, the management team should understand on how

flexibility to plan IT future enhancement so as to remain the high level of the business-

IT strategic alignments. IT flexibility may be another key to improve Business-IT

strategic alignment. Even the study was not focusing on IT flexibility but there are many

literatures revealed the positive relationship between IT flexibility and strategic-IT

alignment as well (Chung et. al 2003; Zhang et. all 2009). Jorfi et al (2011) mentioned

in his research that the flexibility would improve the business strategic alignment in the

80

exporting area in Malaysia. Even in the SME context, IT infrastructure flexibility could

improve the IT business strategy as well (Zhang et al 2009)

5.2.3 IT Capabilities

IT Capabilities refer to the ability that firm can acquire, deploy, combine and

reconfigure IT resources to support the business strategies enhancement and work

processes (Sambamurthy and Zmud 1997). Lu and Ramamurthy (2011) tried to find

more understanding and mentioned in their studies on how spending on IT capabilities

would relate to the business agility under the volatile business environments. IT

capabilities could be conceptualized and measured the three dimensions: IT

Infrastructure capabilities, IT business spanning capabilities and IT proactive stance.

5.2.3.1 IT Infrastructure Capabilities

IT Infrastructure capabilities reflect to the ability that the firm can manage their

technology architecture, the data management service, application portfolios and

services effectively. It implies how the firm can share IT portfolios throughout the firm in

form of the reliable services. It includes both the technical and management knowledge

so as to provide the reliable physical services and extensive electronic connectivity

within and outside the firm (Broadbent et. al, 1999; Lu and Ramamurthy, 2011)

According to result of the study, IT infrastructure capabilities, employees agreed

that their IT infrastructures were good (with the overall mean value which was equal to

3.744). It could be broken down into the following items, data management services &

architectures (e.g., databases, data warehousing, data availability, storage, accessibility,

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sharing etc.) (Mean = 3.846), network communication services (e.g., connectivity,

reliability, availability, LAN, WAN, etc.) (Mean = 3.702), application portfolio & services

(e.g., ERP, ASP, reusable software modules/components, emerging technologies, etc.)

(Mean = 3.660) and IT facilities’ operations/services (e.g., servers, large-scale

processors, performance monitors, etc.) (Mean = 3.768)

Looking into the previous study which was focusing on the business process

redesign (BPR), so the firms that need to implement BPR need to have the basic level

of IT infrastructure capability, however, the result of the employee surveys reflected the

agreement that their organizations were good on IT infrastructures. It would enable their

extensive change on business process redesign the short-time frames. Therefore, this

study would follow by the result that Broadbent et. al (1999) mentioned as well. Also, in

the e-commerce area, the high level of IT infrastructure would positively contribute to

the sales per employees, inventory turnover, and cost reduction (Zhu, 2004) The high

levels of IT infrastructure capabilities also enable the business operational capabilities

(ability in process execution), dynamic business capabilities (the planned ability to

reconfigure operational capabilities) and improvisational capabilities (the learned ability

to spontaneously reconfigure operational capabilities). There are three types of the

emerging IT infrastructure which are mentioned as following: event drive, service-

oriented and self-learning (El Sawy and Pavlou, 2008). IT infrastructure is also facilitate

‚Knowledge Creating‛ synergy from the interaction between a firm’s web-based

customer infrastructure and its analytical ability. Web-based customer infrastructure can

facilitate the firm’s customer-sensing capability which analytical ability positively

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moderates the relationship. Also, the system integration also positively moderates the

relationship between inter-functional coordination and a firm’s customer-responding

capability (Roberts and Grover, 2012)

5.2.3.2 IT Business Spanning Capabilities

IT business spanning capability is the ability how the firm can manage and

envision their IT resources in order to support and enhance business objectives. It also

means that the management’s ability to enable IT resource to understand the value of

IT investments. (Lu and Ramamurthy, 2011)

According to IT business spanning capabilities, the employees agreed that IT

management team developed a clear vision regarding how IT contributes to business

value (Mean = 3.735), the management team also integrated business strategic

planning and IT planning (Mean = 3.650), management team enabled functional area

and general management’s ability to understand value of IT investments (Mean = 3.709)

and IT management team also established an effective and flexible IT planning process

and developing a robust IT plan (Mean = 3.783). The employees agreed that their

companies were good on IT business spanning capabilities with the mean value equal

to 3.719.

The research results confirmed that the employees thought that their

management team in the organization realized that IT investments were also the key of

IT capabilities. It would effect to the market valuation, profitability, cost and innovation.

So, the management team must ensure that the investments on specific IT assets may

83

return the performance consistently with their strategic purposes. (Arul and Weill, 2007)

The realization on IT investment was determined by another analysis technique using

meta-analysis. (Lim et. al, 2011)

5.2.3.3 IT proactive stance

IT proactive stance is the firm’s ability which can proactively look for ways to

adapt IT innovations to create business opportunities, continues to experiment with new

IT under the firm capacities, continuously look for the new approaches in order to

increase its effectiveness of IT utilization, and encourage the firm’s resources to utilize

the new ways of using IT (Lu and Ramamurthy, 2011)

The employees agreed that their companies constantly keep current with new

information technology innovations (Mean = 3.780), were capable of and continued to

experiment with new IT as necessary (Mean = 3.664), had a climate that is supportive

of trying out new ways of using IT (Mean = 3.704) and constantly seek the new ways to

enhance the effectiveness of IT use (Mean = 3.766). These items supported that

employees agreed that their organization were good on IT proactive stance with the

mean value equal to 3.729.

The result of this study also support that the employee’s companies from the

sample agree that the IT innovation are important especially for the firms which have

the high level of complexity by nature which consistent with the result from the recent

studies which provided the understanding on how firms could realize strategic alignment

84

by tailoring their IT asset portfolios toward an efficiency or innovation focus (Xue et.al,

2012).

5.2.4 Business Agility

Referring from the definition, business agility is determine on how the firms must

have the speed and the quick response to the threats and opportunities which can

revise the behaviors based on the marketplace events.

The employees agreed that their company were able to quickly and easily

perform the following actions, respond to changes in aggregate consumer demand

(Mean = 3.853), customize a product or service to suit an individual customer (Mean =

3.749) react to new product or service launches by competitors (Mean = 3.747), expand

into new regional or international markets (Mean = 3.757), change (i.e., expand or

reduce) the variety of products / services available for sale (Mean = 3.768), adopt new

technologies to produce better, faster and cheaper products and services (Mean =

3.832) and switch suppliers to avail of lower costs, better quality or improved delivery

times (Mean = 3.579). These items supported that employees agreed that their

organization had the business agility with the mean value equal to 3.755.

Regarding SEM analysis revealed IT capabilities had the positive effect on

business agility significantly (β = 0.25; T-Value = 5.35; p = 0.001). Therefore, the result

of the research supported the previous literature reviews which mentioned that IT

capabilities were able to facilitate the business agility as well (Lu and Ramamurthy,

2011). The research also showed the result that Business-IT strategic alignment had

85

the positive effect on business agility significantly (β = 0.60; T-Value = 2.29; p = 0.05).

So, the result of the studies followed the outcome of the previous literatures which

stated that there were the positive link between Business-IT strategic alignment and

business agility (Tallon and Pinsonneault, 2011).

Also, the result of the study was consistent with researches in many areas such

as manufacturing industry. Information Technology could improve the business agility on

the supply chain management (Vickery et. al 2010). The information technology was

also used in the production management to improve the efficiency which is referred as

agile manufacturing (Eshlaghy et.al, 2011). RFID, the IT innovation, was facilitating the

business operation to improve the business agility as well (Zelbst et. al, 2011)

5.3 Implication of the study

As the volatile business environment in many countries due to the global

economic crisis, many firms have got the impact from these issues which increase the

concern for the management teams in the firms around the world. It is the challenge

condition for them that they need to look for the way to be survived under the difficult

situation. It is obvious that the firms must increase their abilities to respond to the

change to serve the volatile consumer demand, and rapid product obsolescence. The

management teams must ensure that the firm operation must be agile to be able to

detect and respond to the market opportunities and the threat with ease, speed and

quickness.

Information technology has been considered as the facilitator of the business

strategic driven nowadays. It has been utilized to enhance the business agility in order

86

to increase the speed and flexible to respond quickly to the rapid change conditions

such as the facilitating on the internal communication among the departments in the

organizations to speed up the decision making or even improving the timeliness of the

operation within the companies or even the supply chain management improvement.

Therefore, the management teams keep trying to look for the way to utilize their

IT resources to be able to increase the business agility. However, they must consider

the resources in the firms are scarce including IT resources as well. They must utilize

their IT resources to be able to increase the business agility with the most efficient ways

if they should invest to expand IT capabilities or using the existing IT resource and

encourage IT people and business people to coordinate with each other more

effectively and ensure that their plans are aligned with the business strategic from the

top management's team.

As mentioned earlier, this research investigated on the effect of IT capabilities

and business-IT strategic alignment on business agility to serve the above queries. The

result of the research revealed that both IT management’s participation on business

planning and business management’s participation on IT planning also positively

effected on business-IT strategic alignment. The magnitude on business management’s

participation on IT planning was quite a bit higher than IT management’s participation

on business planning. Therefore, the management team should take the consideration

on the operation management strategy to encourage the business people to involve in

IT planning as the priority so as to improve the efficiency on business-IT strategic

alignment.

87

According to the effect on business agility, this research exposed the result that

the magnitude on business-IT strategic alignment was more than IT capabilities. It could

be implied that the management team should ensure that their business and IT people

have worked together effectively to align their operations/planning with the business

strategic planning before the management team spend the money to invest on IT

capabilities expansion. Especially, the result supported that the business people were

playing as the crucial role to improve the business agility if they participate on IT

planning effectively.

5.4 Limitation of the study

1. The questionnaire was used to gather the perceptions of the employees from many

companies. The answers from the samples which were collected may not be the

same as other people within the same organization.

2. Some questions which were designed for IT people may be too difficult for the

people who are not familiar in IT related knowledge before. The researcher may

need to explain the more descriptions in easier term via the email or the telephone.

3. The questionnaire were translated into Thai language that there were some

translation that need to be adjusted to be easier for the understanding.

5.5 Recommendation for future research

Due to the fact that the research indicated on the effect of IT capabilities and

business-IT strategic alignment on business agility which was mostly conducting the

data from the employees in Thailand, the researcher would recommend that the future

88

research should conduct the data in another geographic area or expand the area of the

data collection globally.

Moreover, to get the result of the researches more precisely, it should use the

way to interview the employees directly rather than the questionnaire survey. Also, in

the IT capabilities dimension, it would be helpful for the future research if the size of IT

capabilities could be measured to see how much of IT capabilities would be

appropriated for the firms. In the dimension of the business-IT strategic alignment, there

may be other factors which effect to the successful of the strategic alignment which

should be considered because it may effect to the business agility as well.

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APPENDICES

APPENDIX A

ITEM OBJECTIVE CONGRUENCE (IOC) FORM

ITEM-OBJECTIVE CONGRUENCE INDEX (IOC) FORM

Researcher SAROJ WIRATTANAPORNKUL

Student ID 10904022

Program MBA in International Business (International Program)

Graduate School, University of the Thai Chamber of Commerce

Thesis Advisor DR.PHUSIT WONGLORSAICHON

Topic: Effect of IT capabilities and Business-IT Strategic Alignment on Business

Agility

The Research Objective

The following are the research objectives:

1. To study the effect of IT management’s participation on business planning on

business-IT strategic alignment.

2. To study the effect of business management’s participation on IT planning on

business-IT strategic alignment

3. To study the effect of business - IT strategic alignment on the business agility

4. To study the effect of IT capability on the business agility

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Please see whether the research questions match with the objective or not?

Kindly tick () in the box against each question

+1 If the question match with my objective

0 If you are not sure or cannot make a decision

-1 If the question do not match with my objective

Part 2 IT Capabilities

สวนท 2 ประสทธภาพของระบบสารสนเทศ

IT Infrastructure Capabilities / ประสทธภาพของระบบพนฐานของทางดานสารสนเทศ

Operation Definition: IT Infrastructure capacity is the ability of the firm to which the firm

is good at managing the sharable data management services, architecture, network

communication services, the application portfolios and service

No. ขอ

Question ค าถาม

Evaluation ผลการประเมน

Suggestion ขอแนะน า +1 0 -1

1 Data management services & architectures (e.g., databases, data warehousing, data availability, storage, accessibility, sharing etc.) การ จดการทางด านการ ให บ ร ก า รฐ านข อ ม ล แล ะสถาปตยกรรมทางดานสารสนเทศ เชน ฐานขอมล , คลงขอมล, ความพรอมในการใหบรการขอมล, การจดเกบ, การเขาถงขอมล และการแบงปนขอมล

2 Network communication services (e.g., connectivity, reliability, availability, LAN, WAN, etc.) บรการทางดานเครอขายเชนการตตตอเชอมโยง ความเชอถอไดในระบบ ความพรอมในการใหบรการ , LAN, WAN

3 Application portfolio & services (e.g., ERP, ASP, reusable software modules/components, emerging

103

technologies, etc.) การใหบรการในสวนของ Application ในองคกร เชน การ Reusable Software Modules/Components, Emerging Technologies เปนตน

4 IT facilities’ operations/services (e.g., servers, large-scale processors, performance monitors, etc.) การสนบสนนดานตางๆในสวนของระบบสารสนเทศ เชน Servers, Large-scale Processors, Performance Monitors

IT Business Spanning Capabilities / ประสทธภาพของทมงานสารสนเทศทมความ

เขาใจตอระบบธรกจ

IT business spanning capacity is the ability of how the firm can manage IT resources to

support the business operation and strategic objective. Also, it reflect how the firm can

develop the clear IT strategic visions to IT human resources and how they can integrate

the business into IT strategic planning and encourage the managements to understand

the value of IT investments

No. ขอ

Question ค าถาม

Evaluation ผลการประเมน

Suggestion ขอแนะน า +1 0 -1

5 Developing a clear vision regarding how IT contributes

to business value

มการพฒนาวสยทศนแกทมงานสารสนเทศใหเขาใจถง

ความส าคญของระบบสารสนเทศทมตอระบบธรกจ

6 Integrating business strategic planning and IT planning

มความรวมมอกนในการวางแผนงานทางกลยทธระหวาง

ทมงานสารสนเทศทมตอธรกจของบรษท

7 Enabling functional area and general management’s

ability to understand value of IT investments

ผบรหารมความสามารถทจะเขาใจความส าคญตอการลงทน

ทางดานระบบงานสารสนเทศ

104

8 Establishing an effective and flexible IT planning

process and developing a robust IT plan

มพฒนาแผนงานทางดานระบบสารสนเทศทมประสทธภาพ

และมความยดหยน

IT Proactive Stance / ประสทธภาพของทมงานสารสนเทศในการท างานเชงรก

Operation Definition: IT proactive stance is the firm ability to proactively seek the way

on IT innovation or utilize IT resources to create the business opportunities. It implies

on how the firm take the action on the extent of IT resource utilization to continuously

research on the new IT as necessary. It is also reflect whether the firm can find out the

way to keep research the new information technology way and foster the innovative

environment to support the business operation with IT effectively

No. ขอ

Question ค าถาม

Evaluation ผลการประเมน

Suggestion ขอแนะน า +1 0 -1

9 We constantly keep current with new information

technology innovations.

ทมงานสารสนเทศมความรทางดานนวตกรรมใหม ๆ

ทางดานระบบสารสนเทศอยสม าเสมอ

10 We are capable of and continue to experiment with

new IT as necessary.

ทมงานสารสนเทศมความสามารถทจะทดลองระบบ

สารสนเทศใหม อยเสมอเมอมโอกาสอ านวย

11 We have a climate that is supportive of trying out new

ways of using IT.

ทมงานสารสนเทศสรางบรรยากาศใหเกดการมการใชระบบ

สารสนเทศในวธใหม ๆ เพอสนบสนนธรกจอยสม าเสมอ

105

12 We constantly seek new ways to enhance the

effectiveness of IT use.

ทมงานสารสนเทศเสาะหาหนทางใหม ๆ เพอขยายขด

ความสามารถในการใชงานระบบสารสนเทศอยสม าเสมอ

Part 3 IT Management’s Participation on Business Planning

สวนท 3 ความรวมมอของผบรหารสารสนเทศในการวางแผนทางดานธรกจ

IT Management’s Participation on Business Planning / ความรวมมอของผบรหาร

สารสนเทศในการวางแผนทางดานธรกจ

Operation Definition: IT management’s participation on business planning is the extent

on how IT manager attend the business meetings and involve on the business planning

and business strategic goals, it would also reflect on how IT manager attend the

meeting in early phase

No. ขอ

Question ค าถาม

Evaluation ผลการประเมน

Suggestion ขอแนะน า +1 0 -1

13 IT managers regularly attend business meetings.

ผบรหารสารสนเทศเขารวมประชมวางแผนธรกจอยาง

สม าเสมอ

14 IT managers participate in setting business goals and

strategies.

ผบรหารสารสนเทศเขารวมในการวางเปาหมายและกลยทธ

ทางดานธรกจ

15 IT managers are involved early in meetings for major

projects.

ผบรหารสารสนเทศไดเขารวมประชมในโครงการส าคญของ

บรษทตงแตระยะตนของโครงการ

106

Part 4 Business Management’s Participation on IT Planning

สวนท 4 ความรวมมอของผบรหารในหนวยงานตางๆตอการวางแผนทางดานสารสนเทศ

Business Management’s Participation on IT Planning/ ความรวมมอของผบรหารใน

หนวยงานตางๆตอการวางแผนทางดานสารสนเทศ

Operation Definition: Business management’s participation on IT planning reflect on how

business manager involve on IT planning to evaluate the future business need, and

involve on the IT objectives and strategies, and reflect on how they participate on the

major IT investment

No. ขอ

Question ค าถาม

Evaluation ผลการประเมน

Suggestion ขอแนะน า +1 0 -1

16 A variety of business managers are actively involved

in the process of IS planning.

ผบรหารในหนวยงานตาง ๆ ไดเขารวมกระบวนการ

วางแผนงานทางดานสารสนเทศอยางมประสทธภาพ

17 The level of participation in IS planning by diverse

interests of the organization is high.

มระดบการเขารวมในการวางแผนทางสารสนเทศมความ

รวมมอกนจากหลายๆหนวยงานเปนอยางสง

18 IT planning involves an evaluation of future information

needs of business managers.

การวางแผนทางดานสารสนเทศไดมการน าเอาความ

ตองการทไดรวบรวมจากขอมลจากผบรหารจากหนวยงาน

ตางๆ ไวลวงหนา

107

19

A variety of business managers participate in setting

IS objectives and strategies.

ผ จดการในหนวยงานตางๆ มสวนรวมในการก าหนด

วตถประสงคและกลยทธทางดานสารสนเทศ

20 Business managers from several areas are involved in

the selection of major IT investments.

ผจดการในหนวยงานตาง ๆ ไดมสวนรวมในการตดสนใจใน

การลงทนในโครงการทางดานสารสนเทศทมความส าคญ

Part 5 Business-IT Strategic Alignment

สวนท 5 ความสอดคลองกนระหวางกลยทธทางดานธรกจและการพฒนาระบบสารสนเทศ

Business-IT Strategic Alignment/ ความสอดคลองกนระหวางกลยทธทางดานธรกจ

และการพฒนาระบบสารสนเทศ

Operation Definition: Business - IT strategic alignment reflect on how the firm can

integrate the knowledge of Information technology managers with the business

managers together to achieve the organizational strategic goal. It would be derived from

cognitive development of corporate strategies. The level of the business–IT alignment

can be measured by how the integration level of both functionalities. For example, the

assessment on how IT plans aligns with the company’s mission, goals, objectives, and

strategies

No. ขอ

Question ค าถาม

Evaluation ผลการประเมน

Suggestion ขอแนะน า +1 0 -1

21 The IT plan aligns with the company’s mission, goals,

objectives, and strategies.

กลยทธทางดานสารสนเทศไดสอดคลองกบภารกจ ,

เปาหมาย, วตถประสงค และ กลยทธของบรษท

108

22 The IT plan contains quantified goals and objectives.

การวางแผนงานทางดานสารสนเทศไดระบถงเปาหมายและ

วตถประสงคทสามารถวดได

23 The IT plan contains detailed action plans/strategies

that support company direction.

การวางแผนงานทางดานสารสนเทศไดระบถงรายละเอยด

ในแผนงานทตองด าเนนงานและกลยทธทสนบสนนทศ

ทางการด าเนนงานของบรษท

24

We prioritize major IT investments by the expected

impact on business performance.

ทมงานสารสนเทศไดจดล าดบความส าคญของการลงทนใน

โครงการทมความส าคญทางดานสารสนเทศโดยมความ

ค านงถงผลกระทบตอผลประกอบการของบรษท

Part 6 Business Agility สวนท 6 ความสามารถของการปรบตวขององคกรตอความเปลยนแปลงอยางรวดเรว

Business Agility / ความสามารถของการปรบตวขององคกรตอความเปลยนแปลงอยาง

รวดเรว

Operation Definition: Business agility refers to ability that the firm can speed up on the

response to environmental threats and opportunities. It also implies on the performance

that how easily and quickly firms are able to re-act their behaviors based on

unpredictable situation in the market.

No. ขอ

Question ค าถาม

Evaluation ผลการประเมน

Suggestion ขอแนะน า +1 0 -1

25 Respond to changes in aggregate consumer demand.

ตอบสนองความเปลยนแปลงของความตองการของลกคา

109

26 Customize a product or service to suit an individual

customer.

สามารถปรบแตงผลตภณฑหรอบรการใหเหมาะกบลกคา

แตละคนได

27 React to new product or service launches by

competitors.

ตอบสนองตอผลตภณฑหรอบรการใหมทออกโดยบรษทคแขง

28

Expand into new regional or international markets สามารถขยายธรกจไปยงภมภาคอนหรอตลาดในตางประเทศ

29

Change (i.e., expand or reduce) the variety of products / services available for sale. เปลยน(เพมหรอลด)ความหลากหลายของผลตภณฑทขายอยในตลาด

30

Adopt new technologies to produce better, faster and cheaper products and services สามารถน าเอาเทคโนโลยมาใชในการพฒนาสนคาหรอบรการ ใหดขน, รวดเรวและราคาถกลง

31

Switch suppliers to avail of lower costs, better quality or improved delivery times สามารถเปลยนแปลง Supplier ทสามารถใหตนทนทต ากวา, คณภาพดกวา หรอ มเวลาจดสงทสนกวา

Expert Signature……………………………………..………...

(……………………………………………….)

APPENDIX B

SURVEY QUESTIONNAIRE

Survey Questionnaire

“Effect of business-IT strategic alignment and IT capabilities on business agility” Explanation: The aim of this questionnaire is to obtain your opinions about the effect of business-IT strategic alignment and IT capabilities on the business agility, which according to the educational advantage only. The employee who answers the survey must have a chance to participate in business planning or IT planning as well. All information collected will be kept in strict confidence and will not have any other effect on you. Please tick in the box to choose an appropriate answer for each question. Part 1 Personal Information 1. Gender

Male Female 2. Age (Years)

20 - 29 years 30 - 39 years 40-49 years more than 50 years 3. Education Level

Bachelor degree Master degree or above Others 4. Income per month (Baht)

Below 15,000 Baht 15,001 - 25,000 Baht 25,001 - 35,000 Baht 35,001 - 55,000 Baht More than $55,001 Baht

112

Part 2 IT Capabilities Relative to other firms in your industry, please evaluate your organization’s IT infrastructure capability in the following areas on a 1-5 scale (1=Very Poor, 2=Poor, 3=Fair, 4=Good, 5 = Very Good). No. IT Infrastructure Capabilities 1 2 3 4 5 5. Data management services & architectures (e.g.,

databases, data warehousing, data availability, storage, accessibility, sharing etc.)

6. Network communication services (e.g., connectivity, reliability, availability, LAN, WAN, etc.)

7. Application portfolio & services (e.g., ERP, ASP, reusable software modules/components, emerging technologies, etc.)

8. IT facilities’ operations/services (e.g., servers, large-scale processors, performance monitors, etc.)

No. IT Business Spanning Capabilities 1 2 3 4 5 9. Developing a clear vision regarding how IT contributes to

business value

10. Integrating business strategic planning and IT planning 11. Enabling functional area and general management’s ability

to understand value of IT investments

12. Establishing an effective and flexible IT planning process and developing a robust IT plan.

No. IT Proactive Stance 1 2 3 4 5 13. We constantly keep current with new information

technology innovations

14. We are capable of and continue to experiment with new IT as necessary

15. We have a climate that is supportive of trying out new ways of using IT

113

No. IT Proactive Stance 1 2 3 4 5 16. We constantly seek new ways to enhance the effectiveness

of IT use

Please indicate the degree to which you agree or disagree with the statements in the following, by tick in the boxes below in the following scale: 1 = Strongly Disagree 2 = Disagree 3 = Neutral 4 = Agree 5 = Strongly Agree Part 3 IT Management’s Participation on Business Planning No. IT Management’s Participation on Business Planning 1 2 3 4 5 17. IT managers regularly attend business meetings. 18. IT managers participate in setting business goals and

strategies.

19. IT managers are involved early in meetings for major projects.

Part 4 Business Management’s Participation on IT Planning No. Business Management’s Participation on IT Planning 1 2 3 4 5 20. A variety of business managers are actively involved in the

process of IS planning.

21. The level of participation in IS planning by diverse interests of the organization is high.

22. IT planning involves an evaluation of future information needs of business managers.

23. A variety of business managers participate in setting IS objectives and strategies.

24. Business managers from several areas are involved in the selection of major IT investments.

114

Part 5 Business-IT Strategic Alignment No. Business-IT Strategic Alignment 1 2 3 4 5 25. The IT plan aligns with the company’s mission, goals,

objectives, and strategies.

26. The IT plan contains quantified goals and objectives. 27. The IT plan contains detailed action plans/strategies that

support company direction.

28. We prioritize major IT investments by the expected impact on business performance.

Part 6 Business Agility How easily and quickly can your firm perform the following actions? No. Business Agility 1 2 3 4 5 29. Respond to changes in aggregate consumer demand. 30. Customize a product or service to suit an individual

customer.

31. React to new product or service launches by competitors. 32. Expand into new regional or international markets. 33. Change (i.e., expand or reduce) the variety of products /

services available for sale.

34. Adopt new technologies to produce better, faster and cheaper products and services.

35. Switch suppliers to avail of lower costs, better quality or improved delivery times.

*** Thank you for your valuable time and kind cooperation. ***

แบบสอบถามของบทวจย

“การศกษาความสอดคลองกนระหวางกลยทธทางดานธรกจและการพฒนาระบบสารสนเทศและประสทธภาพของระบบสารสนเทศทมผลตอความสามารถในการปรบตวขององคกรตอการเปลยนแปลงทรวดเรว” ค าอธบาย: จดประสงคของแบบสอบถามชดนเพอสอบถามความคดเหนของทานเกยวกบความสอดคลองกนระหวางกลยทธทางดานธรกจและการพฒนาระบบสารสนเทศ และประสทธภาพของระบบสารสนเทศทมผลตอความสามารถในการปรบตวขององคกรตอความเปลยนแปลงอยางรวดเรวขององคกรททานไดท างานอย ผตอบแบบสอบถามจ าเปนตองเคยเขารวมการประชมวางแผนงานดาน IT หรอทางดานธรกจมากอน แบบสอบถามนมจดประสงคเพอใชในการศกษาทางดานวชาการเทานน ขอมลทงหมดจะถกเกบเปนความลบและจะไมมผลกระทบใด ๆ ตอทาน กรณาท าเครองหมาย ใน เพอระบค าตอบทเหมาะสมในแตละค าถามดานลาง. สวนท 1 ขอมลสวนตว 1. เพศ

ชาย หญง 2. อาย (จ านวนป)

20-29 ป 30-39 ป 40-49 ป มากกวา 50 ป 3. ระดบการศกษา

ปรญญาตร ปรญญาโทหรอสงกวา อนๆ 4. รายไดตอเดอน (บาท)

นอยกวา 15,000 บาท 15,001 – 25,000 บาท 25,001 – 35,000 บาท 35,001 – 55,000 บาท มากกวา 55,001 บาท

116

สวนท 2 ประสทธภาพของระบบสารสนเทศ เมอเปรยบเทยบกบบรษทอนในกลมอตสาหกรรมเดยวกน , กรณาประเมนประสทธภาพของระบบสารสนเทศในหนวยงานของทานในแตละหวขอตอไปน โดยใหคะแนนตงแต 1-5 (1=แยมาก, 2=แย, 3=ปานกลาง, 4=ด, 5 = ดมาก) ล าดบท

ประสทธภาพของระบบพนฐานของทางดานสารสนเทศ 1 2 3 4 5

5. การจดการทางดานการใหบรการฐานขอมลและสถาปตยกรรมทางดานสารสนเทศ เชน ฐานขอมล, คลงขอมล, ความพรอมในการใหบรการขอมล, การจดเกบ, การเขาถงขอมล และการแบงปนขอมล

6. บรการทางดานเครอขายเชนการตตตอเชอมโยง ความเชอถอไดในระบบ ความพรอมในการใหบรการ, LAN, WAN

7. การใหบรการในสวนของ Application ในองคกร เชน การ Reusable Software Modules/Components, Emerging Technologies เปนตน

8. การสนบสนนดานตางๆในสวนของระบบสารสนเทศ เชน Servers, Large-scale Processors, Performance Monitors

ล าดบท

ประสทธภาพของทมงานสารสนเทศทมความเขาใจตอระบบธรกจ

1 2 3 4 5

9. มการพฒนาวสยทศนแกทมงานสารสนเทศใหเขาใจถงความส าคญของระบบสารสนเทศทมตอระบบธรกจ

10. มการบรณาการในการวางแผนงานทางกลยทธระหวางทมงานสารสนเทศทมตอธรกจของบรษท

11. ผบรหารมความสามารถทจะเขาใจความส าคญตอการลงทนทางดานระบบงานสารสนเทศ

12. มพฒนาแผนงานทางดานระบบสารสนเทศทมประสทธภาพและมความยดหยน

117

ล าดบท

ประสทธภาพของทมงานสารสนเทศในการท างานเชงรก 1 2 3 4 5

13. ทมงานสารสนเทศมความรทางดานนวตกรรมใหม ๆ ทางดานระบบสารสนเทศอยสม าเสมอ

14. ทมงานสารสนเทศมความสามารถทจะทดลองระบบสารสนเทศใหม อยเสมอเมอมโอกาสอ านวย

15. ทมงานสารสนเทศสรางบรรยากาศใหเกดการมการใชระบบสารสนเทศในวธใหม ๆ เพอสนบสนนธรกจอยสม าเสมอ

16. ทมงานสารสนเทศเสาะหาหนทางใหม ๆ เพอขยายประสทธผลในการใชงานระบบสารสนเทศอยสม าเสมอ

กรณาระบระดบความเหนดวยหรอไมเหนดวยตามหวขอตาง ๆ ดงตอไปนโดยการเลอกระบในกลองขอความตามระดบตาง ๆ ดงตอไปน 1 = ไมเหนดวยอยางยง 2 = ไมเหนดวย 3 = เฉยๆ 4 = เหนดวย 5 = เหนดวยอยางยง สวนท 3 ความรวมมอของผบรหารสารสนเทศในการวางแผนทางดานธรกจ ล าดบท

ความรวมมอของผบรหารสารสนเทศในการวางแผนทางดานธรกจ

1 2 3 4 5

17. ผบรหารสารสนเทศเขารวมประชมวางแผนธรกจอยางสม าเสมอ

18. ผบรหารสารสนเทศเขารวมในการวางเปาหมายและกลยทธทางดานธรกจ

19. ผบรหารสารสนเทศไดเขารวมประชมในโครงการส าคญของบรษทตงแตระยะตนของโครงการ

118

สวนท 4 ความรวมมอของผบรหารในหนวยงานตางๆตอการวางแผนทางดานสารสนเทศ ล าดบท

ความรวมมอของผบรหารในหนวยงานตางๆ ตอการวางแผนทางดานสารสนเทศ

1 2 3 4 5

20. ผบรหารในหนวยงานตาง ๆ ไดเขารวมกระบวนการวางแผนงานทางดานสารสนเทศ

21. มระดบการเขารวมในการวางแผนทางสารสนเทศมความรวมมอกนจากหลายๆหนวยงานเปนอยางสง

22. การวางแผนทางดานสารสนเทศไดมการน าเอาความตองการทไดรวบรวมจากขอมลจากผบรหารจากหนวยงานตางๆ ไวลวงหนา

23. ผจดการในหนวยงานตางๆ มสวนรวมในการก าหนดวตถประสงคและกลยทธทางดานสารสนเทศ

24. ผจดการในหนวยงานตาง ๆ ไดมสวนรวมในการตดสนใจในการลงทนในโครงการทางดานสารสนเทศทมความส าคญ

สวนท 5 ความสอดคลองกนระหวางกลยทธทางดานธรกจและการพฒนาระบบสารสนเทศ ล าดบท

ความสอดคลองกนระหวางกลยทธทางดานธรกจและการพฒนาระบบสารสนเทศ

1 2 3 4 5

25. กลยทธทางดานสารสนเทศไดสอดคลองกบภารกจ, เปาหมาย, วตถประสงค และ กลยทธของบรษท

26. การวางแผนงานทางดานสารสนเทศไดระบถงเปาหมายและวตถประสงคทสามารถวดได

27. การวางแผนงานทางดานสารสนเทศไดระบถงรายละเอยดในแผนงานทตองด าเนนงานและกลยทธทสนบสนนทศทางการด าเนนงานของบรษท

28. ทมงานสารสนเทศไดจดล าดบความส าคญของการลงทนในโครงการทมความส าคญทางดานสารสนเทศโดยมความค านงถงผลกระทบตอผลประกอบการของบรษท

119

สวนท 6 ความสามารถของการปรบตวขององคกรตอความเปลยนแปลงอยางรวดเรว ระบวาองคกรของทานมความสามารถในการปรบตวไดเรวและงายดายตามหวขอดงตอไปนอยางไร ล าดบท

ความสามารถของการปรบตวขององคกรตอความเปลยนแปลงอยางรวดเรว

1 2 3 4 5

29. ตอบสนองความเปลยนแปลงของความตองการของลกคา 30. สามารถปรบแตงผลตภณฑหรอบรการใหเหมาะกบลกคาแตละ

คนได

31. ตอบสนองตอผลตภณฑหรอบรการใหมทออกโดยบรษทคแขง 32. สามารถขยายธรกจไปยงภมภาคอนหรอตลาดในตางประเทศ 33. เปลยน(เพมหรอลด)ความหลากหลายของผลตภณฑทขายอย

ในตลาด

34. สามารถน าเอาเทคโนโลยมาใชในการพฒนาสนคาหรอบรการ ใหดขน, รวดเรวและราคาถกลง

35. สามารถเปลยนแปลง Supplier ทสามารถใหตนทนทต ากวา, คณภาพดกวา หรอ มเวลาจดสงทสนกวา

*** ขอบคณส าหรบเวลาทมคาของทานในการรวมมอในการตอบแบบสอบถามชดน ***

APPENDIX C

GOODNESS-OF-FIT INDICES

121

Degrees of Freedom = 8

Minimum Fit Function Chi-Square = 9.11 (P = 0.33)

Normal Theory Weighted Least Squares Chi-Square = 9.27 (P = 0.32)

Estimated Non-centrality Parameter (NCP) = 1.27

90 Percent Confidence Interval for NCP = (0.0 ; 13.13)

Minimum Fit Function Value = 0.022

Population Discrepancy Function Value (F0) = 0.0030

90 Percent Confidence Interval for F0 = (0.0 ; 0.031)

Root Mean Square Error of Approximation (RMSEA) = 0.019

90 Percent Confidence Interval for RMSEA = (0.0 ; 0.062)

P-Value for Test of Close Fit (RMSEA < 0.05) = 0.85

Expected Cross-Validation Index (ECVI) = 0.12

90 Percent Confidence Interval for ECVI = (0.11 ; 0.14)

ECVI for Saturated Model = 0.13

ECVI for Independence Model = 9.33

Chi-Square for Independence Model with 21 Degrees of Freedom = 3924.15

Independence AIC = 3938.15

122

Model AIC = 49.27

Saturated AIC = 56.00

Independence CAIC = 3973.48

Model CAIC = 150.22

Saturated CAIC = 197.33

Normed Fit Index (NFI) = 1.00

Non-Normed Fit Index (NNFI) = 1.00

Parsimony Normed Fit Index (PNFI) = 0.38

Comparative Fit Index (CFI) = 1.00

Incremental Fit Index (IFI) = 1.00

Relative Fit Index (RFI) = 0.99

Critical N (CN) = 931.99

Root Mean Square Residual (RMR) = 0.0028

Standardized RMR = 0.0078

Goodness of Fit Index (GFI) = 0.99

Adjusted Goodness of Fit Index (AGFI) = 0.98

Parsimony Goodness of Fit Index (PGFI) = 0.28

BIOGRAPHY

Mr. Saroj Wirattanapornkul was born on December 12th, 1980 in Bangkok

province of Thailand. He graduated his bachelor degree of applied statistics science

majoring in King Mongkut’s Institute of Technology Ladkrabang.

He had work experiences of 12 years in Information Technology area. He has

worked as development group leader in global company at this moment.