Week 8 Reading Summary – Tiwana and Kim (2015) – Xi Wu

Tiwana, A., & Kim, S. K. (2015). Discriminating IT Governance. Information Systems Research, 26(4), 656–674.

Strategic IT agility is one important weapon for firms that using IT to consistently create a series of temporary advantages, introducing a new one before rivals could even finish copying the last one. This study asks the question: why are some firms more adept at using IT in their pursuit of strategic opportunities? The belief is that the secret for exploiting IT for strategic agility is how it is governed, i.e., which department makes what IT decisions. This study addresses the research question: How does the interplay between firm’s IT governance choices and departmental peripheral knowledge influence IT strategic agility.

The theoretic foundation is the JM theory that decision rights must be collocated with the knowledge needed to make those decisions. This study develops the idea that firms’ IT governance choices foster IT strategic agility only when their alignment with departments’ peripheral knowledge is discriminating—discriminating in that only a specific department’s peripheral knowledge induces agility for a specific class (apps or infrastructure) of IT decisions; which department has peripheral knowledge must be aligned with which department makes what IT decisions.

Matched-pair data from 105 U.S. firms are collected. All principal constructs using reflective multi-item Likert scales are measured using the firm’s IT function as the unit of analysis. To account for the endogeneity in firms’ IT governance choices, several instrumental variables are used. The two hypotheses about IT app governance and IT infrastructure governance are theoretically support by a three-step hierarchical weighted least squares (WLS) model. This study contributes theoretically to discriminating alignment and governance-contingent value of peripheral knowledge in IT governance literature.