Determinants and impacts of information technology governance effectiveness in Malaysian firms

Abstract

Organisations wishing to improve the value, contribution and alignment of IT investments must first improve the way they govern IT activities, processes and mechanisms by which decisions are made. Extant research has been carried out on IT governance and its effectiveness but not with a focus of organisations from an emerging country such as Malaysia. This study seeks to identify the determinants and impact of IT governance effectiveness. Review of related literature has identified five categories of determinants pertinent to IT governance effectiveness as, organisational demography, information intensity, organisational culture, environmental uncertainty, and IT function characteristics. As for the impact, IT contribution to organisational performance was identified as the dependent variable to emphasize the need for value creation from IT investment and business effectiveness. Additionally, this study investigates gap between perceived importance and effectiveness of each IT governance mechanisms, structure, process, and relational mechanisms. The cross-sectional study was based on self-administered questionnaire survey distributed to a sample of private organisations in Malaysia’s Klang Valley region. A total of 8000 organisations listed in the Malaysian Bursary website (www.klse.com.my), Multimedia Super Corridor website (www.msc.com.my), Federation of Malaysian Manufacturers and SIRIM directory of products and companies were randomly selected. Mail survey technique was utilised that targets 1800 sample of private organisations across various industries using single key informant, Chief Information Officer (CIO). Data from this survey was analysed using Statistical Package for Social Science (SPSS) version 16.0 and SmartPLS software version M2 that covers three phases of analysis, descriptive, exploratory and confirmatory analysis to achieve the desired objectives of the research. The study results revealed a difference between perceived importance and actual effectiveness in IT governance structure, process, and relational mechanisms. The actual effectiveness of IT governance implementation is lower than the perceived importance. This study presented a theoretical model to explain the causal relationship between determinants, IT governance effectiveness and organisation performance. This research represents the beginnings to find a comprehensive theory and model for understanding causal relationship between determinants-IT governance effectiveness and IT governance effectiveness- organisation performance