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Successful utilization of the firm's information technology (IT) investments continues to be a difficult but important task for senior business and information systems managers. This paper focuses on one potentially important determinant of IT investment outcomes-integration of business and IT planning. Integration is examined using three kinds of participation: business managers' participation in IT planning, IT managers' participation in business planning, and top managers' participation in IT resource allocation. Based on considerations of knowledge sharing and commitment, a theoretical model linking these three aspects to three potential consequences-quality of IT plans, IT project problems, and IT-based organization performance-and two antecedents-top managers' perception of IT importance and environmental heterogeneity-is developed. The model is tested using data collected through a survey of 274 chief information officer (CIO) respondents. Results of structural equation modeling analysis support 12 of the 15 hypotheses. Surprisingly, top managers' participation in resource allocation had a stronger association with IT-based organizational performance than either quality of IT plans or the absence of IT project problems. This implies that the role of IT planning and alignment might be weakened when investments reflect top managements' selection. Implications of the study for practice and future research are examined.
Date of Publication: Nov. 2007