Aligning business and IT strategies in multi-business organizations

The alignment of business and information technology (IT) strategies is an important and enduring theoretical challenge for the information systems discipline, remaining a top issue in practice for the past twenty years. Multi-business organizations (MBOs), present a particular alignment challenge, where business strategies are developed at both the corporate level and within individual strategic business units (SBUs) across the corporate investment cycle. In contrast, the extant literature implicitly assumes that IT strategy is aligned with a single business strategy at a single point in time. This study draws on resource-based theory (RBT) and path dependence to reconceptualize business and IT strategic alignment in MBOs. Drawing on Makadok's (2010; 2011) theory of profit, we show how functional, structural and dynamic alignment, create value in MBOs through three strategic drivers: governance, competence and flexibility. This has implications for existing IT alignment models, providing alternative theoretical explanations of how IT alignment creates value.