The critical factors of IT governance and its impact on organizational performance in Malaysian manufacturing industry

  • Bentolhoda Abdollahbeigi Multimedia University
  • Farhang Salehi Multimedia University
Keywords: IT governance in Malaysia, involvement of senior management in IT, organizational demographics, effective IT governance, performance of organization

Abstract


The purpose of this study is to examine the extent to which senior management's involvement and demographics of organizational affect the effectiveness of IT governance with the performance of organizations. This is a combination of exploratory and descriptive research that aims to investigate the determinants of IT governance and its effects on organizational performance in Malaysian manufacturing companies. The sample size of 357 collected for this research. Structural equation modeling (SEM) was utilized in this research to investigate the measurement and structural model simultaneously. The findings demonstrated the relationships between the senior management's involvement and organizational demographics, effective its governance and organizational performance in manufacturing companies in Malaysia. This research is the construction of a theoretically based model which assimilates the senior management's involvement and organizational demographics, effective IT governance, and performance of organizations. Likewise, discover the most crucial elements that affect effective IT governance to improve the manufacturing company’s performance.

Author Biographies

Bentolhoda Abdollahbeigi, Multimedia University
FOM
Farhang Salehi, Multimedia University
FOM

References

Ali, S., & Green, P. (2012). Effective information technology (IT) governance mechanisms: An IT outsourcing perspective. Information Systems Frontiers, 14 (2), 179-193.

Al-Najjar, S.M., & Kalaf K.H. (2012). Designing a balanced scorecard to measure a bank’s Performance, A Case Study. International Journal of Business Administration, 3 (4), 44-53.

Bernroider, E.W.N. (2008), “IT governance for enterprise resource planning supported by the DeLone-McLean model of information systems success”, Information & Management, Vol. 45 No. 5, pp. 257-269.

Bouwes, R., (2013). IT governance effect size : Evaluating the impact of Senior Management involvement on different organizational strategies. University of Amsterdam, Amsterdam, Netherlands. Retrieved from https://scripties.uba.uva.nl/download?fid=543333

Bowen, Frances E., Mahdi Rostami, & Piers Steel (2010). Timing is everything: A meta-analysis of the relationships between organizational performance and innovation, Journal of Business Research, 63(11), 1179-85.

Callahan, J., & Keyes, D. (2004). The evolution of IT Governance @ NB Power. In Grembergen (Ed.), Strategies for Information Technology Governance: Idea Group Publishing.

Castro, H.G.D., & Carvalho, M.M.D. (2012). Gerenciamento do portfolio de projetos: um estudo exploratório. Gestão & Produção, São Carlos, v. 17, n. 2, p. 283-296, 2010. Available at: <http://www.scielo.br/pdf/gp/v17n2/a06v17n2.pdf>.

De Haes, S., Van Grembergen, W., & Debreceny, R.S. (2013). COBIT 5 and Enterprise Governance of Information Technology. Building Blocks and Research Opportunities, Journal of Information Systems, 27 (1), 307-324.

De Souza Bermejo, P.H., Tonelli, A.O., Zambalde, A.L., dos Santos, P.A., & Zuppo, L. (2014). Evaluating IT governance practices and business and IT outcomes: A quantitative exploratory study in Brazilian companies. Procedia Technology 16, 849 – 857.

Duarte, P.A., & Raposo, M.L. (2010). A PLS model to study brand preference: an application to the mobile phone market. In: Esposito Vinzi, V., Chin, W.W., Henseler, J., Wang, H. (eds) Handbook of partial least squares: concepts, methods, and applications. Springer, Heidelberg, 449–485.

Elbanna, S., & Child, J. (2007). Influences on strategic decision effectiveness: Development and test of an integrative model. Strategic Management Journal, 28 (4), 431-453.

Etim, R.S., & Agara, I.G. (2011). The balanced scorecard: The new performance management paradigm for Nigerian firms. Journal of Economic Development Research and Investment 2 (3), 64-73.

Gartner (2010) Gartner Perspective: IT Spending 2010. Retrieved from https://www.gartner.com/en/information-technology.

Grant, G., Brown, A., Uruthirapathy, A., & McKnight, S. (2007). An Extended Model of IT Governance: A Conceptual Proposal. AMCIS Proceedings. 215.

Guilherme L. L., Antonio C.G.M., and João L.B. (2014). IT Governance Effectiveness and its Antecedents: an Empirical Examination in Brazilian Firms.47th Hawaii International Conference on System Science.

Haanappel, S., (2011). A framework for IT performance management. , (February), pp.1–83.

Hair, J.F., Black, W.C., Babin, B.J., & Anderson, R.E. (2010). Multivariate data analysis (7th ed.). Upper Saddle River, New Jersey: Pearson Education International.

Heindrickson, G., & Santos Jr, C.D. (2014). Information Technology Governance in Public Organizations: How Perceived Effectiveness Relates To Three Classical Mechanisms. Journal of Information Systems and Technology Management, 11 (2), 297–326.

Héroux, S., & Fortin, A. (2014). Exploring IT Dependence and IT Governance. Information Systems Management, 31 (2), 143-166.

Héroux, S., & Fortin, A. (2017). Exploring the Influence of Executive Management Diversity on it Governance. Journal of Information Systems and Technology Management, 14 (3), 401-429.

Huygh, T., Haes, S.D., Joshi, A., & Grembergen, W.V. (2018). Answering Key Global IT Management Concerns Through IT Governance and Management Processes: A COBIT 5 Proceedings of the 51st Hawaii International Conference on System Sciences , 5335-5344.

Iden, J., & Eikebrokk, T.R., (2015). The impact of senior management involvement, organizational commitment and group efficacy on ITIL implementation benefits. Information Systems and e-Business Management. 13 (3), 527–552.

ISACA, (2012). A Business Framework for the Governance and Management of Enterprise IT. Rolling Meadows, IL (USA): ISACA, 2012. Available at: <http://www.isaca.org/COBIT/Pages/default.aspx>.

Kairu, E.W., Wafula, M.O., Okaka, O., Odera, O., & Akerele, E.K. (2013). Effects of balanced scorecard on a performance of firms in the service sector. European journal of business and management, 5 (9), 81-88.

Lee, O.K. et al., (2012). It impacts on performance of service firms through operation-level dynamic capability. Journal of Applied Business Research, 28(6), pp.1283–1294.

Li, L., Gao, P. & Mao, J., (2014). Research on IT in China: a call for greater contextualization. Journal of Information Technology, 29(3), pp.208–222.

Loderer, C., & Waelchli. U. (2010). Protecting Minority Shareholders: Listed versus Unlisted Firms. Financial Management, 39 (1), 33-57.

Low, V.L., Tay, S.T., Kho, K.L. (2015). Molecular characterisation of the tick Rhipicephalus microplus in Malaysia: new insights into the cryptic diversity and distinct genetic assemblages throughout the world. Parasites Vectors 8, 341.

Marnewick, C., & Labuschagne, L. (2011). An investigation into the governance of information technology projects in South Africa. International Journal of Project Management, 29 (6), 661–670.

Mohamed, N., & Kaur a/p Gian Singh, J. (2012). A Conceptual Framework for Information Technology Governance Effectiveness in Private Organizations. Information Management & Computer Security, 20 (2), 88-106.

Mugwe, C.W. (2014). Determinants for Effective Information Technology Outsourcing: A Case Of International Business Machines Corporation Kenya (Master thesis). University Of Nairobi. Retrieved from http://erepository.uonbi.ac.ke/handle/11295/73584

Nfuka, E. N., & Rusu, L. (2011). The effect of critical success factors on IT governance performance. Industrial Management & Data Systems, 111(9), 1418-1448.

Othman, M.F.I. (2016). Barriers to the adoption of formal IT governance practice: A Malaysian case (PhD thesis), Queensland University of Technology. Brisbane, Queensland, Australia.

Pick, R.A., (2015). Centralization And Decentralization In Information Technology Governance Shepherd Or Servant : , 19(2), pp.61–68.

Rubino, M., & Vitolla, F. (2014). Corporate governance and the information system: how a framework for IT governance support ERM. Corporate Governance, 14 (3), 320–338.

Subriadi, A.P., Hadiwidjojo, D., Djumahir, Rahayu, M., & Sarno., R. (2013), Firm Age, Firm Size and Information Technology Intensity Industry Factors in Influencing Information Technology Contribution to Improve Performance, Journal of Theoretical and Applied Information Technology, 54 (3), 487-496.

Tan, K.S., Teo, W.L., & Lai, K.P. (2011), The applicability of information technology governance in the Malaysian SMEs, Journal of Innovation Management in Small and Medium Enterprises, 2011, 1-10.

Teo, W.L., Manaf, A.A., & Choong, P.L.F., (2013). Perceived effectiveness of information technology governance initiatives among IT practitioners. International Journal of Engineering Business Management, 5 (19), 1–9.

Vaswani, R. (2003). Determinants of Effective Information Technology (IT) Governance. Unpublished Thesis. School of Business, University of Queensland, Australia.

Veerankutty, F., & Ali, N.A., (2016). Information Technology Governance on Public Sector Audit Performance.nternational Proceedings of the Conference on Accounting Studies (ICAS) 2016, 15-18August 2016, 41-48. Langkawi, Kedah, Malaysia.

Weill, P., & Ross, J. W. (2004). IT governance: How top performers manage IT decision rights for superior results. Boston, MA: Harvard Business School Press.

Young, R., & Jordan, E.,( 2008). Top management support: mantra or necessity? International Journal of Project Management 26, 713–725.

Published
2020/05/01
Section
Original Scientific Paper