DOES EMPLOYEE ALIGNMENT AFFECT BUSINESS-IT ALIGNMENT? AN EMPIRICAL ANALYSIS

ABSTRACT

The aim of this paper is to investigate if employee alignment will influence the business-IT alignment in organizations. We measured employee alignment through perceived organizational trust, perceived communications on business-IT strategies to employees, perceived employee commitment to business-IT strategies and perceived knowledge on business-IT strategies. Structural equation modelling (SEM) is used to test me model and hypotheses in this research. The findings from this study indicated that perceived organizational trust, perceived communications on business-IT strategies to employees and perceived knowledge on business-IT strategies have a positive and significant relationship with business-IT alignment of organizations. This study addresses the lack of empirical research by investigating whether employee alignment would improve an organization's business-IT alignment.

Keywords: IT, Employee Alignment, Business-IT alignment, IT strategies, Indonesia.

INTRODUCTION

With increasing competition and globalization, business nowadays have to operate efficiently and effectively. With the introduction of information technologies (IT) and Internet, most companies are now leveraging on IT as part of their strategic business tools. In order to address the global competition, manufacturing organizations are now taking advantage of advanced IT to improve their supply chain [31]. IT tools such as customer relationship management (CRM) systems, supply chain management (SCM) systems, Enterprise Resource Planning (ERP) systems and business intelligence tools are being used by compames to ensure mat they can achieve competitive advantages over their rivals by providing shorter lead times, introducing new products more frequently and responding to customer service and product requirements more rapidly [4].

Although the benefits of GG are no longer a business secret, many organizations are still facing issues with GG implementation. One issue faced by organizations is that it difficult for mem to achieve long term benefits through the adoption of IT [41]. Studies have shown that as many as one third of software failed to delivers that it is intended [19]. One reason for this is the lack of business-GG alignment. It is found that the problem of aligning business and IT strategies is one of the five main problems faced by IT managers [42]. Past studies have attempted to address this by looked into various aspects of organizations factors such as the communications between die business executives and IT executives, the involvement of IT personnel in forming business strategies, and the support from top management on IT. However, there have been few studies which attempt to investigate if employees' alignment with business-IT strategies will improve die alignment of business-GG strategies in organizations. As Boswell et al. [7] stated, employees' alignment witìi organizations' strategies are important for the successful execution of the strategies. Yet, there has been very little attempt to investigates if employees are aligned to the business-IT strategies and whether their alignment will determine the success of business-IT alignment. Furthermore, most studies presented on business-IT alignment have been conducted in developed nations. In developed nations, there are less resistance for the employees to adopt IT strategies when compared to countries which are still new to IT and might resist the idea of

strategic IT implementations.

Therefore in order to bridge the gap in existing literatures, this paper attempts to investigate the relationships between employees' alignment and the business-GG alignments of organizations located in Indonesia. We have chosen companies in Indonesia due to the fact diat Indonesia is one of the fast growing developing countries in Asia. Furthermore, Indonesia main economy contributions are still from the agricultural and manufacturing sector. They are able to attract many foreign investments due to their low labour cost. However, otiier countries such as China and Vietnam are now competing with Indonesia using low cost strategies. In the long term, it would be difficult for Indonesian firms to compete just based on lower labour costs than its competitors. There is a need to improve efficiencies in the businesses and this can be achieved via IT implementations. Results from this study can provide useful insights to decision makers of other companies in other fast developing nations such as China, Vietnam, India and Malaysia. The next section will provide the literature review for this study. Research model and hypotheses development are discussed after me review of literature. This is follow by the methodology and discussion of results sections. Lastly, conclusion and implications as well as limitations and future suggestions for die study are discussed.

LITERATURE REVIEW

Business-IT alignment

Business-IT alignment addresses how much do the IT and business systems are in harmony with one another [15]. How to align business and IT strategies has been a question that both practitioners and academicians have been trying to answer for many years [56]. This question is important to organizations as they invest heavily into IT to improve their business performance. For example, large IT projects such as ERP implementations require successful business-IT alignment [9]. Yen and Shen [63] in their studies stated that it is important to align ERP with the competitive priorities of companies. Successful alignment will also allow companies to maximize its investments in IT and achieve harmony with their business strategies and plans [49].

Business-IT alignment is defined as "the process and goal of achieving competitive advantage through developing and sustaining a symbiotic relationship between business and IT" [18]. The goals of business-GG alignment include ensuring tìiat die IT strategy is aligned to a company's broader goals and objectives, delivering effective and efficient IT services which meet company's needs, and to ensure IT offerings and services are aligned to die business goals [59]. De Haes and Grembergen [18] stated that although the ideas for business-GG alignment are very comprehensive, the real challenge is how organizations can achieve the strategic alignment required.

Past studies on the alignment between business and IT strategies have focused mainly on the benefits that can be gathered from the alignment, or how to achieve such alignment [I]. Papp [49] reviewed the performances and alignments of more than 500 companies over a period of 5 year period and suggested that a regression model can be developed to measure the financial performance of organizations and the level of alignments between their business and IT. Raymond and Bergeron [51] decided to study business-IT alignment based on e-business. Their study which surveyed 107 Canadian manufacturers found that ebusiness alignment is able to improve the growth, productivity and financial performance of companies. Lee et al. [37] developed a socio-technical framework in their study of business-IT alignment and found that the alignment which resulted from socio-technical arrangement in companies' infrastructure will improve business performances. Henderson and Venkatraman [34] also stated that organizational benefits will be achieved if IS and Business strategies and objectives are aligned.

Given the positive outcomes that can be achieved if business and IT strategies and objectives are aligned, many practitioners and academicians aimed to find ways to improve such alignment. Past researchers have developed various models to investigate me factors that influence or hinder the success of business-IT alignment. Teo and King [61] for example, found diat business competence of IS executive is able to account for more than 9% of variation in tiie degree of alignment between business and IS planning. Luftman and Brier [41] in their study with over 500 companies across 15 industries found that some of the main enablers and inhibitors of successful business-IT alignment include senior executive support for IT, understanding die business, IT-business relationship and leadership. Luftman and Brier [41] further suggested that altiiough there is no single comprehensive strategy that will allow firms to achieve and sustain business-IT alignment, the enablers and inhibitors of alignments have remained quite consistent. Gregor et al. [30] found that an organization's enterprise architecture will enable the alignment of business strategy and IT. Teo and Ang [60] proposed die critical success factors for the alignment of business and IS plans. Their studies showed that some of the important critical success factors include top management commitment to the strategic use of GG, IS management knowledge about business, and top management confidence in the company's IT department. Gutierrez et al [32] compared the factors affecting alignments between SMEs and larger organizations. Their findings concluded that altiiough SMEs and large organizations have different resources and IT expertise, the factors that influence the alignment of business-IT are the same regardless of organizations' size. The factors used in their study were communications between IT and business managers, the competency/value measurements which included the assessment of IT investment through the use of metrics, clear definitions of authority given for making IT decision, partnership between business and IT managers, organizations' readiness and the skills of companies' workers.

These existing literatures demonstrated that there were indeed many attempts to study on factors mat can result in better alignment in business-IT strategies and planning. One of the most studied variables used by them is die organization factor (i.e. companies' size, IT governance practices, management support, business and IT managers' relationships). However, it should be noted diat when IT, business strategies or plans are developed, organizations should also involve their employees. Gagnon et al [27] noted that in most organizational strategies, there is little understanding on the mechanisms by which individuals come to aligned with strategies. In this connection, it is important to consider die alignments of employees with the business-IT strategies and plans and to determine whemer employee alignments will influence a successful business-IT alignment. The next section provides an overview of employee alignment.

Employee Alignment and Business-IT alignment

Employee alignment occurs when die employee's behaviour corresponds with their organizational strategy [27]. However, the question remains whedier employees in the companies truly understand the directions and objectives of their organizations [6]. As early as 1954, management guru Drucker [22] has stated that in order for strategic alignment of organizations to occur, individuals within the company must behave in a contributory manner to support the strategic goals of the company [27], [22]. Gagnon and Michael [26] further elaborated that if employees have a supportive attitudes towards the strategic objectives of the company, they are more likely to make decisions that are consistent with diese objectives.

Gagnon and Michael [26] argued that it is important to include individual actors such as employees instead of focusing on organizational level and the associated outcomes when studying business strategies. Although their study was based on strategies in general, a successful business-IT alignment is no difference in terms of its success which depended very much on the alignment of the employees within the organizations. Boswell et al. [7] similarly noted that it was important to align employees to the organizations' business strategies to ensure that the strategies can be successfully implemented. However, there is currently a lack of empirical models which focuses on die relationship between employee alignment and business-IT alignment. Our research proposed such framework which consists of the relationships between employee alignment and business-GG alignment. Our study therefore proposed a research model that empirically examines this relationship. The justifications for including the proposed variables are explained in the next section.

RESEARCH MODEL AND HYPOTHESIS DEVELOPMENT

Perceived Organizational Trust

For an organization to be successful, it is important to have trust within the business organizations. This involved the trusts between the employees and the managers, as well as the employees with the organizations. Trust occurs when an employee willingly become vulnerable to another in exchange for a mutually beneficial outcome [27], [21]. In this study, we have adopted the definition of trust from whereby trust is defined as me employees' trusts on their leaders, the long term business-IT strategies proposed by dieir top management, as well as leaders from other departments.

Past studies have highlighted the importance of organizational trust in business-IT alignment. Eckerson [23] highlighted die importance of trust between business and G? departments for successful business-GG alignment. Dirks and Ferrin [21] found diat when employees trust their top management as well as the organizations, it will have a positive relationship with the organizational commitment and die desired work attitudes. Reich and Benbasat [52] proposed that trust should be tested in die study of business-IT alignment. In line witìi past literatures, we hypothesize diat:

Hl: Perceived organizational trust will improve businessIT alignment in an organization.

Perceived communications on Business-IT Strategies to Employees

In order for a strategy to be successfully implemented, a good communication is essential [2]. A communication is successful if information is transferred from die sender to the receiver with the receiver fully understanding the information he or she received [2].

Luftman [40] stated diat communication is one of the factors that can affect die alignment of business-IT strategies. Communications in organizations involved the exchange of ideas, sharing of information and knowledge between the IT and business managers, ensuring that those involved in both business and IT sides have an understanding on die firm's strategies, business and GG environment. An example of this is shown in Chong et al [13]'s study on how an organization diat wanted to implement an industrial IT standard as part of its strategic plans was able to do so through good communications between die organization and its partners. Rockart et al [53] also mentioned that good communication will ensure that business and GG capabilities are able to be integrated into die business effectively.

Al-Ghamdi et al [2] studied how employees obtained information on corporate strategies and found that most employees surveyed were not happy with their present knowledge on corporate strategy and would like to know more. They found that employees who have worked longer in an organization were able to find more information on corporate strategies as they were able to communicate with the senior management, while junior employees often found that they were not able to have access to such information. When a corporate strategy is set by the top management, it needs die cooperation and executions from all employees. Therefore it is important that strategies are communicated to all employees regardless of dieir positions and experience in die company. Employees in the organization need to know die direction from the top management, and ifthe companies' strategies are communicated to them, they will feel involved and this will increase the chances of successful strategy implementation [20], [2], [57]. We therefore hypothesize that:

H2: Perceived communications on business-G? Strategies to employees will improve business-GG alignment in an organization.

Perceived employee commitment to Business-IT Strategy

Commitment research shows die challenges of aligning employees witìi organization strategies [27]. Commitment is defined as the individual's attachment and willingness to support his or her organization [44]. Gagnon and Michael [26] stated that in today's business environment whereby the bonds between employees and their organizations could be short term, it is important that they are committed to the strategies set by the companies.

Wooldridge and Floyd [62] stated that in an organization, the managers need to be strategically committed. Our current business environment involves more team work, and therefore a committed manager who finds diat his team members are not committed to the company or strategy will find it difficult to ensure the successful implementation of the strategies. When implementing business-GG strategies, the risk is that employees might resist the adoption of technology [12] and is not committed to the business-GG strategy.

Often, when forming a business-IT strategy, it involves implementing strategic G? tools in the organization. Such tools could be new to die organizations. Chen and Gupta [11] and Meredith [43] found that employee's lack of commitment is a barrier to the successful implementation of new technologies. They conclude that an important pre-requisite for technological change is employee commitment. Often, the major decline in employee commitment is also due to their resistance to technological change [5], [10]. Based on existing literatures, we hypothesize that:

H3: Perceived employee commitment to business-IT Strategies will improve business-GG alignment in an organization.

Perceived knowledge on business-IT strategies

It is often being said that knowledge is a key foundation of competitive advantage for an organization [29]. In our research, we defined perceived knowledge on business-IT strategies as the employee's perception of their understanding of the organization's business-IT strategies. This definition is adopted from Gagnon et al [27].

Gagnon et al [27] stated that in order for an organization's strategic goals to be committed by the employees, the employees must have a clear knowledge of what die organization is trying to achieve. That is to say that employee should have a complete understanding of their organization's strategies and this understanding is consistent with those who created the strategies. Boswell and Boudreau [6] highlighted that in order for organizations to gain competitive advantages through thenstrategic goals, it is important that the employees achieved "line of sight". They went on to define "line of sight" as the "understanding of organizational objectives and how to contribute to those objectives". The same principles have been applied to this study. In order to for employees to be aligned to the business-IT initiatives of organizations, it is important that they have requisite knowledge of die organizations' overall businessIT strategies.

Although the relationships between employee knowledge and business strategies or strategic change have been studied in the past (e.g. [27], [50]), there is little empirical analysis that investigates the relationships between employee knowledge and business-IT alignment. In this connection, we hypothesize that:

H4: Perceived knowledge on business-IT strategies will improve business-IT alignment in an organization.

METHODOLOGY

Survey instruments and data collection

Survey instrument is used to test the research model and the hypothesis in this research. Following the advice from Luarn and Lin [39], we have adapted majority of the items for each construct from past literatures. The survey consists of 47 questions to measure the constructs in the study. The target population of this study are employees working in manufacturing companies in Bandung, Indonesia. Table I shows the sources of where the questions were adapted from.

In order to obtain data from the Indonesian manufacturing firms, we contacted the Jakarta Chamber of Commerce and Industry for a list of manufacturing companies in Bandung. We made phone calls to the list of companies behind obtaining agreement from 30 manufacturing firms who were willing to participate in this research. The organizations chosen were ideal for evaluating employee knowledge to their business-IT strategies as these organizations have recently begun to implement strategic IT systems such as ERP, SCM and CRM systems. A total of 500 hardcopy surveys were distributed to 30 manufacturing companies in Bandung, Indonesia. The surveys were translated into Bahasa Indonesia. Out of the 500 surveys distributed, 135 were received while 14 were incomplete. Therefore the total usable questionnaire in this study is 121 with a response rate of 24.2%. We have distributed the surveys to administrative employees working in various departments in the companies such as marketing, accounting, IT and human resources. Hair et al [33] stated that the appropriate minimum sample size for a research is to have 15 observations for each independent variable. As there are 4 independent variables measuring employee alignment in this study, a minimum sample size of 60 is needed. Since we have 121 respondents in this study, the sample size for this research is adequate.

Variable Measurement

Independent variables - employee alignment

The independent variables were derived from existing literatures as shown in Table I. Thirty-eight survey questions were used to measure the 4 independent variables in this study. Each question was measured by five-point Likert scale. For instance, "1" denoted as strongly disagree, "2" denoted as disagree, "3" denoted as neutral, "4" denoted as agree and "5" denoted as strongly agree. Statements that were negatively stated were reversed coded during the analysis, such as the items for perceived cost. These negative worded items are important in reducing the response bias since the respondents have to read the items carefully in case they are phrased the other way round [24]. In order to ensure the reliability of the survey items used to measure die variables, reliability analysis using Cronbach's Alpha is applied. AU the Cronbach's Alpha values are greater than 0.70 (i.e. perceived organizational trust (0.732), Perceived communications on business-GG strategies to Employees (0.759), Perceived employee commitment to business-GG Strategies (0.937), Perceived knowledge on business-IT strategies (0.913)), which concurs with the suggestion from [46].

Dependent variable - Business-IT alignment

The measurement for dependent variable is adopted from Kyobe [36]. We measure the business-G? alignment from the perceptions of the employees instead of the actual organizational business-IT alignment. For example, employees are asked whether they perceive if business plan takes into considerations of GG strategies. A sample of the survey questionnaire is attached in Appendix I. Similar to the measurements for the employee alignment, the 5 point Likert Scale is also used in this study. The Cronbach's Alpha value for the dependent variable is 0.742.

Data Analysis

The research model shown in Figure 1 was analyzed by using SEM. The data analysis was conducted in four steps:

1) Investigating the assumptions of multivariate analysis

2) Performing an exploratory factor analysis (EFA) with varimax rotation to determine the underlying dimensions of adoption factors.

3) Examining the measurement models for each factor using confirmatory factor analysis (CFA).

4) Testing the research model using SEM.

The above-mentioned steps are discussed in die following subsections.

Testing the assumptions of multivariate analysis

The skewness and kurtosis of our variables fall within the acceptable ranges of (± 1 ) therefore our data is normally distributed [25]. The correlation coefficients for the independent variables were less than 0.90 thus confirming that multicollinearity did not exist.

Exploratory Factor Analysis (EFA)

EFA with varimax rotation was performed separately on the employment alignment factors and business IT alignment in order to extract the dimensions of each construct. During this validation process, several items in the employment alignment factors that did not contribute to the Cronbach's alpha values of the scales were deleted, namely, the first (TRUl), second (TRU2), third (TRU3), forth (TRU4), seventh (TRU7), eight (TRU8), ninth (TRU9) and tendi (TRUlO) items of perceived organizational trust; the first (COMI), second (COM2), third (COM3), fifth (COM5), and eight (COM8) items of perceived communications on business-GG strategies to employees; the first (KNOl) to sixth (KN06) of perceived knowledge on business-IT strategies measures were deleted due to poor factor loadings less tiian 0.5 on their respective latent variables [35], [55]. Table III illustrates the results of EFA. The Cronbach's alpha values ranged from 0.732 to 0.937, which are all well above the acceptable threshold 0.70 [47] and factor loadings, are statistically significant at ? < 0.001 as shown in Table BJ.

Measurement Model - Confirmatory Factor Analysis

The measurement model included 19 items explaining four factors: perceived organizational trust (TRU), perceived communications on business-IT strategies (COM), perceived employee commitment to business-GG strategies (COT) and perceived knowledge on business-IT strategies (KNO). In relation to this study, the CFI indices for all the four factors are above 0.9 levels which implied evidence of unidimensionality [3]. As shown in Table ?, all scales are within the accepted limits and composite reliability of all latent constructs exceeded the benchmark of 0.7 [46], implying that the measurement is acceptable. Table G? illustrates the results of convergent validity and internal reliability for constructs.

The goodness of fit the measurement model was measured in terms of six common measures: using the ratio of ?2 statistics to the degree of freedom (df), comparative fit index (CFI), goodnessof-fit index (GFI), adjusted goodness-of-fit index (AGFI), normed fit index (NFI) and root mean square error of approximation (RMSEA) [54]. From Table IV, the observed normed ?2 for this model was 0.295 with (p-value = 0.587 > 0.05) which is acceptable. Other fit indexed include the GFI = 0.999; AGFI = 0.988; CFI = 0.999; NFI = 0.997 are exceeded the recommended cut-off level of 0.9. The RMSEA = 0.000 which is below the cut-off level of 0.08 suggested by [8]. The combination of these results suggests that the measurement model appears to represent a very good fit.

Structural Model

The overall results of structural model analysis are shown in Table IV The structural model has a well fit as determined from the Chi-square index (χ^sup 2^ = 1 .3 19; p-value = 0.267 > 0.05) as well as other indices (GFI = 0.991; AGFI = 0.934; CFI = 0.994; NFI = 0.977; RMSEA = 0.052). All the model-fit indices exceeded their respective common acceptable levels, recommending the structural model displayed to represent an acceptable model fit to the data [38].

Hypothesis testing

The statistical significance of all the structural parameter values was examined to determine the validity of the hypothesized paths. The analytical results revealed that perceived organizational trust (critical ratio = 3.261; p < 0.01), communication on businessIT strategies (critical ratio = 3.181; ? < 0.01) and perceived knowledge on business-IT strategies (critical ratio = 2.650; ? < 0.01) were found to have a significant and positive relationship with business-IT alignment. Thus, the hypotheses Hl, H2 and H4 were supported. Meanwhile perceived employee commitment to business-G? strategies (critical ratio = 1.196; p > 0.05) had no significant relationship with business-IT strategies. Therefore, the hypothesis H3 was not supported. Table V demonstrates the hypotheses results.

DISCUSSIONS OF RESULTS

The main objective of this research is to investigate whether employee alignment will affect the business-GG alignment in organizations. The results showed mat 3 out of 4 hypotheses are supported. Perceived organizational trust (Hl), perceived communications on business-GG strategies to employees (H2), and perceived knowledge on business-IT strategies (H4) are all found to have a positive and significant relationship with business-IT alignment of organizations.

We have taken the definitions of trust to include not only trusting their leaders, the business-GG strategies proposed as well as people from different departments. When an organization set its strategies, it is important that its employees trust the strategies and their top management. This is because strategies can only be successful when everyone is the organization believe in it, and not just the top management. In existing management literatures, it is found that perceived organizational trust is important for a strategy to be successfully executed and to improve business performances [28], [21], [26]. However, for companies nowadays, their strategies often involved both IT and business strategies, and it is important for the business and GG strategies to be aligned. In past research, trust has sometimes being mentioned as the trust between the G? and Business departments [23]. This is important as given that most employees in the IT department are viewed by the business departments as technologists who do not necessary have knowledge in business operations such as finance or marketing. For G? department, they might be more interested in the technologies than business operations. Given that for business-IT alignment to be achieved, both of these departments must trust and work with each other. Therefore companies should build up the trust of their employees in the business-GG strategies proposed.

Perceived communications on business-IT strategies to employees is found to have a positive influence on business-IT alignment. This is consistent with existing studies which has supported the role of communications in successful businessIT alignment [2], [40], [13], [53], [32], [48]. However, many of these existing studies looked at either communications on strategies in general, or communications between business and IT executives. When it comes to implementing business-IT strategies, it is not about the implementation from only these two departments. AU the companies' employees will need to be aligned towards the strategies set forth by the company and will contribute towards ensuring the success of the strategies that the companies aim to deploy. Therefore it is important for organization that the business-IT strategies are communicated to all their employees, and this will help ensure the success of their business-IT alignment.

Whenever an organization sets its strategies, it is possible that only senior employees (in position or years of service) have knowledge on such strategies or know how to obtain information on such strategies. Certain junior employees might just do their job as they do not know what the organizations' goals are, nor will they find out from their managers [2]. Such cases showed a lack of communications as well as lack of knowledge for the employees which will hinder the long term success of the organization's goals. The result from this study shows that knowledge on the strategies is in fact important. This research supports existing studies on employee knowledge and business strategies and showed that the perceived knowledge on business-GG strategies is also important for business-IT alignment.

The result showed that perceived employee commitment to business-IT Strategies has no significant influence on business-IT alignment in organizations. This result is surprising because past studies have shown a positive correlation between commitment and performance of strategies [62], [45]. Our study however, has focused on administrative employees instead of management staffs. It is possible that the administrative employees' commitments are lower when compared to other studies which tend to have conducted with management staffs. It is possible that for Indonesian organizations, it is important to have a committed project champion who drives die project instead of needing the commitments of all employees for the success of business-IT alignments. Since employees nowadays tend to have worked for more tiian one company in their working life, they will not show a long term commitment to a company's strategies as shown in past studies. It is also interesting to note that Indonesia is different from many Asian countries that are steep in Confucianism. The Indonesian culture does not consider the future as being more important than the present [58]. Therefore long term commitments might not be viewed as significant by the employees although this needs further studies.

CONCLUSION AND IMPLICATIONS

The importance of IT in manufacturing is no longer debatable. However, how to achieve business-IT alignment is still a challenge for many organizations. This research examines the relationship between employee alignment and business-GG alignment. A model was proposed and empirically examined. Unlike past researches which have studied on factors affecting business-IT alignment, outcome of business-GG alignment, or focusing on managers from business and IT departments, this research has looked at businessIT alignment from the perspective of employees in general. We have also surveyed administrators who hold junior positions in the company. This is important because managers will often know the business and IT strategies in the company, but this cannot be always true for the other employees in the companies. The implications of this study can be divided into both practical and theoretical sides.

Practical contribution

This study has provided an empirical validation of the relationships between employee alignment and business-IT alignment. Most IT implementation studies have tended to neglect whether employees of all levels are align with the organizations' business-IT strategies. Furthermore, with IT strategies playing an important role in organizations' long term strategies, it is important that different units within the organizations are aligned to the business-GG strategies. Our results also provide strategies for organizations that want to improve dieir business-GG alignment. Firstly, they should build up the trust with their employees in terms of the goals and business and IT strategies of the company. This can be done by getting the employees involved and provide feedbacks when formulating the business-GG strategies. In many Asian countries strategies and decisions are made by the top management. However, if the employees do not believe in these strategies, it would be difficult for the successful execution of these strategies. For example, an organization might believe that a CRM system will help the organization to achieve competitive advantage. However, to ensure that the CRM system is useful, data needs to be collected and keyed into the system. Employees who do not trust that CRM has benefits to the organizations might not put in the effort to collect or input the data. Managers also have a role to play as they need to explain the strategies to the employees and let inform them that the strategies will benefit all in the company. The managers should also communicate the strategies to all employees. The company can also ensure that the strategies are communicated to the employees via IT technologies. For example, the business-GG strategies can be posted on company's intranet which can be accessed by the employees. Employees should be able to communicate with their managers or top management with regards to die business-IT strategies. They should also feel that they can approach the management to discuss these issues. The company should ensure that all employees have knowledge on die business-GG strategies. This can in fact be achieved through good communications. In order to improve employees' knowledge on business-IT strategies, the company can implement a knowledge management system. The knowledge management system will ensure that employees can have easy access to information on their business-G? strategies and such strategies can be accessed anytime, anywhere. Inductions and trainings should also be conducted regularly to update the knowledge of the employees on the business-IT strategies of the organizations.

Our study was also conducted in a developing country. Most companies in developing countries are at an early stage of IT deployment. Therefore by focusing our study in Indonesia, die results will be applicable to other similar countries such as Malaysia, Vietnam and China.

Theoretical contributions

There has been little study which empirically evaluating the relationship between employee alignment and business IT alignment. We have proposed a model to investigate these relationships by employing SEM analysis. The model and results from this study is based on employees from various departments in die companies (i.e. Human resource, IT, Finance etc). We have also measured employee alignment from the perceptions of the employees instead of the top management. We believe that this is one of the few studies which have investigated the issue of business-G? alignment from the perspective of employee alignment. Our study has also developed and validated a multidimensional construct of employee alignment practices. This tool can be used by organizations to evaluate their current employee alignments' status.

LIMITATIONS AND FUTURE RESEARCH DIRECTIONS

There were some potential limitations of this research. Our research was conducted in Indonesia and future studies can focused on other countries and even conduct a cross country comparisons to see if the results are consistent when set in different countries. The sample size for our study is also relatively small and we hope to include not only junior administrators, but also managers and blue collar workers in the organizations for future study. Our model has only included employee alignment. Future businessGG alignment studies can also incorporate other control variables such as organization factors and national culture together with the employee alignment used in this research. Lastly, a cross comparison studies can also be conducted to test if the models used in this study is applicable to other countries.

ACKNOWLEDGEMENT

We would like to thank the three anonymous reviewers for their suggestions and comments.

[Sidebar]

Received: July 8, 2010 Revised: September 7, 2010 Accepted: September 28, 2010

[Reference]

REFERENCES

[1] Adekoya, A.A., Eyob, E., Ikem, FM., Omojokun, E.O., Quaye, A.M. and Bada, A.O. "Dynamics of information technology (IT) successful implementation in development countries: A Nigerian case study", Journal of Computer Information Systems, (45: 3), 2005, 107-1 12.

[2] Al-Ghamdi, S.M., Roy, M.H. and Ahmad, Z.U. "How employees learn about corporate strategy: An Empirical analysis of Saudi manufacturing company," Cross Cultural Management: An International Journal (14: 4), 2007, 273-295.

[3] Al-Hawari, M and Ward, T. "The effect of automated service quality on Australian banks' financial performance and the mediating role of customer satisfaction," Marketing Intelligence & Planning (24: 2), 2006, 127-147.

[4] Beach, R., Muhlemann, A.P, Price, D.H.R., Paterson, A., and Sharp, J.A. "The selection of information systems for production management: An evolving problem," International Journal of Production Economics (64:1-3), 2000, 319-329.

[5] Boer, H., Hill, M. and Krabbendam, K. F.M.S. "Implementation management: promise and performance," International Journal of Operations & Production Management (10: 1), 1990, 5-20.

[6] Boswell, WR., and Boudreau, J.W "How leading companies create, measure and achieve strategic results through "Une of sight"". Management Decision, (39: 10), 2001, 851-860.

[7] Boswell, W.R., Bingham, J.B. and Colvin, A.J.S. "Aligning employees through "Une of sight"," Business Horizons (49), 2009, 499-509.

[8] Brown, M.W., Cudeck, R. Alternative Ways of Assessing Model Fit, Newbury Park: Sage Publications, 1993.

[9] Chakraborty, S. and Sharma, S.K. "Enterprise resource planning: an integrated strategic framework," International Journal of Management and Enterprise Development (4: 5), 2007, 533-51.

[10] Chen, L, Gupta, A. and Chung, CH. "Employee commitment to die implementation of flexible manufacturing systems," International Journal of Operations & Production Management (16: 7), 1996, 4-13.

[11] Chen, I.J. and Gupta, A. "Understanding the human aspects of flexible manufacturing system through management development," Journal of Management Development (10: 1), 1993, 32-43.

[12] Chong, A. YL. and Ooi, K.B. "Adoption of Interorganizational System Standards in Supply Chains: An Empirical Analysis of RosettaNet Standards," Industrial Management and Data Systems (108: 4), 2008, 529-547.

[13] Chong, A.Y.L, Ooi, K.B and Sohal. "The relationship between supply chain factors and e-coUaboration tools adoption: An empirical examination," International Journal of Production Economics (122: 1), 2009, 150-160.

[14] Cliff, J.E. and Jennings, RD. "Commentary on the multidimensional degree of family influence construct and me F-PEC measurement instrument," Entrepreneurship Theory and Practice (29: 3), 2005, 341-347.

[15] Chen, L. "Business-G? alignment maturity of companies in China," Information & Management (Al: 1), 2010, 9-16.

[16] Costigan, R. D., liter S.S. and Berman, J.J. "A Multidimensional Study of Trust in Organizations", Journal of Managerial Issues, (10: 3), 1998, 303-317.

[17] Darroch, !."Developing a measure of knowledge management behaviours and practices," Journal of Knowledge Management, (7: 5), 2003, 41-54.

[18] De Haes, S., and Van Grembergen, W. "Exploring the relationship between IT governance practices and business/ IT alignment through extreme case analysis in Belgian midto-large size financial enterprises," Journal of Enterprise Information Management, (22 :5), 2009, 615-637.

[19] Denning, RJ. & Riehle, R.D. "The profession of G? Is software engineering engineering?", Communications of the ACM, (52:3), 2009, 24-26.

[20] Dickerson, C, Communications 101. InfoWorld's CTO, 2002.

[21] Dirks, K. T. and D. L. Ferrin. "The Role of Trust in Organizational Settings," Organization Science, (12: 4), 2002, 450-467.

[22] Drucker, P. The Practice of Management. New York: Harper, 1954.

[23] Eckerson, WW., 2005. Trust is Fundamental to alignment. SearchCIO.com, December 15, 2009, available at: http:// searchwinit.techtarget.com/news/article/0,289142,sidl_ gcill53068,00.html.

[24] Field, A. Discovering Statistics Using SPSS, 2nd ed., London: Sage Publications, 2005.

[25] Garson, D. Testing of Assumptions, Key Concepts and Terms, 2007, available at: www2.chass.ncsu.edu/garson/ pa765/assumpt.htm (accessed 2 September 2007).

[26] Gagnon, M. A. and Michael, J. H. "Employee strategic alignment at a wood manufacturer: An exploratory analysis using lean manufacturing," Forest Products Journal, (53: 10), 2003, 24- 29.

[27] Gagnon, M., Jansen, K. and Michael, J.H. "Employee Alignment with Strategic Change: A study of StrategySupportive Behaviour among blue collar employees," Journal of Managerial Issues, (20: 4), 2008, 425-443.

[28] Gould- Williams, J. "The importance of HR practices and workplace trust in achieving superior performance: a study of public-sector organizations," International Journal of Human Resource Management, (14 :1), 2003, 28-54.

[29] Grant, R.M. "The knowledge-based view of the firm: implications for management practice," Long Range Planning, (30: 3), 1997, 450-4.

[30] Gregor, S., Hart.D., andMartin, N. "Enterprise architectures: enablers of business strategy and IS/IT alignment in government," Information Technology & People, (20: 2), 2007, 96-120.

[31] Gunasekaran, A. and Ngai, E. W T. "Knowledge management in 2 1 st century manufacturing," International Journal of Production Research, (45: 1 1), 2007, 2391-2418.

32] Gutierrez, A., Orozco, J. and Serrano, A.'Tactors affecting IT and business alignment: a comparative study in SMEs and large organizations," Journal of Enterprise Information Management, (22: 1/2), 2009, 197-21 1.

[33] Hair, J.F., Anderson, R.E., Tatham, R.L., Blank, W.C. Multivariate Data Analysis, 5th ed. New Jersey: PrenticeHall, 1998.

[34] Henderson, J. and Venkatraman, N. "Strategic alignment: leveraging information technology for transforming organisations," IBM Systems Journal, (32 :1), 1993, 4-16.

[35] Hoang, D.T., Igel, B., Laosirihongtìiong, T. "The impact of total quality management on innovation. Findings from a developing country," International Journal of Quality & Reliability Management, (23: 9), 2006, 1092-1 17.

[36] Kyobe, M. "The influence of strategy-making types on IT alignment in SMEs," Journal of Systems and Information Technology, (10:1), 2008, 22-38.

[37] Lee, S.M., Kim, K., Paulson, P and Park, H. "Developing a socio-technical framework for business-IT aUgnment," Industrial Management & Data Systems, (108: 9), 2008, 116-1181.

[38] Lin, H.F., Lee, G.G. "Impact of organizational learning and knowledge management factors on e-business adoption," Management Decision, (43: 2), 2005, 171-88.

[39] Luarn, P. and Lin, H.H. "Toward an Understanding of die Behavioural Intention to Use MobUe Banking," Computer in Human Behaviour, (21: 6), 2005, 873-891.

[40] Luftman, J. "Assessing Business-IT alignment maturity," Communications of the Associate for Information Systems, (4: 14), 2000, 1-51.

[41] Luftman, J. and Brier, T. "Achieving and sustaining business-IT aUgnment", California Management Review, (42: 1), 1999, 109-122.

[42] Luftman, J., Kempaiah, R. and Nash, E. "Key issues for IT executives 2005," MIS Quarterly Executive, (5: 2), 2006, 80-99.

[43] Meredith, J.R. Managerial Lessons in Factory Automation: Three Case Studies in Flexible Manufacturing Systems, Monograph, (4), Operations Management Association, TX, 1989.

[44] Mowday, R. T, Porter, LW. and Steers, R.M. Employee Organization Linkages: The Psychology of Commitment, Absenteeism and Turnover, New York: Academic Press, 1982.

[45] Noble, CH. and Mokwa, P. "Implementing Marketing Strategies: Developing and Testing a Managerial Theory," Journal of Marketing, (63: 4), 1999, 57-73.

[46] Nunnally, J. Psychometric Theory, New York: McGrawHill, 1978.

[47] Nunnally, J.C. and Bernstein, LH. Psychometric Theory, 3rd ed., New York: McGraw-Hill, 1994.

[48] O'Neil, J. "Measuring the Impact of Employee Communication on Employee Comprehension and Action: A Case Study of a Major International Firm," Public Relations Journal, (2: 2), 2008, 1-17.

[49] Papp, R. "Business-IT alignment: Productivity paradox payoff?" Industrial Management & Data Systems, (99: 8), 1999, 367-373.

[50] Pappas, J. M., Flaherty, K.E. and Wooldridge, B. "Tapping into Hospital Champions: Strategic Middle Managers," Health Care Management Review, (29), 2004, 8-16.

[51] Raymond, L. and Bergeron, F. "EnabUng the business strategy of SMEs through e-business capabilities: A strategic alignment perspective," Industrial Management & Data Systems, (108: 5), 2008, 577-595.

[52] Reich, B.H. and Benbasat, I. "Factors that influence the social dimension of alignment between business and information technology objectives," MIS Quarterly, (24: 1), 2000, 81-113.

[53] Rockart, J.F., Earl, M.J. and Ross, J. "Eight Imperatives for the New GG organization," Sloan Management Review, 1), 1996, 43-55.

[54] Segars, A.H., Grover, V. "Strategic information systems planning success: an investigation of the construct and measurement," MIS Quarterly, (22: 2), 1998, 139-63.

[55] Sit, W-Y, Ooi, K. B., Lin, B. and Chong, A. YL. "TQM and customer satisfaction in Malaysia's service Industrial Management & Data Systems, (109: 7), 2009, 957-975.

[561 Smaczny, T "Is an alignment between business and information technology the appropriate paradigm to IT in today's organisations?," Management Decision, (39: 10), 2001,797-802.

[57] Starzmann, G. and Baca, C. "Total rewards: freshness that lasts," Workspan, (47: 4), 2004, 55-61.

[58] Sudarwan, M. and Fogarty, T.J., "Culture and Accounting in Indonesia: An Empirical Examination," The Journal of Accounting, (13:4), 1996, 463-481.

[59] Technet. Business-IT alignment Overview, 2002. April 25 2009, available at: http://technet.microsoft.com/en-us/ library/cc54330 1 .aspx.

[60] Teo, T.S.H. and Ang., J. S. K. "Critical Success Factors in the Alignment of IS plans with business plans," International Journal of Information Management, (19), 1999, 173-185.

[61] Teo, T.S.H. and King, W.R. "Integration between business planning and information systems planning: An evolutionary-contingency perspective," Journal of Management Information Systems, (14: 1), 1997, 185-214.

[62] Wooldridge, B. and Floyd, S.W. "Research Notes and Communications Strategic Process Effects on Consensus," Strategic Management Journal, (10: 3), 1989, 295-302.

[63] Yen, H.R., and Sheu, C. "Aligning ERP implementation with competitive priorities of manufacturing firms: An exploratory study," International Journal of Production Economics, (92: 3), 2004, 207-220.

[Author Affiliation]

ALAIN YEE-LOONG CHONG

The Hong Kong Polytechnic University

Hung Horn, Hong Kong

KENG-BOON OOI

Jalan University

31900, Kampar, Perak, Malaysia

FELLX T. S. CHAN

The Hong Kong Polytechnic University

Hung Horn, Hong Kong

NATHAN DARMAWAN

INTI University College

71800 Nilai, Negeri Sembilan, Malaysia

APPENDIX I - SAMPLE ITEMS IN SURVEY

Perceived Organizational Trust

We believe in the strategies laid out by our senior management.

When employees express their point of view, they will be truly heard.

We trust each other to complete a job.

We are encouraged to share our ideas and feeUngs with others.

Conflicts in our views in company strategic directions will be dealt with in an appropriate and professionaüsm.

IT strategies are an important part of business strategies.

Business strategies can only be successful through a good support from IT strategies.

We believe that our ideas will be heard.

It is not a problem for us to provide ideas on feedbacks on companies' strategies.

AU employees are responsible and will perform their job regardless of dieir department.

Perceived communications on business-IT strategies to employees

I am kept informed about major changes occurring within the company.

Information is shared in a timely manner from the company.

I am kept informed about reasons behind company decisions.

The information I receive from the company is complete.

I am kept informed about major changes occurring within my business/function.

Information is shared in a timely manner from my business/ function.

I am kept informed about reasons behind business/function decisions.

I have the information needed to perform my job effectively.

The information I receive from my business/function is complete.

My business/function does a good job of communicating information to all employees.

Perceived employee commitment to business-IT strategies

I am willing to put in a great deal of effort beyond that which is normally expected in order to help the business be successful.

I am committed to the long term strategies set by my organization.

I feel loyal to the business.

I find my values and goals are compatible with the business' values and goals.

I am proud to tell others that I am part of the business.

There is much to be gained by particpating with the business on a long-term basis.

I agree with the business' goals, plans and poUcies.

I really do care about the fate of the business.

Deciding to be involved with the business has had a positive influence on my life.

I understand and support decisions regarding the future of the business.

Perceived knowledge of business-IT strategies

I am willing to put in a great deal of effort beyond that which is normally expected in order to help the business become successful.

I am committed to the long-term strategies set by my organization.

I feel loyal to the business.

I find my values and goals are compatible with tiie business' values and goals.

I am proud to tell others that I am part of the business.

There is much to be gained by participating with the business on a long-term basis.

I agree with the business' goals, plans and policies.

I really do care about the fate of the business.

Deceding to be involved with the business has had a positive influence on my Ufe.

I understand and support decisions regarding the future of the business.

Perceived knowledge on business-IT strategies

People in our organization frequenüy spend time discussing customers future needs, visions and companies' strategies.

When people in our organization need information, they know who exactly to ask.

There are regular meetings between departments to discuss trends and developments.

We keep a database of customer information, business and IT strategies diat is easy to access.

Information about customer satisfaction is disseminated to all levels of our organization.

We encourage people with similar interest to work together.

We manage to keep up-to-date witìi technological developments that could affect our business.

Information on new technological developments that affect our business is circulated.

We periodically review the likely effect of changes in technology on our customers.

We are quick to decide on how to respond to changes in technology.

Business-IT alignment

Business planners understand the value of IT to business.

Our business plan specifies the contribution of IT to the business.

Business plans revised whenever IT evolves.

Business managers participate in IT planning processes.

IT personnel participate in business planning.

IT opportunities prioritized on basis of business objectives.

We revise G? plans whenever business evolves.

IT personnel understand our business needs.

IT and business plans are prepared simultaneously.