This paper empirically examines relationships among organizational strategy, competitive advantage of information technology (CAIT), and organizational performance in Korean manufacturing industry. Effects of information technology on the linkage betw...
This paper empirically examines relationships among organizational strategy, competitive advantage of information technology (CAIT), and organizational performance in Korean manufacturing industry. Effects of information technology on the linkage between organizational strategy and performance are investigated and CAIT measures suggested by Sethi and King (1994) are tested for verification. Questionnaires were administered to randomly selected 150 CIO`s in manufacturing industry. Research results confirm that information technology provides several traits of strategic advantages such as efficiency, threat, functionality, preemptiveness, and synergy and significantly contributes to organizational performance. Direct relationship between organizational strategy and performance is proven to be weak, rather indirect effect of strategy on performance through CAIT is partially recognized. While MIS literature strongly suggests alignment between organizational strategy and CAIT, IT is not seemed to be well considered by Korean top managers in organizational strategy formulation process, Competitive advantage of Information Technology measures developed by Sethi and King`s (1994) are proved to be reliable and valid, but threat and synergy dimensions are needed to be revalidated. High performance firms show much stronger association among organizational strategy, CAIT, and performance than low performance firms. This finding reinforces the general belief that alignment between organizational strategy and CAIT is critical for firms to attain sustainable competitive advantage, subsequently enhances organizational performance and competitive position against rivals, potential entrants, substitutes, suppliers, and buyers.