The organisational integration of the IT function: A key enabler of firm capabilities and performance

Organisational integration between intra- and inter-organisational sub-systems is an important factor of operational coordination, innovation and strategic effectiveness. So far, scholars have mainly focused on the organisational integration of three sub-systems: production/operations, marketing/sales, and research & development. This study investigates the organisational integration of the organisational unit in charge of the firm's information technology (IT) and information systems (IS): the IT function. Five key dimensions of this construct are identified: integration of the IT function with the top management team (TMT), business units, firm's customers, non-IT suppliers and IT providers. A survey questionnaire with 236 respondents confirms that all these five dimensions of the organisational integration of the IT function positively influence the firm's market performance; this relationship is strongly mediated by the contribution of the firm's IS to both competitive and cooperative organisational capabilities. This research model highlights the complementary explanatory power of Lawrence and Lorsch's theory of organisational integration, the business – IT alignment literature, and the resource-based view (RBV). The results suggest that the more firms evolve towards IT-enabled business environments, the more they need IT managers to be socially embedded in these environments and actively contribute to the overall knowledge-based organisational integration of the system.