The impact of IT-business alignment on SME performance: The mediating effects of strategic collaboration, coordination, and responsiveness

The alignment between information technology (IT) and business strategy is regarded as an ongoing issue for information systems (IS) researchers and practitioners. Although prior studies suggest the enabling role of IT-business alignment on firm performance, our understanding of the processes through which such gains are achieved in the small-to medium enterprise (SME) context still remains unclear. Moreover, there is limited research exploring how SMEs employ the alignment between IT and business strategy to work closely with their business partners in order to achieve business competences. In order to address these research gaps, this study investigates whether and how IT-business alignment enables SMEs to achieve performance goals through developing strategic business activities effectively and efficiently. Using structural equation modelling analyses of survey responses collected from 211 Australian high growth SMEs, we find positive,significant, and impactful linkages between IT-business alignment, strategic collaboration, coordination, responsiveness, and SME performance. The results also show that strategic collaboration, coordination, and responsiveness fully mediate the relationship between IT-business alignment and SME performance. This study contributes to the IS research by providing empirically-supported explanations for the critical role of IT-business alignment in SME success. More significantly, through investigating the effect of IT-business alignment at the inter-mediate business process level, this research provides new insights to understand the underlying influential mechanisms of IT-business alignment in the SME context. These findings have important implications for SME business managers.