Environmental Uncertainty and IT Infrastructure Governance: A Curvilinear Relationship

Ling Xue (), Gautam Ray () and Bin Gu ()
Additional contact information
Ling Xue: Department of Operations and Information Management, Kania School of Management, University of Scranton, Scranton, Pennysylvania 18510
Gautam Ray: Department of Information and Decision Sciences, Carlson School of Management, University of Minnesota, Minneapolis, Minnesota 55455
Bin Gu: IROM Department, McCombs School of Business, The University of Texas at Austin, Austin, Texas 78712

Information Systems Research, 2011, vol. 22, issue 2, 389-399

Abstract: Extant research considers the IT governance choice to be a trade-off between the cost-efficiency of centralization and the responsiveness provided by local information processing. This view predicts that firms tend to decentralize IT governance in more uncertain environments. We investigate this issue by studying the relationship between environmental uncertainty and IT infrastructure governance in a sample of business units from Fortune 1000 companies. The key proposition in this paper is that the relationship between environmental uncertainty and decentralization in IT infrastructure governance is best characterized as a curvilinear relationship. That is, when environmental uncertainty increases from low to high, firms tend to first decentralize their IT infrastructure decisions to the business units to enhance their responsiveness; and then centralize their IT infrastructure decisions to the headquarters as uncertainty increases further, to achieve the benefits of coordination and to mitigate the potential agency problem in uncertain environments. Moreover, the study proposes that business unrelatedness between business units and their headquarters moderates the curvilinear relationship between environmental uncertainty and IT infrastructure governance. We find that both the propositions are supported by the data.

Keywords: IT infrastructure governance; environmental uncertainty; agency theory (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
http://dx.doi.org/10.1287/isre.1090.0269 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:orisre:v:22:y:2011:i:2:p:389-399

Access Statistics for this article

More articles in Information Systems Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().