Digital transformation :|a mutual understanding and strategic alignment perspective

Abstract

Previous studies have shown a positive impact of mutual understanding on IT strategic alignment and its impact on firm performance. However, digital transformation (DX) is changing the way the business operates, communicate and create value and it is on the top of the agendas of CEOs. While DX requires top management support and commitment, no previous research has addressed the mutual understanding between C-level managers on the role of DX, its impact on strategical alignment and contribution of it to firm performance. This research aims to fill this gap. For this, the work of Johnson and Lederer (2010) is extended and previously validated IS instruments are adapted to DX by reviewing the literature and by making in-depth interviews with CIO/CDOs of 4 international companies and 2 IS academics. This research extended the theories of mutual understanding and IT strategic alignment to quantitatively assess the role and contribution of DX. Survey data collected from 45 companies, where 45 CEOs and 123 CxOs participated. Mutual understanding of the role of DX led to DX strategic alignment at aggressiveness, proactiveness, internal and external defensiveness dimensions. On the other hand, aggressiveness, analysis, and internal defensiveness dimensions improve DX contribution metrics. This research also shows that the greatest mutual understanding on the role of DX is between C-level managers primarily in the manufacturing sector in accordance with Industry 4.0. This research will help organizations increase interaction, communication, and collaboration between different departments and raising awareness about the importance and impact of DX on companies’ success.