The Impact of Knowledge Sharing and Rational Planning on IT-Based Organizational Performance: An Empirical Analysis

Achieving the full worth of IT investments is an important task of top management but questions remain as to what factors lead to improved returns and how do such investments impact organizational performance. Using a postal survey of 273 CIO respondents, this study analyzed the relationship of knowledge sharing and rational planning to IT-based organizational performance. Knowledge sharing was assumed to be influenced by the support of top management for IT planning. Rational planning was represented by strategic IT alignment and the formal evaluation of IT investments. Using a structural equation modeling approach, study data revealed that top management support of IT predicted domain knowledge sharing which in turn predicted higher levels of rational planning. However, formal evaluation of IT investments was a higher and more significant predictor of IT-based organizational performance than alignment. Study results support top management support, knowledge sharing, and rational planning as predictors of IT-based organizational performance.