An Empirical Investigation of the Drivers and Outcomes of Information Technology Governance by Boards of Directors

This study examines the extent to which board of directors are providing ‘governance oversight’ of their organization’s IT activities and whether their efforts are making any difference in terms of organizational performance. Building on contingency theory we theorize that the magnitude of IT oversight exercised by boards depends on an organization‘s particular IT situation and especially its need for (1) fast and reliable IT, and (2) new innovative IT. However, we also posit that the contingency approach may be suboptimal because it focuses only on current IT needs, and may ignore other potential competitive and defensive uses of IT. These future-looking considerations are in line with the resource-based view of the firm according to which IT is a key resource which, when utilized efficiently and effectively, can create a competitive advantage. Accordingly, we hypothesize that the magnitude of board-level IT oversight positively affects firm performance regardless of existing IT needs, Using structural equation modelling analysis applied to data collected from a sample of 146 directors, representing 146 Canadian firms we found support for all our hypotheses. Implications for research and practice are discussed.