Effectiveness of Strategic Decision-Making on IT Investment: Antecedents and Its Impacts on IT Investment Performance

Abstract

Many companies have taken the recent step of setting up an independent decision-making system, often called an 'IT Investment Committee', in order to maximize the performance of their IT investments. However, merely organizing such a committee in itself might not ensure good investment performance, owing to conflicts of interest or discord among its members. In this study, it was reviewed which characteristics of members are required for IT Investment Committee to have effective decision-making, by setting up a hypothesis based on Bounded Rationality Model and Politics Model which have been widely adopted in the strategic decision-making area and then conducting a survey on 152 companies. We found that Procedural Rationality and Political Behavior have statistically significant impact on the effectiveness of strategic decision-making on IT investment. Furthermore, degree of shared knowledge between business members and IT members participating in decision-making process and degree of two types of heterogeneity among them lead to higher level of Procedural Rationality and Political Behavior. These findings have a number of practical and theoretical implications.