How Hybrid IT Governance Mechanisms Influence Digital Transformation and Organizational Performance in the Banking and Insurance Industry of Indonesia

Abstract

Incumbent businesses need to accelerate their digital transformation due to disruption from digital technologies, competition, behavioural changes, regulation, and pandemics. Nevertheless, many digital transformation investments have failed due to poor governance. Previous research has identified the hybrid of traditional and agile-adaptive IT governance mechanisms that influence digital transformation. However, it is important to measure the extent of mechanisms’ influence on organizational performance. Therefore, online survey data from 338 Indonesian banking and insurance respondents have been collected and analysed using the SEM-PLS. The results show that hybrid IT governance mechanisms have moderate influences on digital transformation, and digital transformation strongly influences organizational performance. The study contributes to research by analysing the effect of hybrid IT governance mechanisms on organizational performance, fully mediated by digital transformation. In practical terms, the measurement items from the hybrid IT governance mechanisms, digital transformation and organizational performance dimensions can be useful for guiding digital transformation journeys.