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Factors Influencing the Strategic Alignment of Information Technology with Business in the Tourism Industry STATUS of THESIS STATUS OF THESIS Title of thesis: Factors Influencing the Strategic Alignment of Information Technology with Business in the Tourism Industry I ,___________________MOHAMMED ABDI MUSSA_______________________ Hereby allow my thesis to be placed at the Information Resource Center (IRC) of Universiti Teknologi PETRONAS (UTP) with the following conditions: 1. The thesis becomes the property of UTP 2. The IRC of UTP may make copies of the thesis for academic purposes only. 3. This thesis is classified as Confidential √ Non-confidential If this thesis is confidential, please state the reason: _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ The contents of the thesis will remain confidential for _______ years. Remarks on disclosure: _____________________________________________________________________ _____________________________________________________________________ _____________________________________________________________________ Endorsed by ________________________ ____________________ Signature of Author Signature of Supervisor Permanent address: Name of Supervisor 185 Upper Warwick Street, Liverpool L8 8HD, UK Assoc. Prof. Dr. P. D. D. Dominic Date: _____________________ Date: __________________ UNIVERSITI TEKNOLOGI PETRONAS FACTORS INFLUENCING THE STRATEGIC ALIGNMENT OF INFORMATION TECHNOLOGY WITH BUSINESS IN THE TOURISM INDUSTRY By MOHAMMED ABDI MUSSA The undersigned certify that they have read, and recommend to the Postgraduate Studies Programme for acceptance this thesis for the fullfilment of the requirements for the degree stated. Signature: ____________________________________ Main Supervisor: Assoc. Prof. Dr. P. D. D. Dominic Signature: ____________________________________ Co - Supervisor: Dr. Alan Giffin Downe Signature: ____________________________________ Head of Department: Dr. Mohd Fadzil Bin Hassan Date: _____________________________________ FACTORS INFLUENCING THE STRATEGIC ALIGNMENT OF INFORMATION TECHNOLOGY WITH BUSINESS IN THE TOURISM INDUSTRY by MOHAMMED ABDI MUSSA A Thesis Submitted to the Postgraduate Studies Programme As a requirement for the degree of DOCTOR OF PHILOSOPHY DEPARTMENT OF COMPUTER AND INFORMATION SCIENCES UNIVERSITI TEKNOLOGI PETRONAS BANDAR SERI ISKANDAR PERAK MAY 2011 DECLARATION OF THESIS Title of thesis Factors Influencing the Strategic Alignment of Information Technology with Business in the Tourism Industry I ______________________MOHAMMED ABDI MUSSA__________________________ hereby declare that the thesis is based on my original work except for quotations and citations which have been duly acknowledged. I also declare that it has not been previously or concurrently submitted for any other degree at UTP or other institutions. Witnessed by ________________________________ __________________________ Signature of Author Signature of Supervisor Current address: Name of Supervisor 185 Upper Warwick Street, Liverpool L8 8HD, UK Assoc. Prof. Dr. P. D. D. Dominic Date: _____________________ Date: __________________ iv ACKNOWLEDGMENT I am indebted to my supervisors, Associate Professor Dr P. Dhanapal Durai Dominic and Dr Alan Giffin Downe. Without their wise counsel, inspiring discussions and guidance, this thesis would not have been completed. I wish to convey my deepest appreciation for their encouragement and support over the last three years. I would like also to express my sincere appreciation to Associate Professor Dr Azween Abdullah at Universiti Teknologi PETRONAS, and Dr Siew-Phaik Loke at Universiti Teknologi Mara for their time and enduring assistance to help me to complete this thesis. I would also like to acknowledge and express my gratitude to the Universiti Teknologi PETRONAS for their financial support which has enabled me to conduct this research. Without the graduate assistance scheme awarded to me by the postgraduate office, this research would not have been materialized. Additionally, I would to express my heartfelt thanks to my late father, my mother, my wife, and all of my family members who have provided me all the necessary support and encouragement to pursue my education. I am grateful for the support of my close friends and colleagues who have been supportive in peer review sessions. Finally, I wish to acknowledge the important contribution of the survey respondents. Their support to provide the survey data made this study possible. v ABSTRACT For the last two decades, information technology (IT) in general, and information systems (IS) in particular have rapidly advanced in capability and have changed the way organizations do business. For many organizations, IT spending constitutes one of the biggest investments each year and as a result, the strategic alignment between information technology (IT) and business has been a priority for information system practitioners and business executives. However, the conditions under which IT can be used for competitive advantage continues to be a major challenge. The objectives of this thesis were to identify the behavioral, technical and organizational underlying strategic alignment factors, and to investigate strategic alignment influence of the use of IT for competitive advantage. The findings of this study further extend the strategic alignment research stream. This was achieved by developing, empirically testing, and validating the second-order strategic alignment factor model to investigate the influence of the strategic alignment between IT and business on the use of IT for competitive advantage. Using the survey method, a mail questionnaire has provided 202 respondents of IT and business executives from the Malaysian service sector (Tour and Travel agents). The data were analyzed using structural equation modeling (SEM) techniques to validate the hypothesized second-order strategic alignment factor model. Confirmatory factor analysis supported the coordination of IT planning with business planning; communication between IT and managers; human resource skills maturity; IT infrastructure flexibility; and organizational change adaptability as the underlying strategic alignment factors. The analysis also supported that strategic alignment between IT and business to positively influence the use of IT for competitive advantage. Furthermore, the hypothesized second-order strategic alignment factor model demonstrated an adequate model fit with the sample data. Hence, the hypothesis that the proposed second-order factor model fits the data was supported. The study has made theoretical and practical contributions. First, the theoretical contribution, the proposed second-order strategic alignment model of this study has vi extended the cumulative research of aligning IT strategy with business strategy by examining how strategic alignment can influence the use of IT for competitive advantage. Another theoretical contribution is that, strategic alignment is specified as a second-order construct, derived from the first-order constructs; which are a coordination of IT and business planning factor; communication between IT and business managers factor; human resource skills maturity factor; IT infrastructure flexibility factor; and organizational change adaptability factor. The revised second- order strategic alignment factor model not only has acceptable model fit, but also performs better than the alternative model. This study has provided a validated and tested research model that will be an important tool for practitioners and managers to be able to know and assess the underlying strategic alignment factors, and the influence of strategic alignment of the use of IT for competitive advantage. vii ABSTRAK Dalam lingkungan dua dekad yang lalu, teknologi maklumat (IT) secara umum, dan sistem maklumat (IS) secara khususnya mempunyai kemajuan yang pesat dalam kemampuan dan telah mengubah gaya sesebuah organisasi menjalankan perniagaan; dalam kebanyakan organisasi, perbelanjaan IT merupakan salah satu pelaburan yang terbesar pada setiap tahun . Sebagai hasilnya, penyelarasan strategik antara teknologi maklumat (IT) dan perniagaan telah di senaraikan antara sepuluh tertinggi dalam isu IT bagi para pengamal sistem maklumat dan eksekutif perniagaan. Namun, keadaan di mana IT boleh digunakan untuk keunggulan dalam persaingan terus menjadi cabaran besar bagi mereka. Tujuan tesis ini adalah untuk mengenalpasti perilaku, teknikal dan organisasi yang mendasari faktor penyelarasan strategik, dan untuk mengetahui pengaruh penyelarasan strategik pada penggunaan IT untuk keunggulan kompetitif. Penemuan kajian ini memanjangkan penyelarasan strategik aliran penyelidikan. Hal ini dilakukan dengan membentuk, menguji dan mengenal pasti secara memerhati peringkat kedua model faktor penyelarasan strategik untuk menyiasat pengaruh penyelarasan strategik antara IT dan perniagaan mengenai penggunaan IT untuk keunggulan kompetitif. Dengan menggunakan kaedah tinjauan, senarai soalan melalui e-mel telah menyediakan 202 responden IT dan eksekutif perniagaan dari sektor perkhidmatan Malaysia (agen pelancongan dan perjalanan). Data yg diperolehi dianalisis menggunakan teknik pemodelan persamaan berstruktur atau “structural equation modeling” (SEM) untuk mengesahkan peringkat kedua model faktor penyelarasan strategik. Analisis faktor pengesahan telah menegaskan bahawa penyelarasan perancangan IT dengan perancangan perniagaan, komunikasi antara IT dan pengurus, tempoh kematangan kemahiran sumber
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