Examining the Emergence of Hybrid IS Governance Solutions: Evidence From a Single Case Site

Abstract

The prior IS literature points to the importance of organizational context for predicting a firm’s IS governance solution. However, for the most part this literature assumes that firms adopt a uniform IS governance solution for all business units and that this solution can be predicted by context variables at the overall organization level. The purpose of this study is to increase our knowledge about why firms implement a hybrid IS governance solution in which a subset of IS functions that includes systems development is decentralized to some business units, but not to other business units, in the same enterprise. A theoretical framework of context variables at the business unit level is first developed. An embedded, single case study provides an initial test of eight propositions derived from the framework, as well as an opportunity for theory building. Data are collected utilizing both deductive and inductive methods from IS and non-IS executives of a divisionalized Fortune 500 firm in which a uniform decentralized solution for systems development in place for almost a decade has recently been replaced by a hybrid solution. The case study findings suggest that a configuration of four variables characterizes a business unit context conducive to decentralized systems development governance (organic decision-making, high business unit autonomy, a differentiation competitive strategy, and an unstable industry environment). As predicted, however, the influence of these variables is likely to be overridden and a “deviant” solution adopted when deficiencies in IT capabilities are perceived and there is a culture that supports structural change at the business unit level. Additional interview and survey data collected from the key stakeholders are then analyzed in order to develop a richer understanding of the dimensions of the IT capabilities construct at the business unit level. The notion of absorptive capacity provides a theoretical argument for the emergent findings. Implications for researching today's increasingly complex IS governance forms are then drawn.