Survey of Strategic Alignment Impacts on Organizational Performance in International European Companies Hajer KEFI Associate Professor CREPA, University of Paris-Dauphine Place du Maréchal-De-Lattre-De- Tassigny 75016 Paris France hajer.kefi@u-picardie.fr Michel Kalika Professor CREPA, University of Paris Dauphine Place du Maréchal-De-Lattre-De- Tassigny 75016 Paris France Michel.kalika@dauphine.fr ❒ Abstract The strategic use of technology based in- formation systems (IS/IT) is a fundamen- tal issue for every business. This is par- ticularly true in the case of firms that en- gage in international business activities. The present paper is part of an empiri- cally oriented project to investigate the impacts of strategic alignment on organ- izational performance, especially in the case of European International Compa- nies. We use Structural Equation Modeling to apprehend the strategic alignment con- cept as an emergent variable derived from the co variation of two components : (1) business strategy; and (2) the IS/IT strategy. Then, we explore the role of this emergent concept as a determinant of or- ganizational performance. We use data from a large database con- structed due to survey instruments to as- sess the usage of IS/IT among European firms. 505 questionnaires have been ex- ploited in this study. The results obtained will be presented and discussed in this paper. Key-words: Strategic alignment, organizational per- formance, co variation approach, struc- tural equation modeling. 1. Introduction The globalization of business reflects the view that most companies have to compete in a borderless environment. Challenges and opportunities are tremendous especially in the European Commu- nity, where profound changes have been experi- enced (common currency, restructuring of Eastern Europe, etc.). The European companies have to compete in an increasingly competitive global market. They have to undergo the continuous threats of new entrants and substitute products and the strengthening bargaining power of all their business partners, within or beyond the European frontiers (Kalika, et al., 2003). In this context, the achievement of sustainable competitive advantage requires dramatic business process changes, moving toward more flexible and agile structures. Strategic alliances and partnering can support and enable these transformations, via joint ventures, knowledge exchange, outsourcing, etc. Such arrangements can help companies (the small ones, as well as the giants) to target custom- ers once beyond their grasp. Historically, the role of IT in the organization has evolved. It has been treated for a long time as a “cost center” or an expense rather than a strategic weapon (Alter, 1995). Since the 1980’s, this role has been recognized as “strategic” (Porter and Millar, 1985). It has been considered as an enabler to achieve competitive advantage. For some 20 years now, the assumption that technology based information systems (IS/IT) provide a crucial sup- port to operational and strategic business proc- esses has been widely accepted (Luftman, 1996; Ward and Griffiths, 1997). However, empirical evidence that provides a good correlation between IS/IT alignment with business strategy and organ- izational performance is still needed. As stated by Sabherwal and Chan (2001): “empirical research on the performance implications of this alignment has been sparse and fragmented”. 0-7695-2268-8/05/$20.00 (C) 2005 IEEE Proceedings of the 38th Hawaii International Conference on System Sciences - 2005 1