Striving towards strategic alignment in SMEs: an empirical analysis

Purpose - Despite general awareness and acceptance of the benefit of strategic planning/alignment of IS strategy with business strategy, few efforts have been made to define and study the relationship. A review of literature has revealed that past studies have largely neglected the specific consideration of small to medium‐sized enterprises (SMEs) especially IT/software developing SMEs in India. The purpose of this research is to investigate the prevalence of strategic planning activity in Indian IT SMEs and its decisive influence on business performance. Design/methodology/approach - A survey‐based approach was adopted to understand the prevalence of strategic planning activity in Indian IT SMEs and its crucial influence on business performance at all three levels of management. A short survey instrument was designed by reviewing the literature on strategic planning activity in software developing SMEs. A sample of 23 software developing SMEs in India was used. Findings - A response rate of 88.8 per cent was achieved and included respondents at senior management, middle management, and lower level management across the software developing SMEs in India. The results indicate that the alignment of IS/IT strategy with corporate strategy has significant effect on performance of IT SMEs besides the general awareness of importance of strategic alignment in SMEs at all three levels of management. Research limitations/implications - The limited number of software developing SMEs will affect the generalizability of the study to the entire SME population. To negate the limitations of this study, multiple multi‐level case studies will be conducted in SMEs in the next phase of research. This research would contribute by indicating some of the implications, for both decision makers and academia, of an extended IT capabilities viewpoint on strategic planning activity. Future study should focus on performing a global survey on strategic alignment practices in SMEs. Originality/value - The novelty of the paper lies in conducting a comparative study on the strategic alignment practices at all three levels of management in Indian SMEs and measuring its impact on the performance of the firm.