Hard and Soft Governance: The Missing Link Between Corporate and IT Governance

Earlier research showed firms with superior IT governance (ITG) have more than 20% higher profits than firms with poor governance given the same strategic objectives. This article forms part of an on-going independent research project on effectiveness and maturity of ITG. It is known that corporate governance (CG) and ITG are related. However, little is known on how this relation works. This relation can be described in several ways; for example, from a performance (added value) or a conformance (rules and regulation) perspective. Current governance research is largely focused on hard governance. Hard governance refers to elements like structures and processes. Soft governance is related to social aspects like human behavior and organizational culture. This study focuses on the relation between CG and ITG from a performance perspective and is based on a systematic literature review and a series of ten case studies. In the case studies an adjusted assessment instrument for hard and soft ITG was used. A systematic literature review was conducted to validate the relevance of the focus areas of this instrument for CG. The instrument used in the case studies was adjusted with a corporate perspective to be able to compare results from a corporate and a departmental (business and IT) perspective. Our research showed that an integrated approach for ITG and CG is needed, and what focus areas need attention in this relation. The value of this paper is twofold: It describes the basic outlines of the focus areas relating ITG and CG. Some of which are not yet getting a lot of attention in current research, especially continuous improvement and the informal organization. It lists the results from a series of ten cases studies, in which twelve focus areas have been discussed with sixty participants from a departmental (IT and business perspective) and a corporate perspective.