The effect of business uncertainty on IT governance

Abstract

The purpose of this study is to examine the effect of business uncertainty on the information technology (IT) governance of listed firms in Indonesia. The samples are listed firms in Indonesia Stock Exchange for the years 2015–2018. Total observations are 1,215 firm years. The authors used the random effect panel regression to test the hypotheses. The authors find that business uncertainty has a significant positive association with IT governance, consistent with the prediction. Companies with higher business uncertainty are in higher demand for implementing IT governance. The authors have not found previous studies that examine business uncertainty as to the determinant of IT governance. The authors also examined the IT governance in Indonesia, one of the emerging countries. Most previous studies on IT governance were conducted in developed countries, which results may not be generalized to emerging countries.