Shadow Information Technology Risk and Usage Policy Effectiveness among German and Italian Financial Executives

ABSTRACT Our study draws on self-organization theory to develop a framework for explaining financial executives’ shadow information technology (IT) behavior (i.e., executive adoption of a technology without the IT department’s knowledge). Understanding executive shadow IT usage is important, because it can significantly increase business risk related to loss of control and information security. Although directly involving shadow IT, our research also attempts to clarify mixed results in the broader usage policy literature. We investigate shadow IT usage via an experiment and separate interviews with financial executives from Germany and Italy, representing autonomous and autogenic environments, respectively. Results indicate higher shadow IT propensity in autonomous contexts and stronger adherence to stringent IT usage policies in autogenic contexts. Interview data further suggest that internal control strength and executive alignment with the IT department are key factors shaping shadow IT behavior. Unique findings add an international component to shadow IT and usage policy literatures. JEL Classifications: M15.