What is the primary mechanism through which IT governance influences firm performance?

The primary mechanism through which IT governance influences firm performance is through its impact on IT-business alignment. This alignment is essential because it ensures that the IT strategy is in harmony with the overall business strategy, enabling organizations to leverage technology effectively to drive competitive advantage.

When IT governance structures are robust, they facilitate better communication and collaboration between IT departments and various business units. This cooperation ensures that IT initiatives are focused on delivering value relevant to the business goals, which often results in more effective project selection, resource allocation, and prioritization of IT investments.

Effective IT-business alignment can lead to improved operational efficiency, enhanced customer service, and accelerated innovation, all of which contribute to better overall firm performance. By aligning IT with the business objectives, organizations can also better respond to market changes and customer demands, which further drives performance improvements.

The other choices, while relevant to aspects of IT governance, do not capture the central mechanism by which governance influences performance as directly as IT-business alignment does. Enhancing workforce productivity, ensuring compliance with regulations, and eliminating technological risks may contribute to better outcomes but are outcomes of effective alignment rather than the mechanism itself.