Impact of usage of inter-organizational information systems on supply chain capabilities

This research empirically tests a theoretical model that seeks to explain how Inter-Organizational Information System (IOS) Usage affects Supply Chain Capabilities. Specifically, the focus is to find out whether IOS Usage affects Supply Chain Capabilities directly or indirectly through Supply Chain Integration. There is no prior research to explain the impact of IOS Usage on Supply Chain Capabilities. The research model is developed based on Transaction Cost Economics, Relational View of Inter-Organizational Competitive Advantage, and Knowledge Based View theories. IOS, in this study, refers to EDI systems (including Internet based EDI systems). Supply Chain Capabilities comprise of Upstream and Downstream Supply Chain Capabilities. Capabilities are expressed in terms of cost capability, delivery reliability, process flexibility and product quality. A survey-instrument with 99 measurement items is developed and data collected from 96 buyer - supplier dyads using a Web based survey. After screening the data for outliers, responses from 95 dyads are analyzed using Confirmatory Factor Analysis (CFA) and Structural Equation Modeling (SEM).; The results of this study suggest that Supply Chain Integration fully mediates the relationship between IOS Usage and Supply Chain Capabilities and that development of both upstream and downstream capabilities occurs synergistically on account of IOS enabled Supply Chain Integration. The results provide evidence that EDI systems facilitate in the exchange of only four different types of information. The results also suggest that relationship between IOS Usage and Supply Chain Capabilities does not change after addition of supply chain type control variable. This is the first study to examine the impact of IOS enabled Supply Chain Integration on Supply Chain Capabilities. This study is also the first study to develop and apply a method to measure Supply Chain Capabilities by getting responses from both the business units that form the dyad and by performing MTMM analysis to carve out adverse effects due to method variance. The results of this study should encourage supply chain members to share information through IOS and adopt Supply Chain Integration to improve Supply Chain Capabilities.