Explaining EDI -based electronic cooperation in customer -supplier interfirm relationships: An empirical study

Two prominent trends---more cooperative business partner relationships coupled with rapid advances in computer and communications technology---have given rise to new forms of electronic cooperation through interorganizational systems (IOS). In spite of this emerging electronic cooperation, existing literature is limited in its ability to pinpoint the core set of factors based on well-grounded theories that determine the extent of the electronic cooperation between trading partners. By investigating the use of electronic data interchange (EDI) as the specific form of IOS that enables electronic cooperation, this research intends to identify factors influencing the level of EDI use, in terms of volume and diversity, in dyadic customer-supplier relationships.;An integrated research model is built on the existing base of knowledge on transaction cost theory, social exchange theory, and diffusion of innovation theory. A number of hypotheses are derived particularly with respect to the outcomes of influence strategies ("carrot-and-stick") used by customers, the role of overall transaction climate between the trading partners, and the effects of supplier's intraorganizational characteristics. We empirically test the research hypotheses using structural equation modeling with data collected from 251 suppliers of a nationally known retailing customer.;The theoretical model receives strong empirical support in the data obtained form the sample. The results indicate that reciprocal investments, power exercised, relative advantage, and cooperation are significant predictors of the levels of EDI volume and/or diversity in the customer-supplier relationship. The results also indicate that asset specificity and trust are significantly and positively related to the level of suppliers' cooperation with the customer, which in turn is positively related to the levels of both EDI volume and diversity. In addition, we find that the positive association between reciprocal investments and EDI diversity is enhanced with increasing levels of suppliers' cooperation with the customer. With respect to the explanatory power of the theoretical model, the model explains approximately 18% and 26% of the variances in EDI volume and EDI diversity, respectively. In addition, the theoretical model provides a relatively large amount (54%) of the explained variance for suppliers' cooperation with the retailer.