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Interorganizational dependence, information transparency in interorganizational information systems, and supply chain performance

  • Empirical Research
  • Published:
European Journal of Information Systems

Abstract

To explain the large disparity between the potential and practice of interorganizational information systems (IOSs), this study investigates asymmetric information transparency in an IOS from a dyadic perspective. When there is asymmetric dependency in a dyad, an IOS may not completely eliminate asymmetric information transparency between supply chain (SC) partners but may change the nature of information asymmetry. Consistent with resource dependence theory, this study includes joint dependence and dependence asymmetry as antecedents of information transparency in an IOS. The data used in this study were collected from 111 matched pairs of intermediate component manufacturers and their immediate suppliers in heavy manufacturing industries. The results show that asymmetric information transparency in an IOS is prevalent in SC relationships. Regarding the antecedents of information transparency in an IOS, both joint dependence and each partner’s dependence advantage are significant. Furthermore, information transparency in an IOS positively influences SC performance measured by SC relationship quality and relationship-specific performance, whereas asymmetric information transparency negatively influences joint profit performance.

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Notes

  1. Theoretically, it is possible to compare interorganizational information sharing between two different channels, i.e., electronic (e.g., IOS) and non-electronic (e.g., face-to-face). However, in today’s networked environments, SC firms of all sizes are interconnected through electronic channels in order to improve the efficiency and effectiveness of their business processes. Further, considering the sheer volume of information exchange between upstream SC partners in heavy manufacturing industries, it is practically impossible to maintain a close SC partnership without an IOS. Hence, we limit our discussion to environments where SC partners are interconnected via an IOS.

  2. Regression splines are piecewise regression functions between two variables. The basic logic of a regression spline is to allow the slope of the regression equation to change at certain points (known as knots, nodes, or jointpoints). Usually, one regression will approximate the negative tendency, while the other regression will approximate the upward tendency. In this instance, researchers can identify knots in the relationship between x and y, and then they can perform two piecewise linear estimates joined at the knots (Johnston, 1984).

  3. One concern may be regarding respondent knowledge of relationship-specific performance. Since the majority of our sample consists of small- and medium-sized companies (80.1% of the buyer sample and 84.6% of the supplier sample had revenues of less than $100 million in 2010) working in upstream SCs, respondents should know what proportion of their business is conducted with the SC partner and its profitability.

  4. For our main analyses, common method variance was not a concern because the data were collected from two different sources: (1) intermediate component manufacturers and (2) their immediate suppliers.

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Authors and Affiliations

  1. Graduate School of Information, Yonsei University, Seoul, Korea

    Bangho Cho & Kyung Kyu Kim

  2. Department of Business Administration, Daejin University, Pocheon-si, Korea

    Sung Yul Ryoo

Authors
  1. Bangho Cho
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  2. Sung Yul Ryoo
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Correspondence to Kyung Kyu Kim.

Additional information

Associate Editor:

Richard Klein

Editor:

Frantz Rowe

Appendices

Appendix A

Constructs and measures [seven-point (1–7) Likert scales]

* Item dropped due to poor loadings in a confirmatory factor analysis with PLS-SEM.

(R) Reverse coded item.

Dependence (Morgan et al, 2007)

The extent to which you agree or disagree with the following statements as it applies to your firm for this category:

  1. 1.

    This partner firm would be very difficult to replace.

  2. 2.

    We are dependent on this partner firm.

  3. 3.

    Losing this partner firm would be costly for us.

Information transparency in IOS (Saeed et al, 2005)

  • Supplier’s information transparency for the manufacturer: the extent to which the supplier’s internal information in the following areas is visible and accessible to the manufacturer through the IOS:

    1. 1.

      Order completion status

    2. 2.

      Backorder status

    3. 3.

      Production schedules

    4. 4.

      Current production capacity

    5. 5.

      Demand planning information

  • Manufacturer’s information transparency for the supplier: the extent to which the manufacturer’s internal information in the following areas is visible and accessible to the supplier through the IOS:

    1. 1.

      Inventory status

    2. 2.

      Sales order status

    3. 3.

      Production schedules

    4. 4.

      Current production capacity

    5. 5.

      Demand forecast information

Relationship quality (Kumar et al, 1992)

  1. 1.

    Our association with this partner has been a successful one. *

  2. 2.

    The partner leaves a lot to be desired from an overall performance standpoint. (R)

  3. 3.

    If we had to give the partner a performance appraisal, it would be outstanding. *

  4. 4.

    Overall, the results of our relationship with the partner have fallen short of expectations. (R)

Relationship-specific performance (Jap and Anderson 2003)

The degree to which financial outcomes result from the interdependence of effort and investments that reside within the dyad:

  1. 1.

    A high level of joint profits between them

  2. 2.

    A considerable amount of profits together

  3. 3.

    An increase in the joint profits shared between them

Interorganizational trust (Poppo et al, 2008)

  1. 1.

    The relationship with this partner firm can be characterized as mutually trusting.

  2. 2.

    This partner firm keeps the promises it makes to your company.

  3. 3.

    Your firm is sure that what this partner firm says is true.

  4. 4.

    This partner firm fulfills its commitments exactly as specified.

  5. 5.

    When making important decisions, this partner firm is concerned about your company’s welfare.

IOS integration (Grover & Saeed, 2007)

The extent to which the systems shared by two or more firms are integrated to facilitate access to information residing in either firm in the following three dimensions:

  1. 1.

    Databases

  2. 2.

    Applications

  3. 3.

    File formats

Joint governance structure (Luo, 2008)

  1. 1.

    Both parties always work together on establishing and implementing new policies, rules, and procedures that govern alliance operations.

  2. 2.

    Both parties always work together formulating and executing budget control and investment control.

  3. 3.

    Both parties always work together building and exercising various information control systems (in accounting, sales, production, inventory, etc.).

  4. 4.

    Both parties are always dedicated to establishing a new corporate culture suitable for alliance growth, relinquishing its own corporate culture if necessary.

  5. 5.

    Both parties always work together setting forth alliance goals and objectives and annual plans, and monitoring and appraising middle level manager performance using some of these measures.

  6. 6.

    Whenever the alliance contract needs alternation or renewal, both parties always work together on all related terms and clauses and jointly monitor contract enforcement thereafter.

  7. 7.

    Contract terms on interparty cooperation, sharing, and exchange are clearly defined and well executed by both parties.

  8. 8.

    Contract terms on directing, monitoring, and governing the alliance’s major activities are clearly defined and well executed by both parties.

Appendix B

Results of measurement models for the manufacturer and supplier samples.

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Cho, B., Ryoo, S.Y. & Kim, K.K. Interorganizational dependence, information transparency in interorganizational information systems, and supply chain performance. Eur J Inf Syst 26, 185–205 (2017). https://doi.org/10.1057/s41303-017-0038-1

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