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Information sharing and strategic signaling in supply chains

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Abstract

Information sharing in procurement occurs in rich and varied industry contexts in which managerial decisions are made and organizational strategy is formulated. We explore how information sharing ought to work in procurement contexts that involve investments in inter-organizational information systems (IOS) and collaborative planning, forecasting and replenishment (CPFR) practices. How and under what circumstances does a firm that plays the role of a supply chain buyer decide to share information on key variables, such as point-of-sale consumer demand data with its supplier, up the supply chain? This is a key issue that crosses the boundary between supply chain management and information systems (IS) management. The answers that we provide are based on our use of a game-theoretic signaling model of buyer and supplier strategy in the presence of uncertainties about final consumer demand. We also explore the connection between operational costs that are associated with the firm’s information sharing and information withholding strategies. Our results provide normative guidance to supply chain buyers about how to interpret different demand uncertainty scenarios to improve their decisions and generate high value. From the IS management perspective, we show the impacts on the firm of different information sharing approaches that are made possible by present day technologies.

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Authors and Affiliations

  1. W. P. Carey School of Business, and School of Computing and Informatics, Arizona State University Tempe, Arizona, AZ, 85287, USA

    Robert J. Kauffman

  2. Department of Economics, University of Wisconsin, Milwaukee, WI, 53201, USA

    Hamid Mohtadi

  3. Credit Risk Assessment, USBank, Minneapolis, MN, 55402, USA

    Hamid Mohtadi

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  1. Robert J. Kauffman
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Correspondence to Robert J. Kauffman.

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The authors acknowledge the MIS Research Center of the University of Minnesota for partial support. Rob Kauffman also thanks the W. P. Carey Chair at the W. P. Carey School of Business, Arizona State University, Tsinghua University’s School of Economics and Management, and the Shidler School of Business at the University of Hawaii for the funding of some research activities related to this work.

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Kauffman, R.J., Mohtadi, H. Information sharing and strategic signaling in supply chains. J. Syst. Sci. Syst. Eng. 18, 129–158 (2009). https://doi.org/10.1007/s11518-009-5105-2

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