Empirical assessment of interorganizational information systems for supply chain management in the motor industry

Klugherz, Michael (1992) Empirical assessment of interorganizational information systems for supply chain management in the motor industry. Doctoral thesis, University of London: London Business School.

Abstract

This thesis uses empirical evidence to examine the impact of electronic data interchange (EDI) as a new information technology on the design of the interorganizational supply chain between first-tier component suppliers and their original equipment manufacturer (OEM) customers in the motor industry. The basic framework of analysis is the relationship between transaction characteristcis, information technology and interorganizational structure. Looking at the supply chain as an information processing system, EDI is assumed to take on a mediating role within the transaction context in which buyers and suppliers operate. A deductive research approach is used to address systematically both causes and consequences of EDI use for supply chain management. In this process, three complementary organizational theories are used to develop testable research hypotheses: systems theory, transaction cost theory and resource dependence theory. The research method is based on a survey design which focuses on the interorganizational supply chain as the unit of analysis. Responses of 104 first-tier component suppliers form the basis for an empiricl assessment of the research hypotheses. A structural equation modelling technique is employed to identify the causal relationships between supply chain transaction characteristcis, the suppliers' use of information systesm, and aspects of both the behavioural and economic structure of the supply chain. The empirical analysis yields four main findings. First, the information processing response of suppliers is a function of transaction cost, whereby transaction specific investment in logistics operationgs and the criticality of transactions turns out to be key determinants for EDI use. Second, EDI is established as a transaction cost mediator, which allows firms to move towards increasingly market-based governance structures. Third, OEM customers, in response to their increased dependence on suppliers, are found to rely on economic power sources and active influence to get their suppliers to use EDI in situations of high transaction cost. Fourth, no evidence could be established for a hypothesized impact of information systems on the formation of value-added partnerships. At present, partnership developments are a consequence of high transaction cost, but not of the suppliers' EDI use.