While inter-organizational information integration is believed to benefit supply chain management (SCM), prior studies have shown mixed results. Based on Organizational Information Processing Theory, we question this belief and highlight the importance of information technology (IT)-enabled collaborative decision making to deliver performance benefits and the contingency of the integration–collaboration–performance link on IT infrastructure to establish electronic connections in a supply chain. Analyzing the survey data collected from a sample of 188 trading companies, we find a positive structural relationship between inter-organizational information integration and IT-enabled collaborative decision making, leading to customer service performance, when a high level of IT infrastructure development is present. Our post hoc analysis verifies these empirical findings. For practicality, we propose an empirical taxonomy of firms for managerial reference in developing IT infrastructure in support of linking inter-organizational information integration with IT-enabled collaborative decision making.
With an emphasis on coordination and collaboration, studies on supply chain management (SCM) have recognized the importance of inter-organizational information integration (Frohlich and Westbrook, 2001, Narasimhan and Kim, 2002 and Shin et al., 2000). Inter-organizational information integration refers to the extent to which firms electronically link and deploy information technology (IT) for information sharing across partner firms ( Rai et al., 2006). Information integration allows organizational activities to be coordinated as an integral whole ( Frohlich and Westbrook, 2001), facilitating information, finance, and material flows across a supply chain ( Dehning et al., 2007). Such integration for SCM is useful for reducing operations costs through elimination of waste, as well as improving communication and information sharing through removing uncertainty and equivocality in exchange ( Stefansson, 2002 and Wang and Wei, 2007; Wong et al., 2009). The premise of these benefits pertains to better information sharing in a supply chain ( Goodhue et al., 1992), improving supply chain partners’ cooperative ties in business coordination ( Malhotra et al., 2007), as well as customer service performance. From the supply chain perspective, customer service performance is concerned with the performance outcomes of firms in satisfying customer needs by being reliable, responsive, and flexible ( Fawcett et al., 2011 and Stewart, 1995). The establishment of information integration enables firms to coordinate with supply chain partners to better satisfy customer needs ( Whipple et al., 2002).
However, recent studies have found that inter-organizational information integration is not related to effective coordination of activities across firms (Sanders, 2008), while other studies have emphasized collaborative decision making for reducing the bullwhip effect in supply chain operations (Fiala, 2005, Lee et al., 1997 and Malhotra et al., 2007). The customer service operational consequences of collaborative decisions on performing supply chain activities should not be neglected (Swaminathan et al., 1998). Furthering the focus of collaborative decision making on group-based intelligence (Raghu et al., 2001), IT-enabled collaborative decision making requires application of IT to generate and disseminate information for decision making across firms ( Nissen and Sengupta, 2006). This is helpful in reducing the adverse impact of the decisions made by one party on the operations of the other partners, compromising supply chain-wide performance ( Fiala, 2005 and van der Zee and van der Vorst, 2005). This is in line with the service-dominant logic, one of the primary tenets of which is concerned with collaboration between supply chain partners ( Lusch et al., 2008). For example, the production and shipment arrangements of a manufacturer can delay the new product launches of its downstream partners, incurring sales lost, and higher inventory and warehouse costs due to uncertain replenishments in the supply chain. Similarly, a lack of understanding of the quality requirements for product design and development in the supply chain can result in the making of unwanted products in the market. These inefficiencies suggest that collaborative decision making is essential for partners to benefit from information integration by resolving divergent goals in their supply chain operations.
There are studies on the performance impacts of inter-organizational information flows through the use of information systems, e.g., EDI, but the influence of the information backbone, i.e., IT infrastructure, on information integration and collaborative decision making has not received due research attention. IT infrastructure refers to the technical foundation for supporting the coordinating organizational functions and the adoption of enabling IT to perform present and future business operations ( Pispa and Eriksson, 2003), reflecting the ability of firms to “connect” with their supply chain partners. A lack of IT infrastructure development can be detrimental to electronic linkages and collaborative decision making in supply chains, which rely on the use of standardized, timely, and accurate data for improving customer service performance ( Byrd and Turner, 2001). This information backbone is therefore instrumental in integrating information and coordinating business activities in SCM.
Drawing on Organization Information Processing Theory (OIPT), this study has the following objectives: (1) investigating the mediating role of IT-enabled collaborative decision making in the relationship between inter-organizational information integration and customer service performance of firms and (2) examining the contingency of such relationships on IT infrastructure. This study makes two contributions. First, we advance knowledge on the role of IT-enabled collaborative decision making in enhancing the performance outcomes of inter-organizational information integration. Specifically, this study sheds light on the impact of inter-organizational information integration on IT-enabled collaborative decision making, and the business value of collaborative decision making in coordinating supply chain activities. Second, we identify the performance contingency of inter-organizational information integration and collaborative decision making on IT infrastructure for SCM. The results provide evidence on the impact of IT-enabled collaborative decision making on customer service performance of supply chains from the OIPT perspective.
