How do suppliers benefit from the implementation of
IOS? : An empirical study in Chinese electronic
industry
Master thesis, MSc BA, specialization Operations & Supply Chains, University of Groningen, Faculty of Economics and Business
February 4, 2013 Lei Wang Student number: 1546406 Herman Gorterstraat 5B 3061 SM Rotterdam Tel.: +31(0)642152546 e-mail: lei0531@hotmail.com Supervisor/university/field of study Prof. dr. J. de Vries dr. K. Scholten
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Abstract
Although many studies have addressed the benefits of inter-organizational systems (IOS), the benefits of IOS on suppliers in the supply chain are still controversial and incoherent. This study, with a focus of suppliers, explores that how suppliers benefit from the implementation of IOS. We develop a model of factor impacts on the benefit of IOS. The benefits of IOS are analyzed in two levels: overall benefit and
intermediate benefit. Factors, including inter-organizational dependence,
inter-organizational differentiation, time length of IOS implementation and information availability & quality, impact the intermediate benefits of IOS. The model is examined by a questionnaire survey of 102 suppliers of two selected focal companies in Chinese electronic industry. The tested result reveals that the overall benefits of IOS occur through the intermediate benefits of IOS including the inter-organizational collaboration and task efficiency. Meanwhile, Strong evidence in this study shows that intermediate benefits of IOS have been affected by inter-organizational dependence, information availability and quality, and time length of IOS implementation.
Key words: Inter-organizational system, IOS, Supplier, Inter-organizational
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Table of content
1. Introduction ... 4
2. Literature review ... 6
2.1 Analysis on benefits of IOS ... 6
2.2 Supplier focus ... 7
2.3 Variables and hypothesis ... 8
2.4 Research model ... 12
3. Research methodology ... 13
3.1 Conducting questionnaire and data collection ... 14
3.2 Sample characteristics ... 15 3.3 Measures ... 17 3.4 Data analysis ... 19 4. Results ... 20 4.1 Descriptive statistics ... 20 4.2 Test of hypotheses ... 21
5. Conclusion and discussion ... 26
5.1 Summary ... 26
5.2 Practical implications ... 28
5.3 Limitations and further research ... 28
References ... 30
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1. Introduction
In supply chain management (SCM), strategic partnership has been considered as one of the key supply chain enablers. In managing relationships with supply chain partners, information technology (IT) and the integration of information systems across partnering organizations has emerged as an important instrument (Pereia, 2009). Inter-organizational system (IOS) is constructed by cross-boundary IT technologies and value-added networks as a vinculum between suppliers and buyers in the supply chain (Craighead, Patterson, Roth & Segars, 2006). It involves network-based and information exchange in supply chain management and decision support systems that use a common technology (Lyytinen & Damsgaard, 2011). Thus, an IOS can be established between two or more organizations that share information and communicate based on common IT capabilities and networks. It enables the creation, storage, transformation, and transmission of information across organizational boundaries (Johnston & Vitale, 1988). IOS has become the key success factor of supply chain management since it enables inter-organizational task efficiency, organizational responsiveness while minimizing uncertainty and inventory costs (Hartono, Li, Na and Simpson, 2010; Vickery, Jayaram, Droge, & Calantone, 2003).
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IOS on suppliers and mechanisms that enable suppliers to realize benefits (Subramani, 2004).
The few studies of the benefit of IOS to supplier have been conducted with the focus of the supplier network. Supplier networks comprise a large number of supplier companies working with a focal company which is the Network leader (Subramani, 2004). The focal company plays a dominant role in orchestrating suppliers, and they often champion the introduction of IOS in their supplier networks. Although IOS is based on the cooperation of both supplier and the focal company, the benefits of IOS seemed are unevenly skewed in favor of the focal company (Wang and Seidmann, 1995; Riggins and Mukhopadhyay, 1994). Suppliers appear unlikely to be benefited from networks, and they may even bear the costs in establishing IOS upon the requirement of the focal company and costs of activities related to implementation of IOS (Wang and Seidmann, 1995). The question for the suppliers to concern is how they can benefit by implementing IOS instead of whether they should implement. Since there are hardly any empirical studies on this theme, this study conducts an empirical research. The research question in this study is proposed as:
How do suppliers benefit from the implementation of IOS?
This study, from the perspective of suppliers instead of the focal company, aims to explore the factors affecting benefits of the implementation of IOS on suppliers and whether the implementation of IOS benefits suppliers in business practices by conducting an empirical research in Chinese electronic industry. The research results may provide supplier with a good understanding of how suppliers can gain benefits from implementation of IOS in their supply chain network. The sub questions are designed as follows:
1) What are the benefits of IOS?
2) What are the factors affecting the benefits of IOS on suppliers?
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To understand and explain the main research question, three sub questions listed above are necessary. In order to explore how supplier benefit from the implementation of IOS, the benefits of IOS should be clearly defined which refers to sub question 1. Then, factors influencing these benefits on suppliers and their interrelationships should be explored which refers to sub question 2. Finally, testing the interrelationships by conducting an empirical study answers both sub question 2 and
3.
To conduct this research, this study firstly reviews relevant literatures. And a clear research model is constructed together with numbers of hypothesis to present the variables and their interrelationships. Then an interview with a specialist in Chinese electronic industry council and a Likert scale questionnaire survey among a large sample of suppliers who has established IOS with two selected focal companies in Chinese electronic industry are conducted. Finally ， the statistical analysis are implemented based on the data collected and hypothesis were tested.
The rest of the article is organized as follows. In section two, a theoretical review on historical studies is conducted. To that end, a concept model and hypothesis are designed. The third section describes the research methodology of this study. In forth section, the results of data analysis are presented. The final section of this article summarizes this research and suggestions.
2. Literature review
2.1 Analysis on benefits of IOS
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or do not happen.Overall, IOS benefits the organizations in business functional gains,
such as improvements in profitability, lower costs, and higher customer satisfaction
level (Hartono et al, 2010; Vickery et al, 2003).However, these overall benefits do not
emerge straightly. There must be pathways via which the organizations achieve the
overall benefits.Since the IOS enables the cross-boundary information exchange and
cooperation networks between organizations, the intermediate benefits of IOS would
include higher degree of information availability and quality for decision making, efficiency improvements in task performance, and better collaboration between organizations (Qu Gang, Ji Shaobo, Min Qingfei, 2008; Subramani, 2004).
Meanwhile, the intermediate benefits of IOS can be impacted by inter-organizational factors as well. By studying factors impacting intermediate benefits and the extent to which intermediate benefits add value to overall benefits, a better understanding of the pathway through which IOS does/does not create benefits to the organizations can be acknowledged.
2.2 Supplier focus
Historical studies mostly focus on the benefits derived by IOS to the focal companies which are the leaders of the supply chain. Due to the subordinate role of suppliers, little attention has been paid to the benefits of IOS suppliers and mechanisms that enable suppliers to realize benefits (Subramani, 2004).
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IOS based collaboration mechanism which shifts tasks related to monitoring and managing retail inventories from buyers or retailors to suppliers. Because of its nature of quick response and continuous replenishment of inventory, buyers and retailors benefit in lowering inventory cost and improving customer satisfaction. However, suppliers have to respond more tasks in monitoring retail inventories, meanwhile, bear higher inventory holding costs and frequent delivery costs (Mukhopadhyay, Kekre, and Kalathur 1995).
Due to the development of supply chain and the subordinate role of suppliers in the supply chain, suppliers sometimes have to join the focal company based network and IOS in order to survive although they may not benefit much from it (Subramani, 2004). The question for the suppliers to concern is how they can benefit by implementing IOS instead of whether they should implement it. Thus, this study focuses on how suppliers benefit from implementing IOS and factors affect benefits derived by IOS on suppliers.
2.3 Variables and hypothesis
As it is studied in 2.1, the benefit of IOS can be considered as a two-stage model of benefits (Barua et al, 1995). Better information availability and quality, task efficiency and collaboration between organizations are intermediate benefits through which IOS could deliver overall benefits to the organization. This research, based on organizational information processing theory (OIPT) and recent related studies, proposes five factors that affect the intermediate benefits of IOS as well the overall benefits.
2.3.1 Inter-organizational dependence influences IOS benefits
OIPT theorists (Tushman and Nadler, 1978), in study of information systems on
subunits of an organization, argues that the impact of an integrated information
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between subunits, the more intense for them to exchange information, coordinate and interact with each other, because changes in one subunit may require some adjustment in the other (Tushman and Nadler, 1978).
Hartley and Beningon (2006), in their study of inter-organizational relationships,
also indicate that the dependence on each other for assistance, information, commitments or in respect of other behaviors encourages collaboration between individuals or organizations.
To apply this issue to IOS, the first hypothesis states that:
Hypothesis 1a: With the implementation of IOS, the higher interdependence between two partnering organizations, the greater IOS related collaboration improvements.
In addition to improving inter-organizational collaboration, the strategic value of IOS has been well recognized for its real time interaction, higher transaction accuracy, more efficient order delivery and quicker payments. Without an integrated information systems, interdepend units cost more time and effort in completing tasks (Hendon and Nath, 1994).
To apply this issue to IOS, hypothesis 1b states that:
Hypothesis 1b: With the implementation of IOS, the higher interdependence
between two partnering organizations, the greater IOS related task efficiency.
2.3.2 Inter-organizational differentiation influences IOS benefits
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China. Due to difference of the system platform and business process, the users in supplier side had to use an originally system to process the tasks. And in order to share task related information, they had to enter data again into IOS. Double systems exited in the organization resulted low task efficiency.
Kretschmer, T. and Puranam, P. (2008) further indicates that organizational differentiations, such as differences in customer needs, the way task performed, result to difficulties in collaboration between organizations. They impede the achievement of gains from inter-organizational integration.
Thus, hypothesis 2a and 2b state that:
Hypothesis 2a: With the implementation of IOS, the larger differentiation of an
organization from its partnering organizations, the lower IOS related collaboration improvements.
Hypothesis 2b: With the implementation of IOS, the larger differentiation of an organization from its partnering organizations, the lower IOS related collaboration improvements.
We propose that the inter-organizational differentiation, such as differences in
information systems, external and internal environments, may to some extent set of the effects of IOS on improvements of inter-organizational collaboration and task performance.
2.3.3 Time length of implementing IOS influences the IOS benefit
Historical studies indicate that the benefits of implementing enterprise information systems improve over time (McAfee, 2002; Markus and Tanis, 1999). They argue that the impact of implementation is not quickly and significantly emerged in the early stage of adopting enterprise information systems due to the exits of run-in period. With the increase of time elapsed, the dexterity of operating systems can be increased which enables the work efficiency, and the coordination between users from different parties can be improved. Thus, this study proposes that:
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related collaboration improvement.
Hypothesis 3b: The longer time length of the implementation of IOS, the higher IOS related task efficiency.
We propose that employees involved in IOS may take time and efforts to get familiar with the mechanism of IOS in the early stage since IOS implemented. Time consuming in tasks and orders may higher than that in later stage. It might take more efforts of coordination in order to collaborate with partnering organization in the early stage of implementation than that in later stage.
2.3.4 Information availability and quality influences the IOS benefit
According to Madapusi and D’ Souza (2012), information availability refers to the real time information available from the information system, and information quality refers to the reliability of the information delivered from the information system. They are considered as performance measures of the information system in the study of Madapusi and D’Souza (2012). The study results found that information availability and quality had a significant influence on firms’ managerial performance and operational performance. Vosburg and Kumar (2001) indicate that without information accuracy and on-time delivery, organizations are severely constrained in the coordination and task efficiency. To apply this issue to IOS, hypothesis 5a and hypothesis 5b state that,
Hypothesis 4a: The greater availability and quality of information shared by IOS, the higher collaboration improvement.
Hypothesis 4b: The greater availability and quality of information shared in IOS, the higher IOS related task efficiency.
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2.3.5 Intermediate benefit to overall benefit
As it is studied in 2.1, the benefit of IOS can be considered as a two-stage model of benefits (Barua et al, 1995). This study appoint the dependent variable as the overall business benefits of IOS on the suppliers, such as increasing profitability, reducing costs, and enhancing customer satisfactions. And the dependent variable “overall benefits of IOS on suppliers” are proposed to occur through the intermediate benefits including task efficiency, inter-organizational collaboration. Therefore, this study proposes:
Hypothesis 5a: With the implementation of IOS, the better collaboration, the
greater overall benefit of IOS on suppliers.
Hypothesis 5b: With the implementation of IOS, the higher task efficiency, the greater overall benefit of IOS on suppliers.
2.4 Research model
Based on the above literature review, a research model (figure 1) was proposed summarizing all the hypothesized relationships and a summary of hypotheses are listed in table 1.
Figure 1: The research model
Inter-org dependence
Inter-org differentiation
Time Length of IOS implementation
Inter-org collaboration
Task efficiency
Overall benefits of IOS on Supplier Intermediate benefits of IOS
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Table 1. The summary of hypotheses Hypotheses
H1
a. With the implementation of IOS, the higher interdependence between two partnering organizations, the greater IOS related collaboration improvements.
b. With the implementation of IOS, the higher interdependence between two partnering organizations, the greater IOS related task efficiency.
H2
a. With the implementation of IOS, the larger differentiation of an organization from its partnering organizations, the lower IOS related
collaboration improvements.
b. With the implementation of IOS, the larger differentiation of an organization from its partnering organizations, the lower IOS related
collaboration improvements.
H3
a. The longer time length of the implementation of IOS, the higher IOS related collaboration improvement.
b. The longer time length of the implementation of IOS, the higher IOS related task efficiency.
H4
a. The greater availability and quality of information shared by IOS, I the higher collaboration improvement.
b. The greater availability and quality of information shared in IOS, the higher IOS related task efficiency.
H5
a. With the implementation of IOS, the better collaboration, the greater
overall benefit of IOS on suppliers.
b. With the implementation of IOS, the higher task efficiency, the greater
overall benefit of IOS on suppliers.
3. Research methodology
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collected from a large number of firms by conducting questionnaire survey; 2) Data collected in questionnaire survey represents a generalized value among firms instead of a single firm’s option. 3) Quantitative data collected by questionnaire survey are proper to b test the proposed hypothesis in this study. Finally ， the statistical analysis/regressions were implemented based on the data collected, and hypothesis were tested.
3.1 Conducting questionnaire and data collection
The seven-point Likert scale questionnaire（appendix 1) was developed based on studies of organizational information processing theory. By means of inter-organizational system, the questions were organized corresponded to recent theoretical studies on inter-organizational systems. To ensure that the questionnaire items corresponded to the theoretical model as intended and the applicants of the questionnaire among suppliers in Chinese electronic industry, an interview was conducted with a specialist in Chinese electronic council. Then a further pre-test was conduct to two participants in a supplier company. The final questionnaire, according to the specialist suggestion and responses from pre-test participants, was formed in 41 items which was used to measure the research model and test the hypotheses.
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Two focal companies were chosen in this study, namely Company L and Company G. Company L and Company G are participants in Chinese electronic industry, but they are different in businesses. Company L is a private brand producer of electronic products. Its products are sold in worldwide. Besides producing goods by its own factories, company L also outsources its production to other suppliers. The supplier of company includes raw material/components suppliers and logistic services providers. These suppliers are targeted groups in this research. Company G is a retailer of electronic products in China. It owns more than 1200 retail stores. The suppliers of company G are suppliers of finished goods and logistic service providers.
3.2 Sample characteristics
The survey instrument was mailed to the managers of 246 supplier firms which implement IOS together with the two focal companies, including 202 suppliers of company L and 44 suppliers of company G. The valid response rate was 41.5 percent (102 valid responses). The summery of response rate are presented in table 2.
Table 2. Summary of Response Rate of the Sample
Suppliers of Company L Company G Total
No. of Survey sent 202 44 246
No. of responses 86 18 104
Response rate 42.6% 40.9% 42.3%
No. of valid responses 84 18 102
Valid response rate 41.6% 40.9% 41.5%
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(self-motivated suppliers 8.8%; Third party ASP encouraged supplier 2.2%). Table 5 shows the time length of the IOS implementation. All supplier firms (102) in the sample have implemented IOS in no more than three years. 21 firms (20.6%) have implemented IOS in less than one year, 17 firms (16.7%) have implemented IOS between one and two years, and 62.7% firms have implemented IOS between two years and three years.
Table 3. Profile of Respondents
Respondents No. of responses (total 102) Percentage (100%)
Raw material / components supplier
79 77.5%
Logistic service provider 10 9.8%
Finished goods supplier 13 12.7%
Table 4. Motivation of the Implementation of IOS
Motivation No. of Suppliers Percentage
Supplier self-motivated 9 8.8%
Third party ASP encouragement 2 2.0 %
Focal company requirement 88 86.3%
Others 3 2.9%
Table 5. Time Length of IOS implementation
Time Length No. of suppliers Percentage
> 1 year 21 20.6%
>= 1year ~ <2 years 17 16.7%
=> 2 years~ <= 3years 64 62.7%
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3.3 Measures
The online survey conducted questionnaire was originally in English and translated into Chinese by the researcher. The questionnaire contained two parts. The first part covered general information on the supplier firm and its IOS. Information regarding variables and time length of implementing IOS were collected in this part. The second part contained six Likert scales of overall benefits of IOS to suppliers, inter-organizational collaboration, task efficiency, information availability and quality, inter-organizational dependence, and inter-organizational differentiation. Respondents assessed the extent of agreement with each statement ranging from 1 (strongly disagree) to 7 (strongly agree). The summary of measures is shown in table 6.
Overall benefit of IOS to suppliers was measured using a five-item scale. Scale items related to overall benefits of IOS to suppliers in the perspective of financial revenue, costs, inventory, and customer satisfaction. Sample items were such as “IOS has improved the company’s customer satisfactions” and “IOS has reduced the company’s inventory costs”. Respondents assessed the extent of agreement with each statement ranging from 1 (strongly disagree) to 7 (strongly agree). In this study, the scale has a Cronbach’s alpha value of 0.902.
Inter-organizational collaboration was assessed with a five-item scale. Scale items measured the inter-organizational collaboration in terms of information sharing, demand uncertainty, coordination, synchrony, and level of quick response to changes in focal company. In this study, the Cronbach’s alpha coefficient of inter-organizational collaboration is 0.945
Task efficiency was measured with a four-item scale. Scale items assessed task efficiency in the perspective of time consuming on tasks. For example, “IOS saves time in order acceptance, planning and order release”. Within this study, the scale has a Cronbach’s alpha value of 0.901.
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accurate enough for their purposes” and “The information provided by IOS are exactly on time to enable employees to process their tasks.” The cronbach’s alpha value of the scale in this study is 0.914.
Inter-organizational dependence was measured using a five-item scale. Scale items assessed how much the activities and performance of supplier depend on the focal company. Scale items were such as “Information exchange with the focal company is critical for the company to perform its job well” and “The decisions of the focal company have important effect for the operations of this company”. In this study, the scale has a Cronbach’s alpha value of 0.925.
Inter-organizational differentiation was assessed with a three-item scale. Scale items were related to the degree of differences between suppliers and the focal company in implementing IOS and the way cooperating. For example, “Comparing with other customers, this customer (focal company) implements very different IOS. In present study, the scale has a Cronbach’s alpha value of 0.751.
Time length of implementing IOS was measured in the unit of years. It related to years of IOS implemention in supplier firms. The data of time length was collected from the first part of the questionnaire survey (Part 1.General information). The respondents were asked to fill in the year numbers.
Table 6. Summary of Measures
Variables
No. of questionnaire
items
Contents of items Cronbach’s
alpha
Overall benefit of IOS 5 Financial revenue, customer
satisfaction, inventory, costs .902
Inter-org collaboration 5
Information exchange,
interaction, demand
uncertainty, coordination, Synchrony, quick response
.945
Task efficiency 4 Time consuming tasks. .901
Info availability &
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information and data
Inter-org dependence 5 Degree of interdependence .925
Inter-org differentiation 3 Differences between orgs .751
Time length of
implementing IOS 1 Years of IOS implementation
3.4 Data analysis
The statistic program were used to investigate is SPSS. Several statistical analysis techniques were used to address the hypotheses and interrelationships presented in the research model.
Firstly, descriptive statistics and Person correlations analysis (two-tailed) were conducted in presenting means and relationships among inter-organizational dependence, inter-organizational differentiation, information availability & quality, inter-organizational collaboration, task efficiency and overall benefit of IOS to suppliers. The significance levels were addressed at .01, .05 and .00. Person correlations analysis discovers not only the correlations between variables but also whether multi-colinerarity problem exits. Multi-colinearity problem refers to the fact that each independent variable might have same characteristics to affect dependent variable. When multi-colinearity problems exits (significant-high correlation >.80), the research model is not sufficient to address the research.
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information availability & quality on task efficiency (H1b, H2b, and H4b) were tested as well.
Last but not least, the effects of time length of IOS implementation on intermediate benefits of IOS (inter-organizational collaboration and task efficiency) were tested in different statistical methods comparing with techniques used above. The time length of IOS implementation was measured by the number of years. Time length of IOS implementation was examined into two pairs (time length <1year and >= 1 year, time length < 2 years and >= 2year). Then we tested whether supplier firms with longer time length of IOS a higher average score of improvement on inter-organizational collaboration and task efficiency than firms with time length shorter time length of IOS implementation. The results were further verified by T test.
4. Results
4.1 Descriptive statistics
Table 7 shows the correlation between inter-organizational dependence,
inter-organizational differentiation, information availability & quality,
inter-organizational collaboration, task efficiency and overall benefit of IOS to suppliers. As table 6 shown, except the correlation between information availability & quality and inter-organizational differentiation (r=0.04, p>.05), the other correlations between variables are all significant and positive according to their r value and p value.
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Table 7. Correlations of the Variables
Note: N=120; *p < .05, **p < .01
4.2 Test of hypotheses
4.2.1 Test of hypothesis H1a b, H2a b, H4a b, & H5a b
The multiple regression results regarding the intermediating effect of inter-organizational collaboration and task efficiency on overall benefit of IOS on suppliers are illustrated in Table 8. The significant F changes equals to Zero which means the intermediating effect on overall benefits are able to be explained. The result that adjusted R square equals to 0.63 suggests around 63 per cent of data in dependent variable can be explained successfully by the data in independent variables. The result provides strong evidences supporting that both inter-organizational collaboration and task efficiency have positive and significant effect on overall benefit of IOS to suppliers (Beta1=.33, p1=.000; Beta2=.52, p2=.000). Therefore, hypothesis 5a and 5b are supported in this study.
Table 8. Results of Regression Analysis Testing the Intermediate Effect of Inter-Organizational Collaboration and Task Efficiency on Over All Benefit of
IOS
Independent variable Dependent Sig. F. Adjusted Beta Sig. t
22 variable Change R2 1.Inter-organizational collaboration Overall benefit of IOS to supplier .000 .63 .33 .000*** 2.Task efficiency .52 .000*** Note: *p<.05, **p<.01, ***p<.001
Table 9 shows the regression results of the effect of inter-organizational collaboration, inter-organizational differentiation, and information availability and
quality on inter-organizational collaboration. The results show that
inter-organizational dependence and information availability and quality has a significant-positive relationship with inter-organizational collaboration (Beta1= .41, p1=.003; Beta3=.54, p3=.000). However, there is no strong evidence on the relationship between inter-organizational dependence and collaboration (Beta2=.06, p2=.209). Thus, hypothesis 1a and 4a are supported in present study. There is no strong evidence supporting hypothesis 2a.
Table 9. Results of Regression Analysis Testing the Effect of
Inter-Organizational Dependence, Inter-Organizational Differentiation, and Information Availability & Quality on Inter-Organizational Collaboration
Independent variable Dependent variable
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Table 10 indicates that inter-organizational dependence and information availability also has significant and positive effects on task efficiency (Beta1=.14, p1=.020*; Beta3=.45, p3=001**). Thus hypothesis 1b and 4b are supported in this study. The results found no strong evidence supporting the effect of inter-organizational differentiation on task efficiency (Beta2=.05, p2=.302). Thus, hypothesis 2b is not supported.
Table 10. Result of Regression Analysis Testing the Effect of
Inter-Organizational Dependence, Inter-Organizational Differentiation, and Information Availability and Quality on Task Efficiency
Independent variable Dependent variable
Sig. F. Change Adjusted R2 Beta Sig. t 1.Inter-organizational dependence Task efficiency .000 .42 .14 .020* 2.Inter-organizational differentiation .05 .302 3.Information availability &quality .45 .001** Note: *p<.05, **p<.01, ***p<.001
4.2.2 Test of hypothesis H3ab
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2=4.59>4.25). However, T test shows that the results are not significant (p1=.181, p2=.079)
Table 11. Test 1 of Time Length of IOS Implementation
Time length of IOS implementation < 1year >=1year Total P
value
No. of firms 21 81 102
1.Inter-org collaboration Mean 4.37 4.62 4.57 .181
2.Task efficiency Mean 4.25 4.59 4.52 .079
Note: *p<.05, **p<.01
Thus, we further tested the two years pair. Table 12 indicates that firms with two years and more than two years implementation of IOS have higher average scores of improvement on both inter-organizational collaboration and task efficiency than firms with time length less than two years (Mean 1=4.73>4.30; Mean 2=4.70>4.23). And T test proves the significance of the results. Therefore, there is a significant and positive relation between time length of IOS implementation and inter-organizational collaboration (p1=.005**). There is a significant and positive relation between time length of IOS implementation and task efficiency as well (p2=.003**). As test results shown, with the increase of time length of implementing IOS, the performance of inter-organization collaboration and task efficiency has been improved. Thus, Hypothesis 3a and 3b are supported in this study.
Table 12. Test 2 of Time Length of IOS Implementation
Time length of IOS implementation < 2year >=2year Total P
value
No. of firms 38 64 102
1.Inter-org collaboration Mean 4.30 4.73 4.57 .005**
2.Task efficiency Mean 4.23 4.70 4.52 .003**
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The overall test results are summarized in figure 2 and table 13.
Note: *p<.05, **p<.01, ***p<.001
Figure 2: Summary of Test Results in research model
Table 13. Test Results of Hypotheses
Hypotheses Results
H1
a. With the implementation of IOS, the higher interdependence between two partnering organizations, the greater IOS related
collaboration improvements.
Yes b. With the implementation of IOS, the higher interdependence
between two partnering organizations, the greater IOS related task
efficiency.
Yes
H2
a. With the implementation of IOS, the larger differentiation of an organization from its partnering organizations, the lower IOS related collaboration improvements.
No b. With the implementation of IOS, the larger differentiation of an
organization from its partnering organizations, the lower IOS related collaboration improvements.
No
H3
a. The longer time length of the implementation of IOS, the higher
IOS related collaboration improvement. Yes
b. The longer time length of the implementation of IOS, the higher
IOS related task efficiency. Yes
H4
a. The greater availability and quality of information shared by IOS,
I the higher collaboration improvement. Yes
b. The greater availability and quality of information shared in IOS,
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H5
a. With the implementation of IOS, the better collaboration, the
greater overall benefit of IOS on suppliers. Yes
b. With the implementation of IOS, the higher task efficiency, the
greater overall benefit of IOS on suppliers. Yes
5. Conclusion and discussion
5.1 Summary
The purpose of this study was explore factors affecting the benefit of the implementation of IOS to suppliers and whether the implementation of IOS benefits suppliers in business practices by conducting an empirical research in Chinese electronic industry.
The study, based on organizational information theory (Thush and Nadler, 1978) and relevant studies (Gattiker and Goodhue, 2005; Barua et al, 1995), considered the benefit of IOS as a two-stage model of benefits: improvements in task efficiency and collaboration between organizations were intermediate benefits through which IOS could deliver overall benefits to the organization. The results of this study found strong evidence that as intermediate benefits of IOS, improvements in task efficiency and inter-organizational collaboration had positive effects on overall benefits to suppliers.
Beside the intermediate effects on overall benefit of IOS, the result also found significant effect of inter-organizational dependence, time length of implementing IOS and information quality on intermediate benefits of IOS:
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higher degree of dependence between organizations, the more intense for organizations to cooperate with each other in coordination and performing tasks. 2. The longer time length of implementation of IOS, the better collaboration between
suppliers and focal companies and the higher task efficiency which in total resulted to the overall benefits to the suppliers. This result supports the historical arguments “the benefits of implementing enterprise information systems improve over time” (McAfee, 2002; Markus and Tanis, 1999). The result can be explained that the benefit of implementation is not quickly emerged in the early stage of adopting enterprise information systems due to financial investment and time consumption of integration between two organizations. With the increase of time elapsed, the dexterity of operating systems can be increased which enables the work efficiency, and the coordination between users from different parties can be improved.
3. The higher availability and quality of information shared in IOS, the better collaboration between suppliers and focal companies and the higher task efficiency. Real-time information and accurate data shared in the IOS enables higher productivity and efficient coordination.
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5.2 Practical implications
The present study also has important contributions to the practical and managerial implications. By conducting the statistical research in Chinese electronic industry, we proved that although 86.3 percent of suppliers in this study passively implemented IOS in the requirement of the focal company, suppliers are still benefited by the implementing. It provided a clear understanding of how overall benefits of IOS on suppliers, such as increase in customer satisfaction and cost saving, can be delivered via its intermediate benefits on tasks efficiency and inter-organizational collaboration. Meanwhile, factors affecting the intermediate benefits as well as the overall benefits of IOS on suppliers were also presented in this research. It provided a systematic thinking to the supplier firms who already has IOS with their focal company in examining their exist implementations and considering change management. And suppliers who are considering implementing IOS with focal company can also benefited from this study since it can be a guideline in making right decision on the implementation.
5.3 Limitations and further research
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Appendix
Questionnaire (draft) Part 1 General Information
Q General information
1. Name of the company
2. Number of employees
3. Annual revenue (in 2011, RMB)
4. Capital (RMB)
5. The role of this company in the relationship with focal company:
Raw materials /components
supplier
Supplier of finished goods
Logistic service provider
Other
6. IOS applied together with focal
company
7. IT technology applied together
with focal company
8. IOS provided by 3rd party ASP? Yes, name of ASP provider___ / No
9.
10. The monthly cost of IOS (RMB)
11. Years in implementing IOS
12. Motivations in implementing
IOS
The focal company requirement The company self-requirement
3rd party ASP encouragement
13.
14. Personal information:
Job category Manger Administration staff others
Department Management board Finance Sales IT
Production & Planning others
Length of service ____ years
Part 2 Variables Survey Items
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Overall benefits of IOS to supplier
15. In terms of its business impacts on the company, the IOS has been a
success. (Gattiker & Goodhue 2005)
16. The financial revenue of this company has been increased since
implementation of IOS. (Hartono et al, 2010, Vickery et al, 2003)
17. IOS has had a significant positive effect on this company’s sales. (Gattiker
& Goodhue, 2005)
18. IOS has improved the company's customer satisfactions. (Hartono et al, 2010, Vickery et al, 2003)
19. IOS has reduced the company's inventory costs. (Hartono et al, 2010, Vickery et al, 2003)
Inter-organizational collaboration
20. IOS makes the information exchange with your customers (focal company) easier. (Hendon and Nath, 1994)
21. IOS diminishes the demand uncertainty from your customers (focal
company) (Vickery et al, 2003)
22. IOS has improved this company's coordination with focal company
(Harley & Beningon, 2006; Gattiker & Goodhue, 2005)
23. IOS helps your company synchronized with focal company (Gattiker &
Goodhue, 2005)
24. IOS helps this company quickly response to the changes in focal
company . (Vickery et al, 2003)
Task efficiency
25. The company employees such as sales, production planning staff, IT staff
need less time to do their jobs. (Gattiker & Goodhue, 2005)
26. IOS saves time in order acceptance, planning, and release. (Vickery et al, 2003)
27. IOS helps company employees like sales, production planning staff, IT staff to be more productive. (Gattiker & Goodhue, 2005)
28. IOS improves the product full fill rate and on-time delivery rate to its
customers (focal company). (Vickery et al, 2003) Information availability & quality
29. The information shared by IOS system to employees is accurate. (Madapusi& D’Souza, 2012; Gattiker & Goodhue, 2005)
30. The information employees receive form IOS system is true. (Gattiker &
Goodhue, 2005)
31. The IOS information that employees used or would like to use is accurate enough for their purposes. (Madapusi& D’Souza,2012; Goodhue 1995)
32. The information provided by IOS is exactly on time to enable employees
to process their tasks. (Madapusi& D’Souza,2012; Gattiker & Goodhue, 2005)
33. Without information provided by IOS, employees are not able to perform
34
Inter-organizational dependence
34. This company has to keep close contact with its customer (focal
company).(Gattiker & Goodhue, 2005)
35. Information exchange with focal company is essential for the company to perform its job well. (Jao-Hong Chen, 2011; Gattiker & Goodhue, 2005)
36. Coordination with focal company is essential for the company to perform
its job well. (Gattiker & Goodhue, 2005;)
37. Decisions of the focal company have important effect for the operations of
this company. (Wybo and Goodhue, 1995)
38. Condition changes in focal company require some adjustment in this
company. (Tushman and Nadler, 1978)
Inter-organizational differentiation
39. Comparing with your other customers, this customer (focal company)
implements very different IOS with your company. (Kretschmer and Puranam, 2008; Xianghua et. al, 2005)
40. Comparing with your other customers, the way the focal company
cooperating with this company is obviously different. (Kretschmer and Puranam, 2008)
41. The demand of the focal company is obviously different from your other
