By reducing the costs of coordination, information technology will lead to an overall shift toward proportionately more use of markets—rather than hierarchies—to coordinate economic activity.

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Electronic markets and electronic hierarchies

Many EDI researchers and practitioners have recognized the importance of high penetration levels for the success of EDI. Unfortunately, such penetration is partly impeded by the resistance of small companies to become EDI capable. To investigate this issue, we identify three major factors that influence the EDI adoption practices of small firms. These factors are: organizational readiness (because of the low levels of IT sophistication and resource availability of small firms), external pressures to adopt (because of the weak market positions of small firms and the network nature of the technology), and perceived benefits (because of the limited impact that IT has on small firms due to under-utilization and lack of integration). By combining the anticipated effects of these factors, we developed a framework of EDI adoption by small businesses. The applicability of this framework is empirically demonstrated using the results of seven case studies. Lastly, recommendations are made for the development of successful EDI partner expansion plans. These include the development of a long term EDI partner expansion plan from the very beginning, the individual assessment of each partner's EDI preparedness level, and the selection of appropriate influence tactics to expedite adoption by small partners. Specifically, it is suggested that EDI initiators pursue promotional efforts to improve partners' perceptions of EDI benefits, provide financial and technological assistance to partners with low organizational readiness, and carefully select and enact influence strategies to reduce resistance.

Electronic data interchange and small organizations: adoption and impact of technology

A great deal of controversy exists about the impact of information technology on firm performance. While some authors have reported positive impacts, others have found negative or no impacts. This study focuses on Electronic Data Interchange (EDI) technology. Many of the problems in this line of research are over-come in this study by conducting a careful analysis of the performance data of the past decade gathered from the assembly centers of Chrysler Corporation. This study estimates the dollar benefits of improved information exchanges between Chrysler and its suppliers that result from using EDI. After controlling for variations in operational complexity arising from mix, volume, parts complexity, model, and engineering changes, the savings per vehicle that result from improved information exchanges are estimated to be about $60. Including the additional savings from electronic document preparation and transmission, the total benefits of EDI per vehicle amount to over $100. System wide, this translates to annual savings of $220 million for the company.

Business value of information technology: a study of electronic data interchange

Electronic data interchange (EDI) has dramatically changed the manner in which interorganizational transactions are conducted. The electronic exchange of transaction documents has had a significant impact on business practices, particularly in the sales and purchase/merchandising functions of organizations. EDI brings in many benefits to the organization such as reduced costs, faster turnaround, better customer service, and in some firms strategic advantage over their competitors. Despite these benefits, firms still have problems in implementing EDI.This study, drawing upon research in innovation theory and information systems, examines the relationship between various innovation characteristics (complexity, two forms of compatibility, costs, relative advantage, and communicability) and various attributes of diffusion (adaptation, internal diffusion, external diffusion, and implementation success) of EDI in organizations. The data for the study were collected from a large-scale field survey of 201 firms in the United States that have implemented EDI. Two senior executives, one from information systems (IS) and the other from the sales/purchase function, provided matched responses to a questionnaire that measured the various research constructs.The results of the multivariate regression analyses revealed that relative advantage, costs, and technical compatibility were the major predictors of adaptation. While relative advantage and duration were important predictors of internal diffusion, technical compatibility and duration were found to be important predictors of external diffusion. Both forms of compatibility (technical and organizational) and costs were found to be important predictors of implementation success in EDI.

Implementation of electronic data interchange: an innovation diffusion perspective

Electronic data interchange: How much competitive advantage?

Information technology and its driving cost performance imperative have changed traditional labor to capital relationships and opened up new opportunities for strategic use of the technology. Different forms of interconnection realized through improved interconnection and larger more accessible data bases are often the basis for deriving strategic advantage. A search strategy based on electronic integration can help organizations find potentially strategic applications.

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Robert I. Benjamin

Papers

Electronic data interchange: How much competitive advantage?

Information Technology, Integration, and Organizational Change

The Realities of Electronic Data Interchange: How Much Competitive Advantage?

Reflections On Effective Application Of Information Technology In Organizations ... From the Perspective Of The Management in the 90's Program