An Empirical Investigation of Complementarity in IT-Enabled Supply Chain Initiatives

40 Pages Posted: 22 Dec 2011 Last revised: 16 Jan 2012

See all articles by Anjana Susarla

Anjana Susarla

Michigan State University - The Eli Broad College of Business and The Eli Broad Graduate School of Management

Anitesh Barua

University of Texas at Austin - Department of Information, Risk and Operations Management

Prabhudev Konana

University of Texas at Austin - Department of Information, Risk and Operations Management

Andrew B. Whinston

University of Texas at Austin - Department of Information, Risk and Operations Management

Date Written: December 20, 2011

Abstract

Advances in information technology (IT) have enabled increased information integration across firms, which can potentially lead to higher operational efficiency. In this paper, we build upon prior literature in information systems (IS), supply chain management, economics and strategy to posit that due to inter-firm interdependence and coordination costs, successful information integration requires concomitant improvements in joint planning and synchronized processes across firms. Using a dataset involving 870 firms, we develop a test to assess the potential complementarity between information integration and inter-organizational coordination mechanisms, and find that in tandem with coordination, information integration results in a significant positive impact on operational efficiency. Recognizing that trust is potentially endogenous in inter-organizational relationships, we examine the impact of IT-enabled inter-firm processes that foster trust, and study the impact of trust on the joint impact of information integration and coordination on supply chain performance. Incorporating a correction for self-selection, we find that trust has a positive influence on the joint effect of information integration and coordination. Our findings offer insights regarding organizational processes that need to be in place when firms undertake information integration initiatives.

Keywords: Information Integration, Coordination, IT-Enabled Supply Chain Management, Complementarity, Inter-Organizational Trust, Endogenous Switching Regression, Exclusion Restrictions

JEL Classification: L14, C12, C21

Suggested Citation

Susarla, Anjana and Barua, Anitesh and Konana, Prabhudev and Whinston, Andrew B., An Empirical Investigation of Complementarity in IT-Enabled Supply Chain Initiatives (December 20, 2011). Available at SSRN: https://ssrn.com/abstract=1975388 or http://dx.doi.org/10.2139/ssrn.1975388

Anjana Susarla (Contact Author)

Michigan State University - The Eli Broad College of Business and The Eli Broad Graduate School of Management ( email )

East Lansing, MI 48824-1121
United States

Anitesh Barua

University of Texas at Austin - Department of Information, Risk and Operations Management ( email )

CBA 5.202
Austin, TX 78712
United States
512-471-3322 (Phone)

Prabhudev Konana

University of Texas at Austin - Department of Information, Risk and Operations Management ( email )

CBA 5.202
Austin, TX 78712
United States

Andrew B. Whinston

University of Texas at Austin - Department of Information, Risk and Operations Management ( email )

CBA 5.202
Austin, TX 78712
United States
512-471-8879 (Phone)

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