How Do Suppliers Benefit From
Information Technology Use In
Supply Chain Relationships?
資管研一 張永昌
Agent
Abstract
 Introduction
 Theoretical Background
 Methods
 Results
 Discussion and Conclusions

Abstract

Two patterns of SCMS use by suppliers：




Exploitation(開發)
Exploration(調查)
Data：131 suppliers using an SCMS
implemented
The results support the vendors-to-partners
thesis that IT deployments in supply chains
leads to closer buyer-supplier relationships
(Bakos and Brynjyolfsson 1993)
Introduction(1)



Early forms of interorganizational systems
(IOS) primarily supported the automation of
manual processes such as ordering and settling
accounts (Riggins and Mukhopadhyay 1994)
A range of new features for information
sharing, communication, and collaboration has
subsequently enhanced these systems (IcasatiJohanson and Fleck 2003)
Estimates suggest that over 30,000 IOS are
currently in use, supporting a large proportion
of business-to-business transactions (Harris
2001).
Introduction(2)




Network leaders：Chrysler、Dell、Ford、Wal-Mart
Benefits from these information technologies are
unevenly distributed and skewed in favor of the
network leader (Riggins and Mukhopadhyay 1994).
network leaders seem to benefit at the expense of
supplier firms (Carter 1990; Clemons and Row
1993), often by shifting activities and costs to
them.
This paper draw on organizational theories（組織
理論） and transaction cost economics（交易成本
理論） to examine supplier benefits from SCMS
use.
Introduction(3)

This work contributes to the literature in
three ways：



it focuses on the supplier perspective in ITmediated supplier-retailer interactions and
highlights the benefits to suppliers from IT use.
it theorizes two patterns of use of supply chain
technologies–for exploitation and for exploration–
and highlights the implications of these
appropriation choices for relationship-specific
supplier investments and supplier benefits.
it theorizes the role of relationship-specific
intangible investments in enabling suppliers to
both generate value and obtain benefits from
SCMS use.
H4
H1
H4
H3a
H3b
H2
H6
H5
H5
H7
Theoretical Background
Patterns of SCMS Use


Prior examinations of IOS reveal multiple
goals motivating their use: providing
management support, reducing operational
costs, improving customer service, and
gaining competitive advantages (Chatfield
and Yetton 2000; Crook and Kumar 1998; El
Sawy, Malhotra, Gosain and Young 1999;
Premkumar, Ramamurthy, and Crum 1997).
The paper draw from a theory of learning
and action that suggests actions in
organizations can be categorized as either
exploitation or exploration (March 1991)
Exploitation
開發
Exploration
調查
Goal目的
improve operational
efficiencies (e.g.,
through increased
standardizati on, tighter
process controls, and
reduced manual
intervention)
Learn about the environment
and discover novel ways of
creating value or solving old
problems.
Task
orientations任
務方針
application of variancereducing strategies to
streamline activities,
perform them efficiently
with a high level of
consistency, and achieve
greater control over
process execution
application of varianceseeking strategies to reassess
current approaches to
problems and to develop
novel solutions
Table 1: Patterns of IT Use by Suppliers
IT Use for Exploitation：Execution of
Structured Interfirm Processes
IT Use for Exploration：Execution of
Unstructured Interfirm Processes
Goals: Improving, applying, and incrementally
refining firm capabilities.
Outcomes: Clearly definable benefits, e.g.,
cost reduction, process consistency, process
efficiency.
Goals: Creating new capabilities, devising novel
solutions to current problems.
Outcomes: ‘Soft’ benefits that are difficult to
evaluate in advance (e.g., shared understanding,
clearer picture of cause-effect relationships,
greater understanding of operating environment).
Examples of IT Use for Exploitation
Examples of IT Use for Exploration
Request for Quotation(RFQ) received
electronically by suppliers. Support
documents such as detailed part drawings
and quality specifications made available
online.
Analysis of point-of-sale data to understand
patterns in customer preferences, patterns in the
sale of complementary products.
Analysis of product-return data to detect issues
to be addressed at retail store level (e.g.,
problems in handling, displaying products).
Electronic Transmission of Purchase
Orders, Electronic Transmission of
Advanced Shipment Notification (ASN).
Scheduling delivery windows at
warehouse loading docks.
Communicating with repair and service personnel
of retailer to diagnose problems encountered in
the field.
Interactions between supplier’s engineering
group and retailer’s service division on diagnosing
component failures to inform product redesign,
new product design.
Examples of IT Use for
Exploitation
Examples of IT Use for
Exploration
Electronic Payment Settlement Advice, Communicating with retail
issued in predefined intervals after
documentation group to improve
material receipt.
service manuals and customer
manuals.
Transmission of order status reports
(e.g., to alert retailer about
unanticipated delays, ability to
advance ship ‘hot’ items).
Communication between product
designers and retail buyers related to
new features to be incorporated to
improve product’s appeal
Electronic notification of changes
(e.g., product specifications, changes
to packaging and shipping
procedures, specification of Purchase
Order quantities).
Interaction between retail planners and
supplier's managers to decide stocking
levels for different products, size
allocations to different stores.
Inventory alerts based on preset
‘triggers’ to communicate stocking
levels of products in warehouses.
Ad-hoc communications between supplier
and retailers' buying and merchandizing
groups (e.g., to signal competitive activity
such as special promotions or to respond to
stock-outs from unanticipated product
demand).
Theoretical Background
Relationship-Specific Intangible Assets
Transaction cost economics suggests
that relationship-specific investments
are important sources of value creation
in interfirm exchanges (Williamson
1995).
 The focus in this paper is on supplier
investments that create two types of
intangible asset specificity：

business-process specificity
 domain-knowledge

Theoretical Background
Business-Process Specificity


Business-process specificity is the degree to
which a supplier’s key business processes
such as operating processes, administrative
processes, and quality-control processes are
particular to the requirements of the focal
firm4 in the relationship (Subramani and
Venkatraman 2003).
Business-process specificity is an important
factor linked to performance in interfirm
relationships (Dyer 1996b; Mukhopadhyay
and Kekre 2002; Zaheer and Venkatraman
1994).
Theoretical Background
Domain-Knowledge Specificity


Domain-knowledge specificity is the degree
to which a supplier’s critical expertise such as
competitive analysis and strategy formulation
and new-product development are particular
to the requirement of the focal firm in the
relationship (Subramani and Venkatraman
2003).
Domain-knowledge specificity is reflected in
instances of firms relying on suppliers for
innovations and for inputs in critical decisions
(Dyer and Singh 1998).
Theoretical Background
Business-Process Specificity and SCMS
Use for Exploitation

Greater levels of SCMS use for
exploitation (ITExploit)–using the
system to perform structured, repetitive
tasks–are accompanied by changes to
interorganizational business processes
(Clark and Stoddard 1996).
Theoretical Background
Business-Process Specificity and SCMS
Use for Exploitation

H1: The higher the level of SCMS use for
exploitation, the greater the level of businessprocess specificity in the exchange.
H1
IT Use for Exploitation
Business-process
Specificity
Theoretical Background
Domain-Knowledge Specificity and SCMS
Use for Exploitation

SCMS use for exploration (ITExplore)
occurs via the reporting and messaging
features of the SCMS. Greater levels of
ITExplore reflect increasing reliance on
an SCMS for unstructured tasks by
suppliers.
Theoretical Background
Domain-Knowledge Specificity and SCMS
Use for Exploitation

H2: The higher the level of SCMS use for
exploration, the greater the level of domainknowledge specificity in the exchange.
H2
IT Use for Exploration
Domain-knowledge
Specificity
Theoretical Background
Relative Influence of SCMS Use on
Relationship-Specific Investments

Higher levels of ITExplore (e.g., greater
communication with the merchandizing
group or the quality-control group)
allow suppliers to become aware of
shortcomings in their business
processes and learn about the
advantageous business practices
adopted by other suppliers (Dyer and
Nobeoka 2000; Dyer and Singh 1998).
Theoretical Background
Relative Influence of SCMS Use on
Relationship-Specific Investments

H3a: The association of ITExploit with
business-process specificity is stronger than the
association of ITExplore with business-process
specificity.
H3a
IT Use for Exploitation
IT Use for Exploration
Business-process
Specificity
Theoretical Background
Relative Influence on
Domain-Knowledge Specificity

ITExploit can reveal information about retailer
processes that are articulated and formalized in
implementing the SCMS. Even in routine use of
SCMS for structured interorganizational
processes (e.g., to transmit quality-control
reports), suppliers may become aware over time
of the retailer’s internal processes for
formulating quality standards, the subjective
judgments involved in quality-control
procedures, the individuals charged with making
these judgments, and the discretion to permit
exceptions possessed by individuals in the
quality-management group.
Theoretical Background
Relative Influence on
Domain-Knowledge Specificity

H3b: The association of ITExplore with
domain-knowledge specificity is stronger than
the association of ITExploit with domainknowledge specificity.
IT Use for Exploitation
H3b
IT Use for Exploration
Domain-knowledge
Specificity
Theoretical Background
Linking SCMS Use to Benefits：Mediation by
Relationship-Specific Intangible Investments

H4: The higher the level of SCMS use for
exploitation, the higher the levels of
operational and strategic benefits achieved
through the leverage of relationship-specific
business processes.
Business-process
Specificity
H4
Operational Benefits
Strategic Benefits
Theoretical Background
Linking SCMS Use to Benefits：Mediation by
Relationship-Specific Intangible Investments

H5: The higher the level of SCMS use for
exploration, the higher the levels of
operational and strategic benefits achieved
through the leverage of relationship-specific
domain knowledge.
Operational Benefits
H5
Domain-knowledge
Specificity
Strategic Benefits
Theoretical Background
Linking SCMS Use to Benefits：Mediation by
Relationship-Specific Intangible Investments

H6: Higher levels of operational benefits in the
exchange are associated with higher levels of
competitive performance.
Operational Benefits
H6
Competitive
Performance
Theoretical Background
Linking SCMS Use to Benefits：Mediation by
Relationship-Specific Intangible Investments

H7: Higher levels of strategic benefits in the
exchange are associated with higher levels
of competitive performance.
Competitive
Performance
Strategic Benefits
H7
Theoretical Background
Control Variables

To discount rival hypotheses, the model
incorporates four variables influencing
supplier benefits:
Product uncertainty（產品的不確定性）
 retailer replaceability（零售商的替換性）
 supplier size（供應商的規模）
 length of association between firms（兩家
公司合作時間長久度）

Theoretical Background
Control Variables
Product uncertainty（產品的不確定性）
 Uncertainty arising from shorter
product life cycles increases information
processing demands in relationships
(Bensaou and Venkatraman 1995).

Theoretical Background
Control Variables
retailer replaceability（零售商的替換性
）
 Low levels of retailer replaceability can
reflect a cooperative climate in the
relationship and therefore be positively
related to supplier benefits (Dyer and
Singh 1998).

Theoretical Background
Control Variables
supplier size（供應商的規模）
 Including firm size in the model
controls for factors such as relative
bargaining power and size of the
resource base that can affect supplier
benefits (Zaheer and Venkatraman
1994).

Theoretical Background
Control Variables
length of association between firms（
兩家公司合作時間長久度）
 Including the length of association as a
control variable has two advantages.
First, it helps control for the potential
effects of relationship duration on
supplier benefits. Second, it controls for
recursive relationships, if any, between
dependent and independent variables
(Subramani and Venkatraman 2003).

Methods
Data
Data：Canada-Alpha
 Alpha has a reputation for carrying
high-quality products and using
rigorous supplier qualification and audit
processes.
 The SCMS was a proprietary system
developed by Alpha.

Methods
Response Rate and Nonresponse Bias
The final survey instrument：mail 640
supplier firms
 Respondents：211（33%）
 Use the SCMS：131(62%) （在最近2年
內有使用SCMS與Alpha公司做交易）

Methods
Data Analysis

PLS Graph：用來評估quality（品質）和
measurement（測量）
Methods
Testing Direct Effects

Hypotheses postulating direct effects
between constructs (H1, H2, H6, and
H7) based on the magnitude and
significance of paths computed by PLS
Graph. I tested hypotheses regarding
difference in the strengths of multiple
paths (H3a, H3b) by comparing the
path magnitudes calculated by PLS.
Methods
Testing Mediated Effects

The mediation hypotheses (H4, H5) in two ways.
The first approach compares the research model
(with mediated paths from SCMS use to
benefits) to a competing model (incorporating a
direct link between the constructs). Because the
two models are nested, model-comparison
procedures using PLS results enable statistical
conclusions to be reached regarding model fit.
The second approach uses mediation-analysis
techniques (Baron and Kenny 1986; Hoyle and
Kenny 1999) to calculate the magnitude and
significance of individual mediated paths based
on values of standardized direct paths computed
in PLS.
Results

經由PLS Graph及表2的中位數、標準差
，針對H1~H7假設做驗證。
假設
結果
Hypothesis 1
Supported
path = 0.22, t =
2.42, p < .01
Positive
Significant
Hypothesis 2
Supported
path = 0.44, t
= 5.77, p < .01
Positive
Significant
Hypothesis 3a
Supported
difference =
0.173, t = 1.86, p
< 0.05
Positive
Significant
Hypothesis 3a
Supported
difference =
0.243, t = 3.30, p
< .01
Positive
Significant
Hypothesis 4
Supported
Positive
Significant
Hypothesis 5
Supported
Hypothesis 6
Not
Supported
path = 0.010, t =
0.1, ns
Hypothesis 7
Supported
path = 0.265, t =
3.291, p < .01
Not
Significant
Positive
Significant
Discussion and Conclusions

The study contributes to the literature by
providing evidence：



suppliers benefit by participating in supply chain
management initiatives of network leaders
benefits from SCMS use are mediated by
suppliers’ deployment of relationship-specific
business processes and domain knowledge in the
exchange
the profile of relationship-specific investments is
linked to patterns of SCMS use