MODELING THE RELATIONSHIP BETWEEN FIRM IT CAPABILITY, COLLABORATION, AND PERFORMANCE

✍ Scribed by Nada R. Sanders; Robert Premus

• Publisher: Wiley (John Wiley & Sons)
• Year: 2005
• Tongue: English
• Weight: 172 KB
• Volume: 26
• Category: Article
• ISSN: 0735-3766
• DOI: 10.1002/j.2158-1592.2005.tb00192.x

✦ Synopsis

Advancements in the capability of information technology (IT) have rapidly changed the face of industry over the past decade. Functions that have been particularly impacted, at least from a theoretical perspective, are supply chain management (SCM) and logistics. Supply chain management, founded on collaboration between supply chain partners (Golicic, Foggin, and Mentzer 2003;Narasimhan and Jayaram l998;Stank, Keller, and Daugherty 2001), is intended to bring performance benefits to the organization. Consider the recent collaborative relationship between Sears and Michelin which has resulted in a 25% reduction in inventories for both companies (Steerman 2003). Similarly, General Motors' new collaborative relationship with its suppliers has reduced vehicle development cycle times from four years to eighteen months (Gutman 2003). This type of collaboration is only made possible through the sharing of large amounts of information along the supply chain, including operations, logistics, and strategic planning data.

Information sharing provides firms with forward visibility, improving production planning, inventory management, and distribution. This collaboration is facilitated by the existence of an efficient and effective information technology (IT) system. Information technology (IT), which allows for the transmission and processing of information necessary for synchronous decision making, can be viewed as the backbone of the supply chain business structure (Grover and Malhotra l999; Kent and Mentzer 2003). For this reason the literature often refers to IT as an essential enabler of SCM activities (Mabert and Venkataramanan l998).

Advancements in IT capabilities have significantly improved the extent of internal and external organizational information sharing. IT capability has been positively linked to firm performance (Bharadwaj 2000;Kearns and Lederer 2003) and shown to have the potential of providing a significant competitive advantage to firms (Earl l993; Ives and Jarvenpaa l99l; Kathuria, Anandarajan, and Igbaria l999). Similarly, firm collaboration has been shown to have a positive impact on performance (Stank, Keller, and Daugherty 2001). However, the collective relationship between