Interfirm Trust, Dependence and Joint Action as Antecedents of Information Quality Paul Forster Information Systems & Management Hong Kong University of Science & Technology

(c) Paul Forster Outline 1. Research problem 2. Proposed model 3. Research design 4. Analysis 5. Discussion ?

(c) Paul Forster Interorganizational Information Systems (IOS) Share data between organizations (Kumar, 1996) IOS and performance: Competitive advantage (Powell et al., 1997) Inventory costs (Mukhopadhyay et al., 1995) Operational improvements (Srinivasan et al., 1994) Distinguished by the presence of the interfirm relationship Coordination through IOS requires managing the interfirm relationship IOS

(c) Paul Forster Costs of Bad Information Direct costs Customer dissatisfaction Increased operational costs Lower employee job satisfaction Indirect costs Impaired decision-making Missed opportunities Increased uncertainty and problem ambiguity Failed projects Poor departmental relationships (Redman, 1998)

(c) Paul Forster Costs of Bad Information Monetary costs $611B USD est. cost of inaccurate and bad data quality (Betts, 2002) Study of retailers - 10% reduction in overall profits from data errors (Raman, 2001) 75% of firms indicate financial performance impact of bad data (Redman, 1998)

(c) Paul Forster Research Question To what extent does the interfirm relationship influence the information quality exchanged between firms through IOS?

(c) Paul Forster Information “ Fit for Use ” Information quality definitions “Fitness for use” (Ballou et al.; Wang and Strong 1996; Lee and Strong, 2003; Lee 2003) Information consumers evaluate the quality of info in relation to the tasks they have to perform (Strong et al. 1997) i.e. the info collector needs to understand the info consumer’s needs

(c) Paul Forster Data as “ Artifact ” or “ Deliverable ” As Artifact Presupposes ex ante information about goals; ex post information about past events Artifacts can be readily compared Objective epistemology, closed systems As Deliverable Negotiated elements and changing requirements Runs readily in informal networks, hard to place into market exchanges Subjective epistemology, open systems

(c) Paul Forster Production of Information Quality If we view IOS information quality as the outcome of a process (Lee and Strong, 2003; Wang, 1998) Then the interfirm relationship between producer and consumer will influence information quality as deliverable Through… Formal processes Information sharing through negotiated arrangements between partners; rules, contracts, standards, regulations Informal processes Information sharing through routines, scripts, schemas; repeated interactions develop habits and work practices

(c) Paul Forster Interfirm Trust Interfirm Joint Action Interfirm Dependence Information Quality H1 H2 H3 H4 H5 Interorganizational Climate Interorganizational Action Information Quality

(c) Paul Forster Interfirm Trust Interfirm Joint Action Interfirm Dependence Information Quality Joint Action Voluntary joint action to achieve individual and mutual goals (Skinner et al. 1992) Enables mutual interpenetration of firm boundaries (Heide and John 1990) Develops formal and informal processes to achieve information quality +

(c) Paul Forster Interfirm Trust Interfirm Joint Action Interfirm Dependence Information Quality Trust Expectation that actors will fulfill their obligations, behave predictably, and act and negotiate fairly (Zaheer et al., 1998) Creates a climate in which information exchange is open Trust is a predictor of cooperation (Anderson and Narus 1990) + +

(c) Paul Forster Interfirm Trust Interfirm Joint Action Interfirm Dependence Information Quality Dependence Dependence is the flip side of power – the dominant party controls of influences the other’s decisions (Emerson 1962) Firms resist power by reducing visibility and denying information Coercive power can create conflict and reduce cooperation - -

(c) Paul Forster Interfirm Relationship Typology Van de Ven & Ferry (1980) Pairwise form (dyadic) Set formNetwork form

(c) Paul Forster Survey Methods Survey design: Previous qualitative research informed survey design Two pretests Administration 1999/ % response rate Sample frame is the entire US air cargo industry Non-response bias Chi-square on first and last 40 on key variables Tested against revenue stats

(c) Paul Forster Psychometric Properties ConstructNo. of Items AlphaComposite Reliability Info. Quality Joint Action Dependence Trust

(c) Paul Forster PLS Structural Model PLSGRAPH 3.0

(c) Paul Forster Discussion Managerial issues “Soft” issues in the management of information quality Theoretical issues The value of viewing information as a deliverable The value of a “set” form of interfirm relationships Limitations Focused on electronic exchange vs. a single IOS Focused on tracking and tracing information – real time, repetitive exchange Focused on a particular supply chain