How do adopters obtain benefits from IOS? Xu Yun 22-Sep-2004 Seminar in IS Research

What benefit can adopter obtain? Benefit from improved information exchange ----Inventory holding cost, transportation Benefit from documents process disrupt (Mukhopadhyay, 1995) Direct strategic benefit ----sales Direct operational benefit ----Decrease process time, improve data accuracy Long term strategic benefit (Mukhopadhyay, 2002)

What benefit can adopter obtain? First order benefit: influenced directly by firms ----Operational benefit Inventory management, Cycle time ----Strategic benefit Development of new product Second order benefit Competitive outcome Beyond the control of the firm (Subramani, 2004)

What benefit can adopter obtain? Interdependent benefit One firm’s benefit may dependent on the way in which its trading partners implement and use the technology. (Riggins,1994 )

Three perspectives for the study The Industry Structure View The RBV View The Relation View

The Industry Structure View Associated with porter’s theory Primary source of benefit: favorable structural characteristic e.g. relative bargaining power, barriers to entry or exit, sunk cost. What effects would the system have on industry structure? (Johnston,1988) How do adopters create barriers to entry for competitors and barriers to exit for champion with IT?

The RBV View Primary source of benefit: Heterogeneity and inimitable resource e.g. asset specificity, domain knowledge How do adopters create business- process specificity or domain-knowledge specificity with IT? (Subramani, 2004)

The Relation View (Dyer, 1998) Interdependent benefit, critical resource may span firm boundary Primary source of benefit: 1)Relation-specific asset Japanese automobile industry Site-specific: Very close Physic-specific: Use belt instead of truck Human-specific: Deep understanding for each other 2)Knowledge-sharing routines A regular pattern of interfirm interactions that permits the transfer, recombination, or creation of specialized knowledge.

The Relation View (Dyer, 1998) 3)Complementary resource and capability Distinctive resources of alliance partners that generate greater benefit than the sum of individual. Good product + Good distribution 4)Effective governance Third-party enforcement (e.g., legal contract) Self-enforcing (e.g., trust) Lower contracting cost, monitoring cost, adaptation cost, difficult to imitation.

Two ways to obtain benefit Value Creation Value Retention or Claiming

Value Creation Normal source Business partner reengineering (Riggins,1994 ) Five levels of business transformation: localized exploitation, Internal integration, BPR Business network redesign, Business scope redefinition How do champion help adopter to implement business partner reengineering?

Value Creation Relationship-specific source 1)Relation-specific asset Duration of guarantee Volume of interfirm transaction 2)Knowledge-sharing routines Partner-specific absorptive capacity Incentives to encourage sharing

Value Creation 3)Complementary resource and capability Ability to identify and evaluate potential complementarities Ability to combine the complementarities 4)Effective governance Ability to employ self-enforcement

Related Questions How to consider the way of value creation in the adopter view? How to associate the framework with IT artifacts?

Value Retention or Claiming To use advanced electronic linkage (such as electronic invoice transaction). The increase asset specificity and reduced transaction cost motivate the buyer to award more benefit to suppliers. (Mukhopadhyay, 2002)

Value Retention or Claiming (Subramani, 2004)

Value Retention or Claiming (Clemons,1993 )

Major Theories Transaction theory Game theory Competitive advantage RBV Motivation theory Trust

End Thank you!