Int. Journal of Business Science and Applied Management, Volume 2, Issue 3, 2007

An evaluation of inter-organisational information systems

development on business partnership relations

Elizabeth A. Williamson

Caledonian Business School, Glasgow Caledonian University

70 Cowcaddens Road, Glasgow, G4 0BA, UK

Tel: +44 (0) 141 331 3122

Fax: +44 (0) 141 331 3193

Email: e.williamson@gcal.ac.uk

Abstract

Inter-organisational information systems (IOS) are being used within SCM to improve businesses

processes and to facilitate closer working relations with business partners. However, the technologies

themselves impact on this relationship as they allow various levels of information flows,

communications, function integration and partner integration.

The aim of this paper is to evaluate IOS development influencing partnership integration within Supply

Chain Management (SCM) by investigating thirteen businesses that use a variety of IOS. IOS are

classified into Elementary IOS, Intermediate IOS and Advanced IOS. Organisational variables such as

information flows, partner co-ordination and integration, partner trust and confidence are measured

against the level of IOS development. Variables such as management commitment, financial costs,

system standards and partner resistance are investigated as forces or barriers, and related to different

levels of IOS development.

This research concludes that IOS development results in increased information flows and coordination

which supports the development of trust and confidence in business partners. However, the customer

position in the supply chain, whether it be retailer, distributor or manufacturer can influence the use of

IOS of its business partners. Also, although IOS allows businesses to source and contact a larger range

of business partners, the tendency is for businesses to use a smaller number of partners. This work also

shows that IOS development changes a business’s relationship with its partners and moves it towards

partnership integration.

However, a number of organisational factors impact on this integration. These factors vary with the

level of IOS development. Management commitment and showing the requirement for IOS

development can act as a positive force in developing IOS or as a barrier against IOS development.

Other barriers include resistance from business partners, financial costs, lack of system standards and

technical maturity of the companies. The effect of these barriers also is affected by the level of IOS

development.

Keywords: inter-organisational information systems, supply chain management, business partnership

relations

Elizabeth A. Williamson

1 INTRODUCTION

An inter-organisational information system (IOS) is a collection of IT resources, including

communications networks, hardware, IT applications, standards for data transmission, and human skills

and experiences. It provides a framework for electronic cooperation between businesses by allowing

the processing, sharing and communication of information (Haiwook, 2001). IOS are also known as

extranets and allow electronic processing of business transactions and documents, as well as the

transfer of information with minimal effort and makes it quickly available. The growth of IOS in SCM

has allowed the flow of information throughout the supply chain by the integration of business

processes (Stephens, Gustin & Ayers, in Ayers, 2002).

IOS can be used at both ends of the supply chain. They can be used with customers, to give

visibility of data and interaction with company employees and with business partners, such as suppliers

and logistic companies. Benefits are the same at both ends and include visibility of data and reduced

purchasing costs (Ayers, 2002).

IOS can be categorised into four phases, in terms of historical IS development (Shore, 2001):

Phase One - Manual systems

Phase Two - EDI systems

Phase Three - ERP systems

Phase Four - Internet-enabled systems

Phase One: Manual Systems

This phase includes paper copies of documents such as purchase orders, bills and invoices. The

information is processed manually and therefore information technology and telecommunications do

not contribute to this system. The disadvantages of this phase are obvious – laborious procedures,

inaccurate data, insufficient information and expensive maintenance of the system. This initial phase is

still in use in some companies either on a wide scale across the company or in particular departments

and in many Small to Medium sized Enterprises (SMEs), as shown in the empirical case studies. This

IOS development may be curtailed due to a lack of expertise, financial resources or other organisational

or environmental pressures (Papazoglou & Ribbers, 2006).

Phase Two: Electronic Data Interchange Systems

The next phase involved the development of EDI technology in the 1980’s and this had a dramatic

effect on the automation of heavy data flows and the elimination of many labour intensive key business

processes. Paper documents such as purchase orders, invoices, bills of lading and shipping slips were

replaced by electronic transmission of the information between computers (McKeown, 2003). EDI was

the main technology used in electronic trading in many sectors, such as retail, manufacturing and

financial services and has only been widely used since the early 1990’s (Williams & Frolick in Ayers,

2002).

Early EDI systems used value added networks (VAN), which are special services on public

networks available by subscription, and provide companies with data communication facilities. The

company operating the VAN is totally responsible for managing the network, including providing any

data conversion between different systems (McKeown, 2003). Therefore VANs were expensive to

implement and therefore limited EDI use to the larger companies.

However, as there is no single agreed national or international standard, an EDI link tends to be set

up for a specific supplier and buyer. Therefore it is difficult to switch the connection to another partner

and a second EDI system may have to be created. Golden and Powell (1999) research showed that EDI

limits flexibility of suppliers who are connected to more than one customer since they are required to

support specific technologies for each. This resulted in an explosion of EDI software, VAN and EDI

standards which made it difficult to integrate the technologies. Also, the full benefits of EDI can only

be realized when EDI is fully integrated with other transaction processing systems, such as accounting

and sales systems. The information sent via EDI is ordered as a transaction set and this transaction set

has a fixed structure. These transaction sets for new products or services also have to be firstly agreed

before they can be implemented. These data constraints also hamper EDI growth and implementation.

A second generation of EDI technology, Internet EDI, overcomes some of the disadvantages of

the early EDI systems. Companies are able to use existing EDI systems and processes by installing

Extensible Mark-up Language (XML) EDI translators on web-servers. Internet EDI lowers entry costs

for businesses as data is transmitted over the Internet rather than using subscription to a VAN, and

therefore telecommunication costs are minimized. It is also more useful in the global marketplace. Cost

savings can be as much as 90% (EDI Data, 2003) and therefore can be implemented by smaller

Int. Journal of Business Science and Applied Management / Business-and-Management.com

companies. It uses the same EDI standards for documents. Data transaction sets are also more flexible

within Internet EDI and allows easier and quicker development of applications (Papazoglou & Ribbers,

2006). Data is processed in real-time when using Internet EDI, as opposed to overnight batch data

flows/processing and this is also an operational advantage. Therefore, due to these benefits over the

older system, the volume of Internet EDI is increasing.

Phase Three: Enterprise Resource Planning Systems

This phase describes a more integrated information systems approach. This approach is being

taken by companies who view the integration of systems and information flows as being essential in

providing improved customer satisfaction and cut operational costs in an increasingly competitive

market-place (Jenson & Johnson in Ayers, 2002).

Enterprise-wide systems and databases integrate and coordinate IT operations across the company.

These systems, characterized by Enterprise Resource Planning (ERP) systems, have developed from

Manufacturing Resource Planning (MRP II) applications. They generally include manufacturing,

logistics, distribution, inventory, shipping, invoicing and accounting (Ayers, 2002). The integration of

information from all departments in the company in the ERP system means that output or consequences

from one system can be fed into other systems, so that there is total information coordination. An ERP

system can also assist in controlling business activities such as sales, delivery, billing, production,

inventory management and human resource management. Therefore it can cover all primary and

support activities within the Value Chain. The implementation of ERP systems also results in

organisational efficiencies as they automate processes, integrate functions and improve the quality of

information flows (Papazoglou & Ribbers, 2006). The reach of ERP systems can be extended to

include partners with the supply chain by the use of SCM software transferred onto the new integrated

system. ERP systems, such as SAP’s R/3, have been implemented across the globe. Worldwide sales

of ERP packages, combined with implementation support, exceeded $15billion in 1999 with annual

growth rates of over 30% (Akkerman et al, 2003).

Phase Four: Internet-enabled Systems

The Internet is a worldwide web of computer networks. The development of the protocol,

Transmission Control Protocol/Internet Protocol (TCP/IP), allows separate networks of different

architectures to work together through open network architecture. The integration of information

resources has therefore been enabled by the use of web development technologies such as Extensible

Mark-up Language (XML) and Java, which have allowed business partners to integrate their

information resources. These systems also provide platforms for fast and reliable communications

between trading partners, regardless of physical barriers (Bandyo-padhyay, 2002).

The use of the Internet requires integration of computer systems by examining existing legacy

systems and software and developing integrated solutions. However, changing corporate information

systems brings about a number of challenges for the business which need to be managed successfully

(Krizner, 2001):

1. businesses have invested thousands if not millions of pounds in legacy systems which they

will be keen to keep in place

2. the financial and time resources required to carry out systems integration

3. security and risk aspects of opening up internal systems to external parties

4. legacy systems require to be integrated to allow information flow between disparate systems

and were not designed to ’talk’ to other systems

5. businesses may define processes and data differently from their supply chain partners

6. legacy systems of partners may use different platforms

7. partners will belong to many different supply chains

There are a variety of information mechanisms available for use by managers in SCM, such as

auctions, purchasing groups and electronic agents which provide this linkage. Recent developments

also include trading exchanges or market places. These are online supply chains which allow the

sharing of real-time synchronized information by using XML on features such as prices and delivery

information. Examples include NonstopRX.com for the pharmaceutical industry and Retail.com for

apparel manufacturers and buyers (Messmer, 2000). These mechanisms may be used to conduct a

business transaction, to purchase something at a given price or to share information to coordinate the

flow of the item after the purchase has taken place. These collaborative mechanisms come under the

Collaborative Planning, Forecasting and Replenishment (CPFR) heading and aim to closely integrate

business partners. In order to help companies come together within this system, the Voluntary Inter-

Elizabeth A. Williamson

industry Commerce Standards Association (VICS) publishes guidelines to assist companies to achieve

their objectives when using CPFR systems. However, the technology may require some business

process change and also CPFR should be integrated into the e-business strategy. (Grossman, 2004).

Managers are also required to choose the appropriate level of integration for particular relations in the

supply chain and the appropriate degree of information sharing (Garcia-Dastugue & Lambert, 2002).

Therefore the Internet is now being used as one of the main networking platform in the upstream,

downstream and internal supply chain by both large and relatively small companies.

Current IOS Development within Business

However, companies may be involved in ad-hoc development and use various operational and

management information systems. For example, a company may use a legacy system for processing

orders and stock control. Legacy systems may also be ‘best of breed’, bespoke, point or developed

internally ERP systems. It may access a customer’s web-enabled production system to calculate order

quantities and it may implement a new invoicing and accounting system as required by head office

which may be a SAP system. These systems may also be totally disjointed, totally integrated, using a

web-enabled ERP integrated technology or use a few information systems with some integration of

processes, some of which are web-enabled. Such companies may have the objective of full integration

in the future. For example, a substantial proportion (82%) of companies surveyed during 2003 expect

to be using the web for purchasing in the course of the next few years, while 75% plan to use online

technology for order management and 71% for order status, with supplier management (69%) and

selling (65%) proving equally popular. (Sweet, 2003). Therefore the actual configuration of IOS used

by a company usually consists of a number of IOS, which may be partially or fully integrated internally

or externally with business partners. This scenario is evident in the empirical case studies.

2 INTER-ORGANISATIONAL INFORMATION SYSTEMS DEVELOPMENT AFFECTING

PARTNERSHIP RELATIONS

Previous research has focused on the how the use of information systems themselves have

changed the business structure and influenced partner relationships (Venkatramen, 1991, 1994).

Christopher & Juttner (1998) found that the quality of a relationship is strongly influenced by its

interface structure. Premkumar in Ayers (2002) states that the nature of the IOS technology and partner

linkages, including common partner objectives is important to IOS development and implementation.

Electronic Data Interchange Systems and Partnership Relations

Electronic Data Interchange (EDI) and point of sale (POS) systems have been used generally

within SCM to facilitate information flows and therefore communication between businesses and their

partners. Research carried out by Hill and Scudder (2002) on the use of EDI systems in the food

industry found that the implementation of EDI facilitated inter-company coordination and that EDI

users have more coordination with their suppliers than do non-users of EDI. These IOS bring about

electronic cooperation by integrating stock holding, distribution, purchasing and other functions to

improve customer responsiveness (Mische, 1992). POS systems have been a major influence in

increasing information sharing among, for example, logistic managers and show that information

exchanges can be beneficial to all parties involved (Lancioni, Smith & Oliva, 2000).

Haiwook (2001) found that EDI provides a better means of inter-organisational coordination than

earlier applications of IT, but it is limited in its influence. Similarly, Santema (2003) found that

although EDI improve communication between business partners, it doesn’t ‘add value’ to the

relationship. This supported previous findings by Clemons & Row (1993), who found that EDI-based

checkout scanners significantly affect efficiency and information flow in distribution channels, but that

automating the processes in this way, doesn’t increase electronic cooperation. He concluded that only

by sharing company information, such as in a two-way information flow, is a true partnership

developed. EDI has also been accused of depersonalizing inter-organisational relationships due to its

restricted information format (Morris, Tasliyan & Wood, 2003).

Crook & Kumar (1998) found that a number of organisational variables, including the partners’

experience of EDI influenced the expansion of its use. Vlosky et al (1997) found that buyers, such as

manufactures, initiate EDI and expect to and actual gain more benefits that their suppliers – their main

objective is to improve customer satisfaction and cut costs. Significant disruption to the business

relationship can occur if the implementation is not handled properly. Over time, relationship strength

and satisfaction increases.

Int. Journal of Business Science and Applied Management / Business-and-Management.com

Internet Inter-organisational Information Systems and Partner Relations

The Internet can be used to provide a platform for partnerships in all areas of the supply chain,

whether it is procurement, purchasing, negotiation, coordination or just information exchange. The

Internet allows two-way communications, unlike EDI technology, and therefore has much more impact

on partner relations and partnerships. Research by Lancioni, Smith & Oliva (2000) concluded that the

use of Internet IOS, can improve supplier relations by improving communications and data flows

between suppliers and businesses. Support for these conclusions is given by a number of researchers.

Barua et al (2001) suggested that the Internet provides opportunities for companies to develop relations

with all business partners, suppliers as well as customers. This research was further developed by Zank

and Vokurka (2003) who surveyed manufacturers, distributors and industrial customers and found that

overall, members of the supply chain believed that e-commerce had a slightly positive impact on their

relations with other supply chain partners. Hayes (2002) has shown that the use of the latest IT systems

can aid supplier relations. For example, commitment, trust and communications can be enhanced and

solidified by allowing the supplier/s access to real-time data which can also be manipulated, as

required.

The Internet better supports the business relationship by offering better information with little

investment expense. (Papazoglou & Ribbers, 2006). Therefore is it the case that advances in

technology are changing this relationship scenario and now it is not so much about the type of

transaction but the technical development within companies and level of information interaction

between companies.

Li & Williams (2001) concluded that implementing IOS could assist in strengthening partnerships

and improving cooperation as

• it requires close working between companies which, in turn, helps them to build a closer

relationship and encourage the sharing of information

• it removes many errors associated with manual systems

• changing partners can be costly and time consuming

However, some Japanese car manufacturers see e-procurement, in particular, as preventing the

development of closer partnership-type relations, which is what they prefer, by automating partner

relations and therefore limit e-purchases to nuts and bolts and basic office supplies (Harney, 2000).

3 RESEARCH

This paper further develops the above findings by investigating the influence of IOS development

on business relationships with suppliers and customers. It also analysed forces for and against IOS

development.

The research critically evaluates 13 case studies to provide rich, in depth information to develop a

theoretical model, thereby extending existing theories and models. The case study approach was also

chosen as an all-embracing method that allows a detailed investigation and understanding of situations

within particular organisational settings (Walsham, 1995). Nineteen in-depth interviews were carried

out with senior employees of these 13 companies to enable cross-case analysis. Companies in product

supply chains were the focus of the research as the products, and supply chains would be clearly

identifiable. Most of the companies were large multinational companies with locations in Scotland,

although three were small Scottish Companies. Items produced by all companies included electronics,

clothing, food and drink, packaging and fixing solutions. The companies were positioned at various

points in the supply chains - suppliers, packaging distributors and manufacturers. Retailers were also

included in the research in order to give an analysis of the full supply chains.

Initially, employees interviewed were managers responsible for part of the supply chain, such as

purchasing managers and sales managers. Thereafter, the manager was usually asked to suggest

partners, either suppliers or customers, as appropriate, who could be used for the development of

dyadic case studies. Managers in these companies were interviewed by using the same structured

questionnaire. Interview responses were confirmed and corroborated by managers within the same

companies, partner companies and other companies using the same type of technologies. It was also

substantiated by additional information from a number of secondary sources, such as company

publications, company websites, published company case studies and the WWW. Data collected was

made more robust by the supply chain network associations. For example, third-party systems, such as

GXS TradeWeb, an Internet EDI global marketplace used by several companies included in the

research.

Elizabeth A. Williamson

As this research investigated the relationship between a company and its partner, partners of the

companies chosen were also investigated where possible. Wilson, Stone & Woodcock (1996) suggested

that researchers exploring buyer-supplier relationships in business-to-business markets should collect

data from both ends of the dyad. They argued that the collected data would be richer and therefore

would compensate for the smaller sample size involved. In fact, although some linkages between case

studies were not known, during the research and analysis, it was clear that most companies had

linkages with most of the others. These gave very strong basis for conclusions. The case studies can

therefore be seen as a network of companies.

Data analysis was undertaken during and after the data collection. The analysis was conducted

using principles of hermeneutics (Klien & Myers, 1999) as methods for identifying and extracting key

themes from multiple case studies (Eisenhardt, 1989). Data analysis used coding, developing trends,

summarizing, clustering and graphs.

After an initial analysis of data, IOS used by the companies were categorised into three types,

Elementary IOS, Intermediate IOS and Advanced IOS, according to the level of internal information

systems integration and external information systems integration with partners in their supply chain.

This classification was subsequently used to determine the objectives of the research and is further

explained in Figure 1.

Figure 1: Inter-organisational Information System Categories and Level of Information System

Integration

Inter-organisational

Information System

Level of Information System Integration

Elementary Many different internal IS with manual data input between systems. No

systems integration with external partners

Intermediate More than one internal IS may be used but automatic data input between

systems. No systems integration with external partners

Advanced More than one internal IS may be used but automatic data input between

systems. More than one external-facing IS may be used with partners but

automatic data input between internal and external systems.

4 FINDINGS

The empirical study gave interesting findings on how IOS development affects not only the

company itself, but also its relationship with its business partners, whether suppliers and customers.

This is due to the fact that IOS cannot be deemed as a closed system on its own, but must be taken as a

component of the organisation (Leavitt, 1965: Boddy, Boonstra & Kennedy, 2002).

Company Restructuring, IOS Development and Position in the Supply Chain

Findings here showed that companies restructure when developing IOS, to improve relationships

with both suppliers and customers. All companies using Advanced IOS had restructured to some

extent, while around 66% of companies using Intermediate IOS and only 33% of companies using

Elementary IOS had undergone any restructuring. Therefore, companies with Advanced IOS are more

likely to have restructured than companies using Intermediate or Elementary IOS. This supports

previous findings that relationships within SCM are now increasingly being seen as partnerships and

businesses within the supply chain generally consider themselves as partners, rather than taking on a

more adversarial and segregated role (Grieco, 1989: Kanter, 1994: Bowersox, 1996: Heikkila, 2002).

Similarly, Venkatramen (1994) in Papazoglou & Ribbers (2006) determined that integration of

advanced information systems require business transformation, which involve changing business

structure and processes and establishing inter-organisational business processes. His work is supported

by other writers such as Ayers (2002), Clark & Stoddard (1996) and Benjamin et al (1990) who

propose that benefits from IOS can only be gained when basic organisational structures and work

processes are redesigned.

This research also showed that companies are more likely to reorganise to improve relations with

customers due to the position power of the customer in the supply chain. Research supports these

findings (Ayers, 2002) in that where previously power resided with vendors/suppliers and they pushed

technology onto their customers, the retailers, now the balance of power is with the retailer. This power

balance was also shown here. For example, a retailer in this study was pushing the food manufacturer

Int. Journal of Business Science and Applied Management / Business-and-Management.com

to used newer advanced technologies, such as RFID. Another manufacturer was ‘invited’ to use the

third party GlobalNetXchange marketplace by their retailing business partner.

Development of Trust and Confidence in Partners

The research found that the level of IOS development has a beneficial impact on

communication/information flows. Of companies using Elementary IOS, 63% of respondents found no

change on communications/information flows/interaction, with only 37% experiencing a Positive

Effect. With regard to companies using Intermediate IOS, 82% replies experienced at least a Positive

Effect with 28% experiencing a Significant Positive effect. All companies using Advanced IOS found

that they had a positive effect (55%), or a significant positive effect (45%) on communications.

To illustrate, one manager commented that their legacy IOS brought about improvements in

communications in purchasing, logistics and customer service and warehousing when they were

implemented. Similarly, another employee commented that IOS development has not changed the

number of meetings with suppliers, but has allowed more interaction with partners and therefore more

important matters can be discussed at face to face meetings. A retail manager illustrated the beneficial

impact of IOS on communications/ information flows to his role. Weekly information from Head

Office is fed back to himself to give information on store targets such as revenue, stock levels and shelf

space usage.

Information sharing and communication is necessary to build trust (Ballou, Gilbert & Mukherjee,

2000). Therefore given the previous findings that IOS development can improve information sharing

and communication, it was of interest to determine if trust between partners was also developed when

IOS development has taken place.

Findings showed that Elementary IOS can have a detrimental effect on trust levels between

partners. For example, one manager regarded the lack of technology as hindering trust levels between

partners as he felt that, as his company’s IOS were not up web-based and in real-time, they hindered

communication between business partners. Where companies used only Intermediate IOS then a

positive effect on trust levels was reported by 54% respondents. For example, a Purchasing Manager

reported that their web-enabled link with suppliers such as has enabled them to share more information

and has led to an increase in trust between the companies. Most, 82%, of the replies from the

companies with Advanced IOS reported a positive effect on the trust levels with partners. Therefore

IOS development assists in development of trust levels between partners.

These findings can be shown as in Figure 2, as a virtuous partnership circle, supporting the

partnership.

Figure 2: Virtuous Partnership Circle

Communication &

Co-ordination

Trust & Confidence

Choi (1999) also found that there is a positive relationship between information volumes, amount

of sales and joint decision-making, leading to better electronic cooperation. Grieco, (1989), Kanter

(1994) and Kwon & Suh (2004) pointed to trust and communications/interaction as improving or even

are necessary for effective working relationships with suppliers.

Elizabeth A. Williamson

Barriers to and Forces for IOS development

Findings showed that other organizational factors also impact on the rate of this development.

Some of these factors can encourage IOS development, whilst others act as barriers against it.

Seven organisational factors were shown to be barriers - benefits not demonstrated, financial costs,

lack of system standards, resistance from other business partners, resistance from customers, technical

maturity of the company, and technical maturity of the trading partner. These barriers were found to

have different levels of impact, depending on the level of IOS development. The barriers had least

effect in companies using Elementary IOS and most impact in companies with Advanced IOS. This is

supported by Soliman & Janz (2003) who found that EDI and Internet-based IOS encountered a range

of barriers which varied with the level of IOS development.

‘Benefits not demonstrated’ and ‘Financial Costs’ were not significant barriers for Advanced IOS

but tended to be significant barriers for Intermediate and Elementary Systems. The remaining five

factors were shown to be barriers, but at different levels and for different levels of IOS development:

‘Business requirement’ and ‘Management commitment’ can act as positive forces and encourage

IOS development at all levels, thereby also enhancing partnership relations. In fact, management

commitment can act as both a barrier, if it does not exist and have positive impact if it does exist.

A manager within one of the electronic companies endorsed this finding with his comment that the

implementation of sophisticated IOS allows both their business and their customer to benefit, thereby

keeping them in a leading position in the electronic market.

Significant Barriers for Advanced IOS

• Lack of System Standards

• Resistance from other business partner

• Resistance from customer

Small Barriers for Advanced IOS

• Technical maturity of company

• Technical maturity of trading partner

Small Barriers for Elementary and Intermediate IOS

• Financial Costs

• Lack of System Standards

• Resistance from other business partner

• Resistance from customer

• Technical maturity of company

• Technical maturity of trading partner

Therefore, in relating the strength of barriers to the type of IOS, then problems were generally

regarded as ‘Small Barrier’ with Elementary and Intermediate IOS and more as ‘Significant Barriers’

with regard to Advanced IOS.

The above analysis also shows that partner resistance is more important to companies with

Advanced IOS. This supports other findings in that variables within both partners can influence partner

integration and that partner variables are more important in companies deploying Advanced IOS.

Therefore, it may be that due to the sophisticated nature of the systems and the integrative nature

of their deployment in bringing companies together, a stronger, ‘leader’ or champion for technological

change is required in order to push through the Advanced IOS, and to overcome technical and partner

barriers.

5 MODEL DEVELOPMENT

In order to further progress the empirical and literature findings, a model has been developed from

the above analysis. Firstly, this research has allowed the definitions of Elementary IOS, Intermediate

IOS and Advanced IOS to be extended, to include other variables, such as Use of IOS, Partner Factors

and Organisational Factors. Thereafter, the influence of organisational and technological factors at the

three levels of IOS development on the organisation and its partners is compared. These are shown in

the following Figures 3, 4, and 5.

Int. Journal of Business Science and Applied Management / Business-and-Management.com

Figure 3: Characteristics of Elementary Inter-organisational Information Systems

Characteristics of Elementary IOS

Technology Use Partner Factors Organisational Factors

Many different IS

used, including EDI

and third party

networks. No/little

internal systems

integration.

Technology seen as an

operational tool,

rather than as a key

strategic component.

Automation of

processes gives

effectiveness gains.

Transactions only.

Partners enter

information into their

own systems. Limited

information

communication and

co-ordination. Limited

benefits from use of

technology.

Collaboration at

operational level.

Companies may be

working towards their

own agenda and for

their own benefit.

Trust exists between

partners but is limited

by the nature of the

IOS used. Partner

collaboration is weak.

Customers exert

position power in the

chain

Significant barriers:

Benefits not demonstrated

Small barriers: Financial

costs

Lack of system standards

Resistance from other

business partners

Resistance from customers

Figure 3 shows that within Elementary IOS development, there is a low level of systems

integration, information co-ordination, and partner collaboration and of benefits gained. Significant

barriers are management commitment, benefits not demonstrated and resistance from customers.

Smaller barriers include financial costs and resistance from other partners.

Figure 4: Characteristics of Intermediate Inter-organisational Information Systems

Characteristics of Intermediate IOS

Technology Use Partner Factors Organisational Factors

More that one IOS are

used, but internal

integration between

information systems,

gives integrated data

flows.

Role of technology is

changing, from an

operational tool to

being a more strategic

component.

Technology is used for

a larger range of tasks

within all functions.

Automation of

processes gives

effectiveness and

efficiency gains.

Information also used

for business planning

Functional

transactions and

management

reporting.

Some integration of

information systems

to form links with

parent company.

Improved level of

communications

between functions.

IOS replacing some

face-to-face

communications.

IS supports

communications with

partners.

Collaboration at

operational and

tactical levels

Companies may be

working towards

their own agenda and

for their own benefit.

However, some

improvement in

partner confidence

due to increased

communications and

collaboration.

Trust between

partners is being

enhanced.

Integration of

partnerships

increasing

Customers exert

position power in the

chain

Significant barriers:

Benefits not demonstrated

Small barriers: Financial

costs

Lack of system standards

Resistance from other

business partners

Resistance from customers

Figure 4 shows that there is some systems integration, information co-ordination, partner

collaboration and benefits gained within Intermediate IOS development. Significant barriers and

insignificant barriers seem to be similar to those in the Elementary IOS.

Elizabeth A. Williamson

Figure 5 shows the characteristics of Advanced IOS.

Figure 5: Characteristics of Advanced Inter-organisational Information Systems

Characteristics of Advanced IOS

Technology Use Partner Factors Organisational Factors

Technology viewed as

a key strategic

component with

information as a key

resource.

Internal and external

integration between

information systems,

using one of more

Internet systems and

portals

Automation of

processes gives

efficiency and

effectiveness gains.

IOS are used at all

levels within the org,

from strategic

through to

operational.

Technology is used

for an extensive

range of tasks within

all functions.

Integration of

communications,

functions and

processes is carried

out by sophisticated

technologies

Advanced IOS allow

partners controlled

access to extensive

company information

Company may

review the status and

number of partners.

They may use tiered

partners according to

‘value’ of

partnership.

Customers exert

position power in the

chain

Significant barriers:

Business Requirement

Management Commitment

Lack of System Standards

Resistance from other business

partner

Resistance from customer

Small barriers:

Financial costs

Technical maturity of company

Technical maturity of trading

partners

At this level of IOS development, there is a high level of systems integration, information co-

ordination, partner collaboration and benefits gained. Organisational barriers become different at this

level of IOS development, with resistance from other business partners becoming more influential.

Combining these results into one graph, Figure 6 shows the influence of these organisational

factors is the three levels of IOS development. The figure shows that IOS development impacts

business partner relationship in a number of ways:

• Communication and coordination with the business partner increases

• Partner integration increases

• Confidence and trust in partners increase

However, this development also brings with it an increase in implementation barriers, such as lack

of IOS standards and resistance from business partners. Management commitment and business

requirement for IOS development can both as act as barriers against or drivers for IOS implementation.

Int. Journal of Business Science and Applied Management / Business-and-Management.com

Figure 6: The Impact of Organisational Factors at varying levels of Inter-organisational

Information Systems Development

Factor Elementary

IOS

Intermediate

IOS

Advanced

IOS

Factor Impact

Partner

Communication

co-ordination,

integration

IOS development increases communication

and co-ordination between partners, as well

as developing partner integration

Partner

confidence and

trust

IOS development, enhances confidence and

trust in partners and therefore partnership

integration

System

Standards

Impact of lack of information system

standards increase in effect with IOS

development

Resistance from

Business

Partners and

Customers

Impact of resistance from other business

partners and customers increase in effect

with IOS development

Management

Commitment

Top management beliefs can act as a

barrier or driver for IS development at all

levels of IOS development. Strong

management commitment is required for

significant IOS development

Business

Requirement/

Benefits not

demonstrated

Business requirement can act as a driver

towards IS integration at all levels of IOS

development. If the benefits of IOS

implementation cannot be demonstrated,

then this may cause a significant barrier

Sherer (1995) developed a framework to describe three types of risk that affect IOS; technical risk

such as security breaches, organisational risk which may arise due to restructuring of staff and their

roles and environmental risk where partner and competitive forces exert influence over the company.

Li & Williams (2001) also developed a similar three level model of barriers to the use of IOS, namely

technical barriers or problems, organisational attitude to sharing information with business partners and

suppliers and at the third level, an overall organisational cultural attitude towards inter-firm

collaboration. However, this model relates such barriers to different levels of IOS development.

This model is supported by findings from Bensaou & Venkatramen (1995) who found that Inter-

organisational Relationships varied with IOS development and that new IOS development will result in

new business models and relationships. The pressure for these developments will come from the highly

competitive marketplace.

6 CONCLUSION

This study is a comparative study on levels of IOS development within 13 case studies. It provides

a better understanding of the impact of IOS across organizational boundaries. The findings show that

the level of IOS development influences partner co-ordination and integration. IOS capabilities also

assist in building trust and confidence in partners. However, a number of organisational factors

influence IOS development and these factors such as management commitment, financial costs,

resistance from other business partners can act as forces for or barriers to IOS development. The

strength of these variables also varies with IOS capabilities.

The study has important implications for business. Organisations are increasing their use of IOS

within SCM functions and therefore identification of the influencing factors is required and critical for

emerging electronic business environments. Since partnership arrangements can be difficult and

resource intensive and important to success in SCM, it would be valuable to businesses to evaluate the

impact of technology, in particular, Internet IOS, on the required levels of partnership integration in

Elizabeth A. Williamson

particular SCM functions. This will assist in improving SCM performance, enhancing business

performance and ultimately leading to competitive advantage.

Ongoing work includes investigating and evaluating the impact of IOS on the supply chain of

virtual products and services, as well as the impact of new technologies such as wireless applications.

The companies involved in this study were international or Scottish based companies and

therefore the international cultural dimension was not investigated or noted. This research could be

expanded to investigate any cultural aspects of the power aspect within business relationships,

furthering the work of Hofstede (1983) who recognised cultural differences in the power variable.

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