The effects of inter-organisational compatibility on inter-organisational information systems (lois), interorganisational activity (loa) integration and supply chain performance

Increasingly organisations are usmg inter-organisational information systems (lOIS) to facilitate business-to-business processes and supply chain activities. Inter-organisational information systems (lOIS) are considered as one of the most effective ways of improving business processes as they enable organisations to quickly identify consumer requirements and communicate the information through out the supply chain. Despite the increased use of lOIS, most organisations have failed to realise any substantial benefits from lOIS. Literature suggests that organisations' could gain significant benefits when lOIS together with interorganisational activities (lOA) effectively and efficiently integrated with those of their supply chain and trading partners. Such a integrated lOIS and lOA facilitates fast, accurate and reliable transfer of information, assures collaborative forecasting, planning, and flexibility to the condition of changing meet market demands. However, the integration of lOIS and lOA 1s usually hindered by intra and interorganisational factors such as competitive environment, industry pressure, organisational capabilities and lack of inter-organisational compatibility. While prior research in lOIS and supply chain management areas has paid attention to the effects of intra-organisational factors on the implementation and integration of lOIS and lOA, limited attention has been paid to the role of inter-organisational compatibility in lOIS and lOA integration, lOIS effectiveness and supply chain performance. Inter-organisational compatibility is considered as one of the major factors that accelerate organisations' decision to adopt innovation in general, and the adoption of information systems (such as EDI and internet), in particular. Taking the above arguments into consideration, this study posits that inter-organisational compatibility also have significant effect on organisations decision to integrate lOIS and IOA with supply chain partners, and the lOIS effectiveness and supply chain performance benefits realised. Therefore, the present study investigates the role of inter-organisational compatibility (technical, strategic and cultural compatibility) as an antecedent to lOIS and lOA integration, lOIS effectiveness, supply chain and business performance within the Australian retailing industry. To solve the research problems, the present study was undertaken in two phases. Phase one included convergent interviews and a literature review to develop a conceptual model and propositions. The objective of convergent interviewing was to identify inter-organisational compatibility factors that influence lOIS and lOA integration, lOIS effectiveness and supply chain performance. The study found that technical, strategic and cultural compatibility influence organisations' decision to integrate lOIS and lOA with supply chain partners. In addition, the respondents indicated that there was an association between inter-organisational compatibility, lOIS and lOA integration, lOIS effectiveness and supply chain performance. Using the results of convergent interviewing and literature review a conceptual model and propositions were developed and tested in Phase two of the study. Phase two involved a quantitative cross-sectional research design using mail survey and a self-administered questionnaire. The data used to test the conceptual model and propositions was collected from 302 respondents with the response rate of 12.1 %. The study performed exploratory and confirmatory factor analysis to purify the data and assure reliability and validity. The data was analysed using One-way analysis of variance (ANOVA), mediated regression and structural equation modelling (SEM). The results One-way ANOV A indicated that organisations' at different levels of lOIS and lOA integration (basic, partial and full) perceived significant differences in inter-organisational compatibility, lOIS effectiveness and supply chain performance. The results also indicated a significant difference in organisations perception of inter-organisational compatibility, lOIS and lOA integration, lOIS effectiveness and supply chain performance across firm sizes (large, medium and small firms). With regards to differences across retailers' type, the results indicated non-significant differences across supermarket and liquor retailing sector in the perception of interorganisational compatibility, lOIS integration, lOIS effectiveness and supply chain performance. The study investigated the mediation effect of lOIS and lOA integration on the relationship between inter-organisational compatibility, lOIS effectiveness and supply chain performance using mediated regression analysis. Supporting the partial mediation effects the results indicated that by facilitating lOIS and lOA integration, inter-organisational compatibility influences information sharing capability and assure secure transfer of information and data between supply chain partners and improves supply chain performance. Additionally, the study investigated the relationship between the constructs interorganisational compatibility, lOIS and lOA integration, lOIS effectiveness and supply chain performance using structural equation modelling. The results indicated that technical and strategic compatibility were predictors of lOIS and lOA integration. The results also indicated significant effects of lOIS and lOA integration on organisations' information sharing capability and secure exchange of information and data as well as the association between lOA integration and supply chain performance. In conclusion, the study identified technical and strategic compatibility as antecedents to lOIS and lOA integration. The results also indicated that lOIS and lOA integration positively influenced lOIS effectiveness and supply chain performance. The results also confirmed the mediating role of lOIS and lOA integration on the link between inter-organisational compatibility dimensions (technical, strategic and cultural compatibility) and lOIS effectiveness and supply chain performance. Thus, the study contributes towards the understanding of the role of lOIS and lOA integration in lOIS effectiveness and supply chain performance. The study extends the literature by categorising inter-organisational compatibility variables into technical, strategic and cultural compatibility. The study investigated inter-organisational integration in the dimensions of lOIS integration and lOA integration and extended the literature by assessing the influence of lOA integration on lOIS effectiveness and supply chain performance together with lOIS integration as suggested by Kim et al., (2006). Finally, the study contributes to literature by applying Resoure Based View (RBV) theory in inter-organisational integration area.