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
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
Keywords: inter-organisational information systems, supply chain management, business partnership
Elizabeth A. Williamson
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,
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 /
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 for the pharmaceutical industry and 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.
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.
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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
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).
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
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
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
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.
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 /
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
Figure 2: Virtuous Partnership Circle
Communication &
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
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.
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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
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
communication and
co-ordination. Limited
benefits from use of
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
Significant barriers:
Benefits not demonstrated
Small barriers: Financial
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
Role of technology is
changing, from an
operational tool to
being a more strategic
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
transactions and
Some integration of
information systems
to form links with
parent company.
Improved level of
between functions.
IOS replacing some
IS supports
communications with
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
Trust between
partners is being
Integration of
Customers exert
position power in the
Significant barriers:
Benefits not demonstrated
Small barriers: Financial
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
Internal and external
integration between
information systems,
using one of more
Internet systems and
Automation of
processes gives
efficiency and
effectiveness gains.
IOS are used at all
levels within the org,
from strategic
through to
Technology is used
for an extensive
range of tasks within
all functions.
Integration of
functions and
processes is carried
out by sophisticated
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
Customers exert
position power in the
Significant barriers:
Business Requirement
Management Commitment
Lack of System Standards
Resistance from other business
Resistance from customer
Small barriers:
Financial costs
Technical maturity of company
Technical maturity of trading
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 /
Figure 6: The Impact of Organisational Factors at varying levels of Inter-organisational
Information Systems Development
Factor Elementary
Factor Impact
IOS development increases communication
and co-ordination between partners, as well
as developing partner integration
confidence and
IOS development, enhances confidence and
trust in partners and therefore partnership
Impact of lack of information system
standards increase in effect with IOS
Resistance from
Partners and
Impact of resistance from other business
partners and customers increase in effect
with IOS development
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
Benefits not
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.
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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