2010-10
The Evolution of an Electronic Trading Community:
The Case of the Electrical and Electronics Industryof Southeast Asia
Tomoaki Shimada

The Evolution of an Electronic Trading Community:
The Case of the Electrical and Electronics Industry of Southeast Asia

Tomoaki Shimada

ABSTRACT
We examine the evolution of an electronic trading community over the Internet on the basis of
the case study of two B2B (business-to-business) exchange operators for direct materials in theelectrical and electronics industry of Southeast Asia. We identify three distinguishable stages inthe transformation of the third party electronic trading community. We also observe that there
are two types of online trading community formation at different stages of the third party
community evolution: Buyer-driven community formation and supplier-driven community
formation. In the end, however, some buyers left the third party community to build their own
private electronic trading communities by developing their own in-house systems. In this study,
we explain the evolution of the third party community and propose a framework of buyers'
community movement. The buyer's decision whether to move to the private community or toremain in the third party community should be made based on what the company expects fromthe B2B exchange system.

Keywords:
Electronic trading community, e-procurement system, B2B exchange operator, electrical andelectronics industry, Southeast Asia

Version: October 10, 20091

Introduction
A large number of IS (information systems) researchers examined the IOS (interorganizational system) adoption in the last two decades. Some of these studies are summarized inTable 2 in Appendix. Most studies on the IOS adoption investigated the private trading
community via an EDI VAN (electronic data interchange value-added network). In this study,
we analyze how a third party electronic trading community evolves over the Internet. The study
is based on an exploratory case study of two B2B (business-to-business) exchange/eprocurement1 operators for direct materials2 in the electrical and electronics industry of Southeast
Asia.
The two operators are CrimsonLogic and ECnet. Each of the two companies is an ASP(application service provider) for e-procurement, and forms a third party online trading
community (independent e-marketplace) through its own system. CrimsonLogic has
approximately 10 buyers and 250 suppliers, most of which are sharing the demand forecast data.
On the other hand, ECnet has approximately 45 buyers and 1200 suppliers, half of which aresharing the demand forecast data. The former is a government-linked company in Singapore,
while the latter is a Singapore-based private company. Further information concerning
CrimsonLogic and ECnet are available from teaching case studies of (De Meyer & Shimada,2004) and (Soh & Singh, 2003), respectively.
In this study, we use the term "third party" for a community whose members areelectronically linked through a third party's (a B2B exchange operator's) system in order todistinguish it from an online community through the buyer's "private" proprietary system.
1

B2B exchange and B2B e-procurement are interchangeable in this study.
There are two types of products to be traded online: Direct and indirect materials. Direct materials form part of thebuyer's products, while indirect materials do not. A typical example of indirect materials is office supplies, airtickets, or MRO (maintenance, repair and operations) products. In contrast, one example of direct materials for PC(personal computer) manufacturers is PC components. The focus in this study is on direct materials purchasing done
online.

22Besides third party exchange and private exchange, consortium-based exchange is another formof B2B exchange. The third party exchange is an electronic marketplace established by anindependent third party, whereas the private exchange is set up by an individual company such asa powerful buyer or supplier. The consortium-based exchange is initiated by a small group ofcompanies in the same industry. An example of consortium-based exchange in the electrical andelectronics industry is E2open3.

Research Methodology
We used a case study approach for this research, as it is suitable for new topic areas(Eisenhardt, 1989), such as online B2B e-procurement. Our case study is the outcome of
exploratory study rather than that of formally structured interviews. We conducted face-to-faceinterviews in Singapore with the two B2B e-procurement operators. We interviewed threesenior/junior managers of each participating organization. The primary role of these managers isbusiness development in Southeast Asia. We met each manager individually or together one to
five times in total. We also interviewed managers in three electronic component manufacturers to
obtain buyer users' views on the B2B procurement systems. These companies are using other
B2B e-procurement systems in addition to one of the two B2B e-procurement operators' systems.
As an ASP, each of the two B2B e-procurement operators provides their users with an
online application which the community members use remotely for data exchange with theirtrading partners via the Web. Purchase orders, purchase order acknowledgements, delivery
orders (notices) and invoices are typical examples of the data exchanged for procurement as part

3

E2open investors and strategic members include leading electronics companies, such as Acer, Hitachi, IBM, LG
Electronics, Lucent Technologies, Matsushita Electronic (Panasonic), Nortel Networks, Seagate Technology,
Solectron, Toshiba, Mitsubishi Electronic, Omron, Ricoh, Sanyo, and Sharp. Another example of consortium-based
exchange is Covisint.

3

of SCM (supply chain management) activities. In addition to the data exchange services between
buyers and their suppliers, these B2B e-procurement operators offer system customization
services of their standard B2B procurement systems to meet the specific needs of each user.
However, they do not offer sourcing services such as auctions or matching of buyers andsuppliers. The B2B e-procurement operators normally convince a buyer to become a member of
the third party online community. Then, on the buyer's behalf they send a letter endorsed by thebuyer to invite its suppliers to join the community. Thus, the managers we interviewed in theoperators are familiar with suppliers' activities in B2B e-procurement as well as buyers'.
Our research procedure of the exploratory case study is as follows. First, we interviewed
the managers in one of the B2B e-procurement operators in Singapore. We asked them how theuser community had been evolving. Although we had very broad research questions about thethird party trading community evolution, we had not developed any specific theory for this study
before we conducted interviews. Then, we can avoid having any bias toward theory to be built
and retain theoretical flexibility (Eisenhardt, 1989). The managers explained the community
transformation by providing us with several events as examples. Second, we structured these
events and built some possible theories about the third party trading community evolution basedon the interviews. Third, we interviewed the same managers to obtain their feedback about ourtheories. Subsequently, we conducted interviews with its users as well as the other system
operator that is a competitor of this operator. There are several repetitions of this process to
exchange their ideas and ours. Then, we evaluated and confirmed some theories within the two
B2B e-procurement operators in the electrical and electronics industry of Southeast Asia.

4The Evolution of an Electronic Trading Community
The third party electronic trading community by each of the two B2B e-procurement
operators consists of several buyers and multiple suppliers. In the electrical and electronics
industry 4 , typical buyers are manufacturers of electrical and electronics products including
electrical appliances and computer peripherals, while their suppliers are normally manufacturersof raw materials or components. The buyers and their suppliers are often called "hubs andspokes" respectively because the data exchange among them forms a trading community whose
structure looks like a wheel as illustrated in Figure 1.
.

Supplier A
Supplier B
Buyer

Supplier C
Supplier D
Supplier E.

Figure 1: A Hub (Buyer) and Spokes (Suppliers) Structure

Figure 2 illustrates the third party trading community transformation. A trading
community is normally created on the initiative of a large buyer, which explains why hubs andspokes are respectively referred to as initiators and followers. The buyer proposes adoption of
the application for data communication with each of its suppliers. A small electronic trading
community is thus formed between the buyer and some of its suppliers. This few-to-one-to-one5
structure is the first step in the trading community's formation as shown in Figure 2. The number
4

On the whole we include the computer, electronics, and electrical industry in the electrical and electronics industry,
as the components such as condensers and connectors are often used across these industries.
5(a number of suppliers) – to – (B2B e-commerce hub, normally one) – to – (a number of buyers).

5

of suppliers in the community gradually increases over time as the buyer's request for the system
to be adopted is taken up. At the same time, a few other buyers start to initiate B2B procurement.
The trading community is thus transformed into a many-to-one-to-few structure in the second
stage. Until this point, the community's formation is buyer-driven (buyer-initiated). In otherwords, a buyer initiates the system adoption and some of its suppliers follow it up to this stage.
Online Trading Community Formation
Supplier A

Supplier B

B2B
Exchange
Operator

Buyer

Buyer-driven Formation

Supplier C
1st Stage: Few-to-One-to-One

Supplier A
Buyer A

Supplier B
Supplier C

B2B
Exchange
Operator

Supplier D

Buyer-driven Formation
Buyer B

Supplier E
2nd Stage: Many-to-One-to-Few

Supplier A
Buyer A
Supplier B
Supplier C

B2B
Exchange
Operator

Buyer B

Buyer-driven Formation &Supplier-driven Formation

Buyer C

Supplier D
Supplier E
3rd Stage: Many-to-One-to-Many

Figure 2: Third Party Online Trading Community Evolution

6

As the community grows, more buyers and their suppliers join the community. Generally,in the next phase in the evolution of the trading community, suppliers will suggest that additionalbuyers join the online trading community so that they can enhance operational efficiency from
economies of scale. Thus, a supplier-driven (or supplier-initiated) community formation emerges.
If a supplier has some buyers who use a different electronic trading community or a proprietarysystem, it will be obliged to use a different system for each buyer, rendering the supplier's
operation both redundant and inefficient. One electronic component supplier observed:"When our buyer places a purchase order with us, we receive an e-mail notification
which is automatically generated by the application. Then, we need to log on to theapplication on the Web to receive the purchase order. After we confirm with ourwarehouse staff that we can deliver the order items on time, we need to log on to thesystem again to acknowledge the order. However, many of our buyers are using
different systems. Even the same company which has several operations is using a
different system in each facility. And we also need to check the fax machine for manualpurchase orders. It is really troublesome, especially if the order is urgent."
If a number of small and medium-sized buyers are willing to join a community in which
there are many suppliers, then due to positive network externality the network structure willchange over time from a few buyers with many suppliers to many buyers with many suppliers
via the portal (many-to-one-to-many), as shown in the third step of Figure 2. Until Step 2, thecommunity formation is completely buyer-driven. In Stage 3, however, a supplier-driven
community formation emerges alongside the buyer-driven community formation, though the
supplier-driven formation is less strong. In the supplier-driven community formation, a buyer is a7

new user and all the suppliers are normally existing users.
In theory, operational efficiency in data exchange through a B2B e-commerce hub can be
explained using the number of contacts in the transactions as depicted in Figure 3. The numberof contacts in the transactions among m suppliers and n buyers is reduced from (m × n) to (m +n). As m and n increase, the difference between (m × n) and (m + n) becomes larger and each
community member can benefit from further economies of scale. In practice, however, this may
not always work well because the buyer sometimes prefers a proprietary system, as illustrated in
Figure 4. The proprietary system fits into the buyer's operations and can be integrated with its
back-end system. In addition, the proprietary system allows the buyer to monitor and control data
without worrying about data confidentiality and system security being handled by a third party.
Supplier A

Buyer A

Supplier A

Supplier B

Buyer B

Supplier B

Buyer A
B2B
Exchange
Operator

Buyer B

Supplier C

Buyer C

Supplier C

.

.

.

.

.

.

.

m

n

m

n

Private Data Exchange

Buyer C.

Data Exchange via an e-Procurement Operator

Figure 3: Efficiency of Data Exchange

Supplier A
Supplier B

Buyer's
Proprietary
SystemSupplier C
Supplier D

Buyer

Supplier E

Figure 4: Buyer's Private Trading Community

In the end, some buyers have left the third party online trading community to build a8many-to-one structure without an e-commerce operator by developing an in-house system, as
indicated in Figure 4. Subsequently, their suppliers will follow suit unless their other buyers arein the community. The reasons for leaving the community vary. For example, one buyer joined
the community because the company wanted to test how the electronic data exchange worked in
its operations. Having seen how it worked, it decided to develop its own in-house system to forma private trading community. In another example, where each facility of the buyer was using a
different online trading community, the company decided to standardize the system worldwide
by forming a private trading community. The company also cited a desire to avoid dependency
of its information systems on the ASP, a trend that increased when the B2B e-commerce bubble
burst. Acknowledging this general movement from the third party online trading community tothe private community, one of the e-procurement operators explained what the company was
doing to counteract the trend:"To prevent buyers from ceasing to use our services, we help them form their own
private online trading community by offering new services such as dedicated server
outsourcing services or licensing services. In our dedicated server outsourcing services,
one server in our data center is physically dedicated to the use of a buyer and its
suppliers only, and the system maintenance is outsourced to us. On the other hand, in
our licensing services we don't play the role of an ASP any longer and allow the buyers
to use our solution package on their premises by licensing the software."On the other hand, some buyers prefer to continue to outsource procurement systems to
ASPs. One MIS (management information system) manager of a semi-conductor manufacturer
explained:

9

"We focus on developing and manufacturing semi-conductors worldwide. So we
outsource any functions which are not relevant to our core business. For example, we
use distributors to sell our products. Likewise, we outsource IS functions to an eprocurement operator. We will not have any plan to increase our resources for managing
IS unless the headquarters change their outsourcing strategy."Another MIS manager of another semi-conductor manufacturer agreed with this view andadded:"Most of large semi-conductor manufacturers in the world are using RosettaNet
standards.6 As RosettaNet is not simple or flexible, it is better to outsource development
and maintenance of procurement systems to a specialist in this area. The e-procurement
operator's 24-hour technical support is also an advantage because we are dealing withmany companies in different time zones."

Proposed Framework
In the previous section, we show that there are two types of buyers: One is moving to
private exchange, and the other is staying in the third party exchange. Although the buyers canuse both the private system and the third party system in parallel, they will select one of these
two options in the end. Otherwise, the company operations are not efficient. The buyers arelikely to choose the option based on their expectations from e-procurement systems. Table 1
proposes the framework of buyers' community movement.
Operational efficiency refers to benefits of a company’s operations, most of which are
immediate benefits of internal operations. Typical examples of operational efficiency are

6

RosettaNet defines a common set of standards for e-business in terms of communication languages and processes
among the supply chain members in the IT (information technology) industry.

10

administrative cost reduction, inventory level decrease, real-time information exchange, clericalerror elimination, and trading procedure simplification. Relational advantage consists of benefits
pertaining to relationships with trading partners, such as loyalty enhancement, better cooperation,
trust development, long-term relationship building, and customer satisfaction. In fact, somecompanies adopt B2B e-procurement systems in order to utilize them as facilitating tools to build
solid relationships with their trading partners.
In the private exchange, the close relationships between the buyer and their suppliers playa key role in its success because the system is specific to the buyer. The buyer's proprietarysystem makes it difficult for new suppliers to join the buyer's online trading community due tolock-in effects of incumbent suppliers. However, some manufacturers prefer this model because
they wish to develop new products with their reliable existing suppliers by keeping collaborative
relationships with them. Thus, if the buyer expects both operational efficiency and relational
advantage from the e-procurement system, the company is likely to build its own proprietary eprocurement system which matches with its business procedures (e.g., those for purchase orderplacement/cancellation) and can easily be integrated with its back-end system.
Community
Movement
Buyer's
Expected Benefits
Operational Efficiency
andRelational Advantage

Move to "Private"
Community
Buyers who wish to keep
collaborative relationships
with their suppliers.
(The e-procurement system is
a competitive weapon.)

Stay in "Third Party"
Community

Buyers who wish to avoid
risk from e-procurement
systems.
(The e-procurement system is
a competitive necessity.)
Buyers who wish to be at
Operational Efficiency
arm's length with their
Only
Inappropriate
suppliers.
(The e-procurement system
just facilitates transactions.)
Table 1: Proposed Framework of Buyers' Community Movement

11

The following comments are not from an electrical and electronics manufacturer using athird party system but from a carmaker who decided not to use a consortium-based system.
However, the manager's comments reflect the very similar situations. An e-BT (business
transformation) manager of Nissan explained why they were not using Covisint7:"Although we invested in Covisint, we are not currently using its system. The Covisint
system was originally created for Big Three automakers (i.e., General Motors, Ford
Motor, and DaimlerChrysler), and hence, the system is suitable for their businessprocedures. Unfortunately, we have different business procedures from them. To use theCovisint system, we have three options. The first option is that we change our businessprocedures so that we can use the Covisint system comfortably. The second option isthat we customize the Covisint system so that we do not need to change our operations.
The third option is that we do not use Covisint system and implement our own
proprietary system. Then, we decided to choose the third option."
However, some buyers are concerned about the technology change or want to avoid any
risk relevant to the e-procurement system, as the technology of e-procurement systems is always
evolving. This type of buyers expects both operational efficiency and relational advantage fromthe e-procurement system, but they hesitate to implement the private e-procurement system.
These buyers are likely to stay in the third party online trading community. The buyers are awareof competitive necessity of e-procurement system, but they do not intend to invest in the systemat this point. Thus, the buyers who belong to the upper-right-hand corner of the two-by-two
matrix in Table 1 will stay in the third party community.

7

Covisint was finally sold to Compuware in February 2004 after the company sold its auction-services business to
FreeMarkets, which is being acquired by Ariba.

12Other buyers like to stay in the third party online trading community for different reasons.
They are concerned with transaction (operation) efficiency which the e-procurement system
surely bring, but wish to keep supplier switching costs or supplier searching costs low. The third
party exchange is suitable for this type of buyer, as many suppliers are in the online trading
community. Thus, if the buyers expect operational efficiency but not relational advantage due totheir preference for arm's length relationships with their suppliers, they are likely to stay in thethird party community.
Finally, the buyers who fall into the lower-left-hand cell of the matrix may beproblematic. These buyers who expect only operational efficiency but intend to move to private
community are pursuing an inappropriate goal because the private system entails close ties
between the buyer and suppliers. Thus, their movement does not match with their expectation.

Discussions and Conclusions
There are no clear-cut boundaries between the three stages in the online trading
community transformation. Specifically, the boundary between the second stage and the third
stage may not be obvious, but we can expect the emergence of the supplier-driven community
formation only in the third stage. It is practical to distinguish "early adopters" in Stage 2 from"late adopters" in Stage 3 because they are likely to have distinct characteristics. The suppliers
adopting the systems in Stage 3 are fence-sitters who take a wait-and-see approach and thendecide whether to adopt the system. Unlike "early adopter" suppliers, "late adopter" suppliers
have more time to assess the impact of e-procurement systems in aspects of both operations andrelationships, though they are more under pressure to adopt the systems.
In this study, we show how the third party electronic community evolves over the13Internet. We identify three distinguishable stages in the transformation of the online trading
community, as illustrated in Figure 2. We also observe that there are two types of online trading
community formation at different stages of the third party community evolution (i.e., buyerdriven community formation and supplier-driven community formation). Some buyers left thethird party community to build their own private electronic trading communities. The buyer's
decision whether to move to the private community or to remain in the third party community
should be made based on what the company expects from the B2B exchange system (i.e.,
operational efficiency and/or relational advantage).
[2010.2.22 960]

14

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Innovation Diffusion Perspective. Journal of Management Information Systems, 11(2): 157-186.
Ramaseshan, B. 1997. Attitudes towards Use of Electronic Data Interchange in Industrial Buying: Some Australian
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Rassameethes, B., Kurokawa, S., & LeBlanc, L. J. 2000. EDI Performance in the Automotive Supply Chain.
International Journal of Technology Management, 20(3/4): 287-303.
Raymond, L., & Bergeron, F. 1996. EDI Success in Small and Medium-Sized Enterprises: A Field Study. Journal of
Organizational Computing and Electronic Commerce, 6(2): 161-172.
Raymond, L., & Blili, S. 1997. Adopting EDI in a Network Enterprise: The Case of Subcontracting SMEs.
European Journal of Purchasing and Supply Management, 3(3): 165-175.
Reekers, N. 1994. Electronic Data Interchange Use in German and US Organizations. International Journal of
Information Management, 14(5): 344-356.
Reekers, N., & Smithson, S. 1994. EDI in Germany and the UK: Strategic and Operational Use. European Journalof Information Systems, 3(3): 169-178.
Saunders, C. S., & Clark, S. 1992. EDI Adoption and Implementation: A Focus on Interorganizational Linkages.
Information Resources Management Journal, 5(1): 9-19.
Scala, S., & McGrath, R., Jr. 1993. Advantages and Disadvantages of Electronic Data Interchange. Information andManagement, 25(2): 85-91.
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Sriram, R. S., Arunachalam, V., & Ivancevich, D. M. 2000. EDI Adoption and Implementation: An Examination ofPerceived Operational and Strategic Benefits, and Controls. Journal of Information Systems, 14(1): 37-52.
Sriram, V., & Banerjee, S. 1994. Electronic Data Interchange: Does Its Adoption Change Purchasing Policies andProcedures? International Journal of Purchasing and Materials Management, 30(Winter): 31-40.
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17Appendix
Authors
1 (Ahmad &Research
Methods
Mail survey

Schroeder, 2001)

2 (Arunachalam,

Mail survey

1995)
3 (Bamfield, 1994) Longitudinal case

4 (Banerjee &study based oninterviews
Mail survey

Golhar, 1994)
Case study based on
5 (Benjamin, deLong, & Morton, interviews
1990)
6 (Bensaou, 1997) Mail survey

7 (Bergeron &Mail survey

Raymond, 1992)

8 (Bergeron &Two mail surveys

Raymond, 1997) (longitudinal

Major Contributions/Findings
The extent of EDI use lead to better deliver performance after controlling for non-managerial
context (product diversity, product customization, production instability, and organizationalsize) and managerial context (just-in-time and quality management).
Customer's request was by far the most supported reason for the EDI adoption. On the other
hand, the improvement of customer service was the most realized benefits from EDI.
The precipitating factors for EDI were EDI innovation networks, cost and performance
improvements, and management learning.
Customer and peer pressure, and the desire for speedier and better communications wereprimary motivations for the EDI adoption.
Buyers would be the dominant force behind the growth of EDI, while suppliers would push it
only when they saw some way of differentiating themselves.
The scope of EDI use had positive influence on buyer-supplier cooperation in Japan and
U.S.A., though not significant in U.S.A.
Companies which had to adopt EDI under pressure from trading partner(s) provided asignificantly worse implementation and usage context for EDI in terms of organizational
support, implementation process, and control procedures.
The imposition of EDI by business partners was negatively related to the attainment of EDI
advantages. In contrast, the organizational context (organizational support, implementation
process, and control procedures) and the integration of EDI were positively associated with the
EDI advantages. Three years later, the implementation process and the imposition of EDI losttheir importance for EDI advantages.

approach) (partiallythe same data as(Bergeron &Raymond, 1992))
9 (Bouchard, 1993) Mail survey and case Organizations' decisions to adopt EDI depended on whether their major business partners werestudy based onusing EDI, and not on the characteristics of EDI.
interviews
Mail survey
The majority of companies implemented EDI to obtain cost savings, but the cost savings did
10 (Carter &not accrue primarily from personnel reductions or new hire avoidance.
Fredendall, 1990)

11 (Chatfield &Yetton, 2000)
12 (Chwelos,
Benbasat, &Dexter, 2001)
13 (Clark & Lee,
1997)

Case study based oninterviews

High EDI embeddedness, which was influenced by existing inter-organizational relationships,
motivated adopter's strategic use of EDI, whereas low embeddedness deterred such use.

Mail survey

The conceptual model based on Iacovou et al.'s was empirically tested. It was confirmed that
intent to adopt EDI was influenced by perceived benefits, external pressure, and organizational
readiness.

Case study based oninterviews, and mailsurvey14 (Cox & Ghoneim, Mail survey,
interviews, and case
1996)
study
15 (Crook & Kumar, Grounded theory
approach1998)

16 (Crum, Johnson,& Allen, 1998)

Two mail surveys(longitudinalapproach)

17 (Davila, Gupta, & Mail survey
Palmer, 2003)

18 (Deeter-Schmelz
et al., 2001)
19 (Drury &Farhoomand,
1996)

Mail survey
Mail survey

20 (Ellram, Londe, & Mail survey
Weber, 1989)

The implementation of EDI without CRP adoption did not result in significant improvementsin performance on inventory turns or stock-outs.
The drivers, benefits, barriers and implementation difficulties to adopting EDI varied among
the seven UK industry sectors. The benefits were most significantly perceived in the retail,manufacturing, and distribution industries.
Increased use of EDI was often organization-initiated and not customer-initiated, but successin increasing the volume of EDI transactions was likely to be impacted by environmental
factors (the nature of customers and suppliers, and industry experience with EDI) andorganizational factors pertaining to customers and suppliers.
Most of the reasons why companies had implemented or continued to use EDI were notsignificantly different between the 1990 and 1996 in the same motor carrier companies.
However, three non-marketing benefits increased significantly in importance: Increased
office/clerical efficiency, improved integration of information, and improved planning.
Companies were approaching e-procurement technologies with very different strategies. The
majority were taking a wait-and-see approach, and were either aware of the developments but
were not committing resources, or investing selectively until the best e-procurement model
could be identified.
By offering encouragement, guidance, and incentives and also by stressing convenience of use,
suppliers could increase the likelihood that buyers would adopt and use e-procurement.
Compared to early adopters, late adopters were less satisfied with the output information of the
EDI systems in terms of reliability, relevancy, accuracy, and completeness. Users' participation
and understanding of the EDI systems in late adopters were also significantly lower than thosein early adopters.
The most important customer service elements were "orders are filled completely", "ordercycle time is short", "order cycle time is reliable", "accurate and timely information", and"quick correction of mistakes". EDI could support retailers in their effort to increase customer
service.

18

21 (Emmelhainz,

Case study based oninterviews
1987)
22 (Fearon & Philip, Case study based oninterviews and1998)
questionnaire

23 (Ferguson, 1998) Interviewer-

administeredquestionnaire survey
24 (Ghobadian, Liu, Case study based on& Stainer, 1994) interviews

25 (Grover, 1993)

Mail survey

26 (Hansen & Hill,

Telephone survey

1989)

27 (Hart & Saunders, Mail survey with

EDI use seemed to improve vendor relationships and to increase purchasing productivity
without changing the basic nature of the purchasing process.
EDI benefit success could be regarded as a synergistic measure of (a) the actual strategic andoperational benefits a company had achieved, and (b) the extent of the planning gap between
pre-implementation benefit expectations and post-implementation perceptions of realized
benefits.
The hub companies that drove EDI achieved the 40% cycle-time improvements, 30% error
reductions, and US$5 per document cost savings.
One of the major benefits of EDI use was that vendor and purchasers were able to makedecisions which affected both parties with knowledge of how the other party transacted.
A proactive technological orientation such as strategic IS planning, and an internal push suchas top management support were the two most significant sets of facilitators for the adoption
decision of a customer-based inter-organizational system.
EDI systems changed the control and audit environment. The survey indicated that the mostpopular reason for EDI use was quick response and access to information, followed by cost
efficiency, customer's request, effect of EDI on paperwork, and accuracy.
Trust was related to increases in diversity of EDI use (the number of transaction sets), while
power was negatively related to diversity.

telephone interviews
1998)
Mail survey
Many manufacturers viewed EDI as a tool for gaining coordination with suppliers, but not(Hill&
Scudder,
28
necessarily so with customers.
2002)
Case study based on Four key factors of the adoption difficulty in B2B exchange were lack of familiarity, risk
29 (Hsiao, 2001)

30 (Hwang et al.,
1993)

31 (Iacovou,
Benbasat, &Dexter, 1995)
32 (Iskandar,
Kurokawa, &LeBlanc, 2001a)33 (Iskandar,
Kurokawa, &LeBlanc, 2001b)interviews and on-site aversion, lack of trust, and incongruent cultural practice.
observations
Mail survey
Customer organizations listed their important motivations behind EDI use as reduction of
paperwork, lowered inventory cost, and competitive advantage improvement, while supplierorganizations specified improvement of customer service as the primary reason.
Case study based on Three major factors of EDI adoption were identified: Perceived benefits, external pressure, andinterviews
organizational readiness. The relationship of each factor with the EDI adoption was moderate,strong, and weak, respectively.
Mail survey"Buyer-push" was the most significant reason for EDI adoption. The resource-dependency
approach appeared to be more suitable than the transaction-cost approach for explaining EDI
adoption.

Mail survey (the same Companies that adopted EDI with its own initiative perceived EDI as having significant
data as (Iskandar,
competitive advantages, while reactive companies considered EDI to be only a necessity.
Kurokawa, &LeBlanc, 2001a))
34 (Jelassi & Figon, In-depth case study EDI allowed customers to eliminate paper work, improve data accuracy and timeliness, as well
as reduce inventory, resulting in significant savings. It also helped the company gain market
1994)
share by winning new customers or becoming the single provider of office supplies to several
large companies.
The adequate constructs to be used for EDI adoption were direct perceived benefits, indirect
35 (Jones & Beatty, Mail survey
perceived benefits, and operational compatibility. Technological compatibility was not
1998)
adequately captured.
Archival data analysis Companies using routine EDI transactions achieved synchronized manufacturing for JIT
36 (Kekre &environments, whereas those with exception EDI transactions (proxies for uncertainties andMukhopadhyay, at a customer
processes out of control) were able to mitigate the negative impacts of process uncertainties as
1992)
a result of timely information.
Mail survey
Expected EDI benefits cited by purchasing managers seemed to be consistent with benefits
37 (La Londe &actually realized.
Emmelhainz,

1985)

38 (Lee, Clark, &Tam, 1999)
39 (Mackay, 1993)

Archival data analysis The EDI adopters of grocery retail chains increased their inventory turns while simultaneously
at a supplierreducing stock-outs as a result of CRP implementation.
Mail survey

The most popular reason to adopt EDI was customers' (large car companies') request in thecomponent sector of the Australian automotive industry. Around 25 to 37 percent indicatedeither marginal or significantly improved trading relationships with their customers. Once EDI
was fully integrated into internal systems, significant benefits were achievable.
The primary reasons for EDI adoption were improved customer service, improved supplier
40 (Maingot & Quon, Mail survey
relationship, reduced clerical error, and competitive advantage. The first three items were also
2001)
viewed as important impacts of EDI after implementation.
41 (Marcussen, 1996) Case study based on Buyers were more positive than suppliers in their evaluation of the effects of EDI on buyerinterviews
supplier relationships. In addition, buyers achieved greater financial benefits from EDI use
than suppliers.
42 (Mukhopadhyay, Archival data analysis EDI with its suppliers enabled Chrysler to significantly reduce operating costs associated withat a buyer
carrying inventories, obsolescence, and transportation. In addition, premium freight savings
Kekre, &and information-handling cost savings were realized.
Kalathur, 1995)

1943 (Mukhopadhyay

Archival data analysis The supplier derived large strategic benefits over time when the customer initiated the EDI
system and the supplier enhanced the system's capabilities.

& Kekre, 2002) at a supplier
44 (Nakayama, 2000) Mail survey

45 (Nakayama, 2003) Mail survey
46 (Neo, Khoo, &Mail survey

Automated information exchange via EDI links might lower wholesalers' perceived bargaining
power over their suppliers in the grocery industry.
For retailers, EDI use enhanced partner knowledge of operational personnel but it reduced
cooperation. On the other hand, for suppliers, EDI use did not enhance partner knowledge but
it reduced conflict.
The opportunity to experiment and learn by using, and adoption behaviors of peers andcompetitors provided added impetus for the rapid diffusion of EDI (Tradenet) adoption.

Ang, 1994)
Mail survey
Independent agents expanded the share of their business devoted to the insurance carriers with
47 (O'Callaghan,
whom they had established EDI linkages. In addition, expected efficiency gains, expected
Kaufmann, &service gains, and expected system compatibility were related to EDI adoption.
Konsynski, 1992)
Mail survey
Regardless of the current EDI knowledge, a lack of know-how concerning EDI in the company
48 (Parker &was a major inhibitor to the adoption of EDI.
Swatman, 1996)
49 (Pfeiffer, 1992) Preliminary interview- 31 different hypotheses about EDI were tested. One of the interesting findings was that EDI

50 (Philip &Pedersen, 1997)

based field study and use was perceived by early adopters as providing competitive advantage.
mail survey
Mail survey
The initial reasons most frequently cited for EDI adoption were also those most frequently
cited as major benefits obtained through EDI implementation in the organizations.

51 (Premkumar,

Mail survey

53 (Premkumar,

Nilakanta, 1994))
Mail survey

The relationship between innovation characteristics (complexity, compatibility, costs, relativeadvantage, and communicability) and diffusion attributes (adaptation, internal diffusion,
Ramamurthy, &external diffusion, and implementation success) of EDI in organizations were examined.
Nilakanta, 1994)
52 (Premkumar & Mail survey (the same EDI users with proactive adoption decision had less competitive pressure, greater exercised
data as (Premkumar, power over their trading partners, more internal need, and more top management support thanRamamurthy,
Ramamurthy, &reactive EDI users.
1995)

Ramamurthy, &Crum, 1997)
54 (Ramaseshan,
1997)
55 (Rassameethes,
Kurokawa, &LeBlanc, 2000)
56 (Raymond &Bergeron, 1996)

57 (Raymond &Blili, 1997)

58 (Reekers, 1994)
59 (Reekers &Smithson, 1994)

60 (Saunders &Clark, 1992)

61 (Scala &Mail survey

There was a growing preference among companies to deal with a supplier/customer who had
EDI facilities.

Mail survey

It was not large companies but companies with high corporate performance that had a highlevel of EDI integration.

Mail survey

The quality of organizational context (organizational support, implementation process, andcontrol procedures) was higher when the SME implemented EDI voluntarily rather than having
it imposed by a major client or supplier.
Case study based on The contracting SMEs were characterized in terms of external influences, predisposition of theinterviews
organizational context, perception of EDI, and business processes, and classified into
"committed", "involuntary", and "belated" adopters. Successful EDI implementation was
linked to strategic/network planning, required resources, knowledge and know-how, andproject planning.
Mail survey
The typical findings were high levels of forced EDI adoption by large organizations and only
limited achievement of high level benefits of EDI.
Mail survey (partially Compared to operational benefits, strategic benefits were more likely to be found in the later
the same data asstages of EDI usage.
(Reekers, 1994))
Mail survey
Perceived costs were negatively related to EDI adoption, but perceived benefits, trust in
trading partners, and net dependency did not affect EDI adoption.
Delphi method

McGrath, 1993)
Mail survey
62 (Sriram &Banerjee, 1994)
Mail survey
63 (Sriram,
Arunachalam, &Ivancevich, 2000)
Case study based on
64 (Stern &Kaufmann, 1985) interviews
65 (Subramani, 2004) Mail survey

66 (Suzuki &Williams, 1998)

Four factors were important to discriminate adopters from non-adopters of EDI in the motor
carrier industry: Company size, competitive pressure, customer support, and top management
support.

Mail survey

The manager's concerns about EDI adoption were that EDI required high initial capital
expenses and high volumes before benefits were attained.
The impact of EDI was moderated by the volume of EDI transactions. Its adoption required
computer skills and training for buyers.
Organizations experienced both operational and strategic benefits from EDI, and customerinitiated EDI users recognized slightly greater EDI strategic benefits than voluntary EDI users.
Most distributors believed that EDI systems had not changed buyers' basic relationships withvendors.
SCMS (Supply Chain Management Systems) use for transaction processing was not
significantly associated with operational benefits. In contrast, SCMS use for learning andknowledge creation resulted in both operational and strategic benefits.
Companies tended to show stronger resistance to EDI when they perceived a high level oftechnological uncertainties (hardware and software), low diffusion rate of industry-wide EDI
formats, and little benefit of using EDI for reducing processing time.

20

67 (Teo et al., 1995) Mail survey

68 (van Heck &Ribbers, 1999)

Intervieweradministeredquestionnaire survey

69 (Vijayasarathy & Mail survey
Robey, 1997)

70 (Walton &Mail survey

Marucheck, 1997)

71 (Weber &Mail survey

EDI (Tradenet) users that had planned ahead, participated early, or integrated EDI with theirinternal IS, benefited more in terms of increased organizational effectiveness (international
competitiveness, inventory control, and customer quantity). In addition, all, irrespective oforganizational characteristics, attained enhanced organizational efficiency (preparation cost,exchange cost, and flow).
The conceptual model based on Iacovou et al.'s was tested. It was basically confirmed that
intent to adopt EDI was influenced by perceived benefits, external pressure, and organizational
readiness, especially the first two factors. In addition, there was no significant relationshipbetween the level of integration of EDI (internally and externally) with the actual benefits
adopters received from EDI use.
EDI use was positively associated with channel information intensity and formalization but not
on channel information quality. Moreover, intensity and formalization were positively related
to channel cooperation but not to conflict. Channel performance was positively associated withchannel cooperation and negatively related to channel conflict.
The quality of delivered products as well as the delivery of the correct item/mix was
significantly related to the buyer's experience using EDI as a tool in supplier management,
willingness of both the buyer and supplier to share sensitive production and capacity
information, acquisition of the EDI system, and the level of EDI integration with othercomputer applications.
Retailers perceived similar levels of benefits from all levels of EDI use.

Kantamneni,
2002)
72 (Williams, 1994) Preliminary interviews Marketing channels (suppliers and customers) typically viewed EDI as a means of reducing
and mail survey

demand uncertainty in the environment. In contrast, logistical channels (shippers and carriers)
were characterized as having significantly powerful shippers that forcefully persuaded carriers
to adopt EDI.
73 (Williams, Magee, Mail survey (the same Longer use of EDI or higher degrees of partner selectivity had a significant positive effect on
EDI range (the percentage of partners with whom a company shares information via EDI), EDI& Suzuki, 1998) data as (Suzuki &Williams, 1998))
width (the extent to which a company uses EDI for multiple purposes), and EDI depth (thevolume of EDI use for each of the possible EDI transactions).

Table 2: Empirical Studies on the Adoption/Use of EDI or e-Procurement Systems

21