How do adopters obtain benefits from IOS?

Xu Yun22-Sep-2004

Seminar in IS Research

What benefit can adopter obtain? Benefit from improved information exchange ----Inventory holding cost, transportation Benefit from documents process disrupt

(Mukhopadhyay, 1995)

Direct strategic benefit ----salesDirect operational benefit ----Decrease process time, improve data accuracy Long term strategic benefit (Mukhopadhyay, 2002)

What benefit can adopter obtain? First order benefit: influenced directly by firms

----Operational benefit Inventory management, Cycle time

----Strategic benefit Development of new product

Second order benefit Competitive outcome

Beyond the control of the firm (Subramani, 2004)

What benefit can adopter obtain? Interdependent benefit One firm’s benefit may dependent

on the way in which its trading partners implement and use the technology.

(Riggins,1994 )

Three perspectives for the study The Industry Structure View

The RBV View

The Relation View

The Industry Structure View Associated with porter’s theory

Primary source of benefit:favorable structural characteristic

e.g. relative bargaining power, barriers to entry or exit, sunk cost.

What effects would the system have on industry structure? (Johnston,1988)

How do adopters create barriers to entry for competitors and barriers to exit for champion with IT?

The RBV View Primary source of benefit:

Heterogeneity and inimitable resource e.g. asset specificity, domain

knowledge

How do adopters create business-process specificity or domain-knowledge specificity with IT? (Subramani, 2004)

The Relation View (Dyer, 1998)

Interdependent benefit, critical resource may span firm boundary

Primary source of benefit:1)Relation-specific asset Japanese automobile industry Site-specific: Very close Physic-specific: Use belt instead of truck Human-specific: Deep understanding for each other2)Knowledge-sharing routines A regular pattern of interfirm interactions that permits the transfer, recombination, or creation of specialized knowledge.

The Relation View (Dyer, 1998)

3)Complementary resource and capabilityDistinctive resources of alliance partners that generate greater benefit than the sum of individual. Good product + Good distribution

4)Effective governanceThird-party enforcement (e.g., legal contract)Self-enforcing (e.g., trust)Lower contracting cost, monitoring cost, adaptation cost, difficult to imitation.

Two ways to obtain benefit Value Creation

Value Retention or Claiming

Value Creation Normal source

Business partner reengineering (Riggins,1994 )

Five levels of business transformation: localized exploitation, Internal integration, BPRBusiness network redesign, Business scope redefinition

How do champion help adopter to implement business partner reengineering?

Value Creation Relationship-specific source

1)Relation-specific assetDuration of guaranteeVolume of interfirm transaction 2)Knowledge-sharing routinesPartner-specific absorptive capacityIncentives to encourage sharing

Value Creation3)Complementary resource and

capabilityAbility to identify and evaluate potential

complementaritiesAbility to combine the complementarities

4)Effective governance Ability to employ self-enforcement

Related Questions How to consider the way of value

creation in the adopter view? How to associate the framework

with IT artifacts?

Value Retention or Claiming To use advanced electronic linkage (such as

electronic invoice transaction). The increase asset specificity and reduced transaction cost motivate the buyer to award more benefit to suppliers. (Mukhopadhyay, 2002)

Value Retention or Claiming

IT Use forExploitation

IT Use forExploration

Business-processSpecificity

Domain-knowledgespecificity

Operation Benefits

Strategy Benefits

CompetitivePerformance

Pattern of ITappropriations

Relationship-SpecificInvestment

First-OrderBenefits

Second-OrderBenefits

(Subramani, 2004)

Value Retention or Claiming

(Clemons,1993 )

Major Theories Transaction theory Game theory Competitive advantage RBV

Motivation theory Trust

End

Thank you!