Eric T. G. Wang

Interorganizational Governance Value Creation: Coordinating for Information Visibility and Flexibility in Supply Chains ∗

More thoroughly understanding how interorganizational governance value can be created by information technology and other governance mechanisms is critical for supply chain management. Based primarily on transaction-cost economics and supplemented by the resource-based view, this study investigates how interorganizational governance (i.e., relational governance and virtual integration) can create value (i.e., information visibility and supply chain flexibility) in the supply chain context. The findings show that both relational governance and virtual integration benefit information visibility. Those results also support both direct and indirect (via information visibility) effects of relational governance on supply chain flexibility. Although failing to affect supply chain flexibility directly, virtual integration can still improve supply chain flexibility with its ability to enhance information visibility. Thus, interorganizational governance mechanisms emphasizing both control and collaboration can influence the gain from collaborationspecific capabilities, leading to the competitive advantage of a supply chain. The results of the study suggest that firms can gain greater supply chain flexibility within existing interfirm relationships by enhancing information visibility through virtual integration and relational governance.

Transaction attributes and software outsourcing success: an empirical investigation of transaction cost theory

Abstract. In recent years, an increasing amount of attention has been paid to information systems (IS) outsourcing by practitioners as well as academics. However, our understanding of the factors that affect outsourcing success is hardly complete. By adopting transaction cost theory (TCT) as the theoretical foundation, this study analyses the implications of transaction attributes on the consequences of customized software outsourcing practice. The research model includes three exogenous variables (contractor reputation, asset specificity and uncertainty) and two endogenous variables (post‐contractual opportunism and outsourcing success). The moderating effects of asset specificity on the relationships between uncertainty and the endogenous variables are also examined. Based on data collected in Taiwan, a research model is constructed to test the hypotheses derived from the theory. The empirical evidence is generally supportive of the theory but with some important exceptions. In particular, contractor reputation and uncertainty have the predicted effects on the contractor’s post‐contractual opportunism perceived by the client and outsourcing success, but asset specificity shows a negative effect on post‐contractual opportunism and a positive effect on outsourcing success, which are opposite to the typical predictions of TCT. Thus, in addition to the supportive findings of the theory, this study also raises an important research question regarding the effects of asset specificity on outsourcing for future research to explore.

A Virtual Integration Theory of Improved Supply-Chain Performance

Organizing and maintaining a competent and flexible supply chain is a major challenge to manufacturers in todays increasingly competitive and uncertain environments. Virtual integration represents the substitution of ownership with partnership by integrating a set of suppliers through information technology (IT) for tighter supply-chain collaboration. From the systems and control perspectives, this study develops a theory of virtual integration with an empirical model to examine the role that virtual integration plays in facilitating manufacturers to achieve greater manufacturing flexibility and comparative cost advantage. Based on a survey of Taiwanese manufacturing firms, our results show that environmental uncertainty tends to motivate manufacturers to increase their manufacturing flexibility, with both virtual integration and supplier responsiveness playing a vital enabling role. The results demonstrate the importance of supplier responsiveness for manufacturers to gain manufacturing flexibility and comparative cost advantage in supply-chain operations. Environmental uncertainty, thus, might first appear as a threat to a manufacturer, but with the help of IT and more responsive suppliers, such a threat could be transformed into a competitive edge, as reflected in the manufacturers higher levels of manufacturing flexibility and comparative cost advantage.

Improving enterprise resource planning (ERP) fit to organizational process through knowledge transfer

Critical to enterprise resource planning (ERP) implementation is the fit between the system and the processes in an organization. Knowledge about the ERP system must flow from those implementing the system and those responsible once in production. Effective knowledge transfer is assisted by the absorptive capacity of the learner and the competence of the knowledge holder, as reflected in the client and consultant relationship of this study. A model of transfer is composed from existing theories of learning to explain the roles played by the client through absorptive capacity and the consultant through competence. Survey data of CIOs in Taiwan confirm that transfer is improved with higher levels of capacity and competence, while the transfer process leads to a better fit between ERP systems and organizational processes. Management needs to foster the build-up of their internal knowledge stocks in order to stimulate the flow of knowledge transfer.

Effects of internal support and consultant quality on the consulting process and ERP system quality

ERP implementation, as a change initiative, is a challenge facing any organization and requires strong support from top management and users. However, internal support is inadequate to overcome client deficiencies in the resources and abilities essential to ERP implementation, implying that the assistance of outside experts is inevitable. This study presents a conceptual framework to investigate how human inputs (top management, users, and external consultants) are linked to communication effectiveness and conflict resolution in the ERP consulting process, as well as the effects of these factors on the quality of the system implemented. Through a survey of 85 ERP implementation projects in Taiwanese manufacturers, the study demonstrates that competent consultants can facilitate communication and conflict resolution in the ERP consulting process and assist in improving ERP system quality. The findings indicate that top management support indirectly enhances ERP system quality through its positive effect on conflict resolution in the consulting process. The results also show that high user support enhances Communication effectiveness; however, communication effectiveness does not influence conflict resolution and ERP system quality. The implications and the limitations of the study are discussed.

ERP Misfit: Country of Origin and Organizational Factors

There are many benefits of enterprise resource planning (ERP) systems, but their implementation is both complicated and difficult because the product spans functional silos and involves many internal and external entities. An ERP system is the outcome of social processes, and different ERP systems can embody distinct social arrangements when developed in different cultural contexts. Such social arrangements are difficult to change due the closure effect of technology stabilization. This leads to various misfit problems, both during and after ERP implementation, causing adverse effects on delivered ERP quality. With a survey of 85 ERP implementation cases in Taiwan, this study derives and empirically tests the main as well as the interaction effects of the country of origin of the ERP package, consultant quality, top management support, and user support of the ERP system quality as perceived by the client after implementation. The results demonstrate the important role of the country of origin of the ERP package and consultant quality in configuring a high-quality ERP system and alleviating the negative effect of misfit problems.

Understanding misalignment and cascading change of ERP implementation: a stage view of process analysis

When adopting an enterprise resource planning (ERP) system, experiencing misalignments between the functionality offered by the package and that required by the firm is common. Implementing an ERP package often necessitates disruptive organizational change, and the outcome of implementation is largely determined by the resolution of misalignment problems. This study draws upon data from a case study to understand the misalignments of ERP adoption and the associated change dynamics from a stage view. The results reveal that industry-, company-, and regulation-specific misalignments often occurred in the chartering phase; misalignments of input, control, data, process, output, and schedule are the major problems in the project phase; misalignments of information and new business requirements are the main concerns in the shakedown phase and onward and upward phase. The cascading effects of misalignments and change actions are illustrated, the misalignment resolution strategies examined, and the implications discussed.

Factors affecting information systems planning effectiveness: organizational contexts and planning systems dimensions

Information systems (IS) planning is recognized as one of the dominated managerial issues of MIS. Based on prior studies in strategic and IS planning, this study integrates three domains to investigate the effects of organizational contexts and planning system dimensions on the effectiveness of IS planning from a contingency perspective. The model is supported by the empirical data, showing the importance of many contextual factors and planning system dimensions to attaining greater effectiveness of IS planning. In particular, the results demonstrate the pivotal role of an organizations improved planning capability in mediating the effects of organization contexts and planning system dimensions on IS planning effectiveness. The implications and limitations of this study are also discussed.

IT support in manufacturing firms for a knowledge management dynamic capability link to performance

Information technology (IT) is applied in many settings of knowledge management (KM) under the premise that a manufacturing organization will gain direct benefit from the investment. However, direct links from investment in IT to organizational performance have always been elusive. Strategic management research presents a concept of dynamic capabilities to model the ability of an organization to respond effectively to changes in the environment and leverage performance. By using this capability as a mediating variable, IT support of KM is shown to indirectly benefit manufacturing organizations in a sample of managers from 500 manufacturing firms in Taiwan. This link indicates firms must carefully align the IT support to strategic needs.

The influence of governance equilibrium on ERP project success

As the ERP adopter and ERP consultancy combine their efforts and resources to achieve mutually desirable goals, the problem of governance, which has been mainly identified as an intrafirm problem, is recognized to be an interfirm problem. To investigate the relationship between various governance mechanisms and their capacity to relieve project hazards, we propose a covariance model of ERP governance. The constructed model analyzes the complementary contributions of different governance mechanisms on ERP project success. Four governance mechanisms are studied, including explicit contracts, implicit contracts, reputation, and trust. This study holds that the virtue of one mechanism will grow into the gap of another, forming an equilibrium of governance structure. Then, the governance equilibrium plays a mediating role between ERP project hazards and ERP project success. Empirical analysis based on 122 ERP implementation projects shows a significantly positive relationship between governance equilibrium and ERP project success. Further, in support of transaction cost theory (TCT), the results indicate that governance equilibrium tends to be aligned with exchange hazards, specifically those associated with specialized investments and uncertainty. The empirical evidence suggests that governance equilibrium, when treated as a multidimensional construct, can provide a holistic representation of complex interfirm governance and allow researchers to match broad predictors with broad outcomes, leading to greater explanatory power of governance mechanisms on ERP project success. Implications, limitations, and future research directions of the study are discussed.