Network Relations and Boundary Spanning: Understanding the Evolution of E-Ordering in the Chinese Drug Distribution Industry

Abstract

The application of e-ordering systems has brought significant changes to the drug distribution industry in China, but the effects of these changes have remained unclear. Adopting a practice perspective and based on longitudinal data collection using multiple methods, we reveal that the Chinese drug distribution practice has passed through the following three stages: the stage before e-ordering, the transitional stage in which the government attempted to impose a centralised platform, and the current fragmented systems stage. We draw upon the theoretical foundations of the network relations model and the boundary spanning theory developed by Schultze and Orlikowski and Levina and Vaast, respectively, to formulate a taxonomic framework for understanding inter-firm network practices. Applying the framework to explain long-term changes in drug distribution in China, we discover that the practice in the field has evolved from traditional, socially embedded relations to information systems-based, socially embedded relations, while the centralised platform deployed by the government was unable to establish a practice with arm's length relations. Our theoretical work contributes an integrated framework for studying inter-firm practices that explicitly incorporates the presence of inter-organisational information systems. Our empirical findings offer helpful practical insights for facilitating collective efforts toward the innovative use of novel IT in the drug distribution industry in China and in other contexts that are similar.