Organizational and Relational Resources in IOS Diffusion

Abstract

This research addresses the theoretically neglected question of how the internal diffusion of inter-organizational systems (IOS) into a firm's activities and its external diffusion into the supply chain partners influence performance improvement. Drawing on the resource-based view, our research model posits that organizational and relational resources affect both internal and external diffusion, which in turn, influence performance improvement. Survey results from 187 managers in Korean and Chinese firms showed that while the impact of organizational resources on a firm's performance improvement was fully mediated by IOS diffusion, the diffusion partially mediates the impact of relational resources on performance improvement. This study also revealed a significantly different pattern of diffusion between Korean and Chinese firms, i.e. showing the impact of organizational and relational resources on a firm's performance through external diffusion of IOS are significantly greater in Korean firms, while the impact of internal diffusion was significantly greater in Chinese firms. In other words, Korean firms tend to externally diffuse IOS toward their business partners, while Chinese firms tend to internally diffuse IOS by deploying IOS from their partners. The implications of these findings for both research and practice are discussed.