Structural equation model for EDI controls: Controls design perspective

Abstract

The evolution of electronic data interchange (EDI) provides a more convenient and flexible means of interorganizational communication as well as lots of organizational benefits. EDI is changing rapidly from traditional EDI to Internet-based EDI due to rapid development of Internet-based information technologies. Security and integrity of the system, however, is becoming a concern among EDI adopters. This paper examines the effects of formal and informal controls, each of which are categorized as internal and external controls, on EDI performance. Hypotheses indicate that controls directly or indirectly affect performance through their effects on the success of implementation. A structural equation modeling approach (LISREL) is used to analyze data from Korean companies.Internal formal and external informal controls have an indirect effect on performance through implementation success. External formal controls turn out to have a direct effect on performance. The results empirically support that causal relations exist between EDI controls, implementation success, and performance.