The effect of relation specific information technology on collaborative coordination in business-to-business relationships

Abstract

This paper examines how specific investments in information technology (IT) affect vertical electronic coordination (VEC) between firms. Recent research has demonstrated that increased specificity in IT investments fosters greater electronic coordination in B2B relationships. In order to capture the various business processes and information exchanged in business-to-business relationships, this paper makes a deliberate distinction between VEC for collaborative purposes and for transactional purposes. The most important distinction concerns the characteristics of the exchange situation, in which the degree of inter-firm dependence plays a central part. Empirical data from a cross-industrial survey of 198 buyer-supplier relationships reveals that the effect that customised IT investments on VEC for collaborative purposes is contingent on the level of basic specific assets employed in buyer-seller relationships. This study found no such effects for electronic coordination for transactional purposes. The findings of this study shows that specific IT investments enhance the ability to carry out collaborative vertical coordination only when strong inter-firm dependency and small number conditions are present.