The relationship among formal EDI controls, knowledge of EDI controls, and EDI performance

Abstract

As new technologies and software applications are supplanting traditional electronic data interchange (EDI) applications, new fraud concerns due to the ubiquitous connectivity of the Internet have increased the interest in EDI controls. Traditional outcome (or process)-oriented views of (formal) control should be supplemented by knowledge management considerations, and user knowledge of contents control and its importance should be enhanced in order to maximize performance. This research addresses the indirect effect of EDI control usage levels on EDI performance through knowledge enhancement. EDI controls were categorized as internal and third-party in order to highlight their internal and external aspects in inter-organizational systems. Knowledge of controls has two parts: knowledge of control content and an understanding of control importance. The research model was empirically tested using a structural equation modeling approach with data collected from Korean companies that have adopted EDI. The results indicate that knowledge plays an important role in mediating the effect of controls on performance. That is, EDI adopters can achieve operational and competitive benefits from high levels of knowledge in relation to control content and its importance.