Interfirm Trust, Dependence and Joint Action as Antecedents of Information Quality

Paul ForsterInformation Systems & Management

Hong Kong University of Science & Technology

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Outline

1. Research problem2. Proposed model3. Research design4. Analysis5. Discussion

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Interorganizational Information Systems (IOS)

Share data between organizations (Kumar, 1996)

IOS and performance: Competitive advantage

(Powell et al., 1997) Inventory costs

(Mukhopadhyay et al., 1995)

Operational improvements (Srinivasan et al., 1994)

Distinguished by the presence of the interfirm relationship Coordination through

IOS requires managing the interfirm relationship

IOS

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Costs of Bad Information

Direct costs Customer dissatisfaction Increased operational costs Lower employee job satisfaction

Indirect costs Impaired decision-making Missed opportunities Increased uncertainty and problem ambiguity Failed projects Poor departmental relationships

(Redman, 1998)

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Costs of Bad Information

Monetary costs $611B USD est. cost of inaccurate and bad data quality

(Betts, 2002)

Study of retailers - 10% reduction in overall profits from data errors (Raman, 2001)

75% of firms indicate financial performance impact of bad data (Redman, 1998)

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Research Question

To what extent does the interfirm relationship influence the information quality exchanged between firms through IOS?

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Information “Fit for Use”

Information quality definitions “Fitness for use” (Ballou et

al.; Wang and Strong 1996; Lee and Strong, 2003; Lee 2003)

Information consumers evaluate the quality of info in relation to the tasks they have to perform (Strong et al. 1997) i.e. the info collector needs

to understand the info consumer’s needs

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Data as “Artifact” or “Deliverable”

As Artifact Presupposes ex ante

information about goals; ex post information about past events

Artifacts can be readily compared

Objective epistemology, closed systems

As Deliverable Negotiated elements and

changing requirements

Runs readily in informal networks, hard to place into market exchanges

Subjective epistemology, open systems

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Production of Information Quality

If we view IOS information quality as the outcome of a process (Lee and Strong, 2003; Wang, 1998)

Then the interfirm relationship between producer and consumer will influence information quality as deliverable

Through… Formal processes

Information sharing through negotiated arrangements between partners; rules, contracts, standards, regulations

Informal processes Information sharing

through routines, scripts, schemas; repeated interactions develop habits and work practices

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InterfirmTrust

InterfirmJoint Action

InterfirmDependence

InformationQuality

H1

H2H3

H4H5

InterorganizationalClimate

InterorganizationalAction

InformationQuality

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InterfirmTrust

InterfirmJoint Action

InterfirmDependence

InformationQuality

Joint Action

Voluntary joint action to achieve individual and mutual goals (Skinner et al. 1992)

Enables mutual interpenetration of firm boundaries (Heide and John 1990)

Develops formal and informal processes to achieve information quality

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InterfirmTrust

InterfirmJoint Action

InterfirmDependence

InformationQuality

Trust

Expectation that actors will fulfill their obligations, behave predictably, and act and negotiate fairly (Zaheer et al., 1998)

Creates a climate in which information exchange is open

Trust is a predictor of cooperation (Anderson and Narus 1990)

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InterfirmTrust

InterfirmJoint Action

InterfirmDependence

InformationQuality

Dependence

Dependence is the flip side of power – the dominant party controls of influences the other’s decisions (Emerson 1962)

Firms resist power by reducing visibility and denying information

Coercive power can create conflict and reduce cooperation

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Interfirm Relationship Typology

Van de Ven & Ferry (1980)

Pairwise form(dyadic) Set form Network form

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Survey Methods

Survey design: Previous qualitative

research informed survey design

Two pretests Administration 1999/2000 14.1% response rate Sample frame is the

entire US air cargo industry

Non-response bias Chi-square on first and

last 40 on key variables Tested against revenue

stats

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Psychometric PropertiesConstruct No. of

ItemsAlpha Composite

Reliability

Info. Quality 3 .78 .86

Joint Action 7 .92 .93

Dependence 4 .81 .86

Trust 3 .74 .84

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PLS Structural Model

PLSGRAPH 3.0

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Discussion

Managerial issues • “Soft” issues in the

management of information quality

Theoretical issuesThe value of viewing information as a deliverableThe value of a “set” form of interfirm relationships

Limitations Focused on electronic

exchange vs. a single IOS

Focused on tracking and tracing information – real time, repetitive exchange

Focused on a particular supply chain