Determinants and outcomes of electronic data interchange diffusion

Abstract

Protagonists of electronic data interchange (EDI), a specific form of inter organizational systems (IOS), claim that it has the potential to dramatically alter the exchange of business documents and business operations (particularly material procurement and sales functions) in a number of industries. Drawing upon past research on innovation diffusion and information systems (IS) implementation, this study examines the role of key innovation and organizational factors in influencing the extent to which EDI is diffused within organizations, and whether more extensive diffusion leads to improved organizational outcomes. Two senior executives (one from the IS and the other from selling/buying function) from over 200 large American companies participated in the field study. The path analyses results indicate that compatibility and relative advantage (two of the three classical innovation attributes), championing, scope for use of EDI within the firm's task environments, and being an early adopter determine the extent to which EDI gets internally diffused through greater integration with other IS applications within the organization. Technical compatibility, top management support and being an early adopter emerge as the key variables influencing the extent to which EDI gets externally diffused through greater external diffusion of business transactions with trading partners. The results also indicate that greater internal as well as external diffusion of EDI facilitates improved organizational outcomes that was measured on six dimensions such as implementation success, organizational performance, influence on market structure, standardization of transactions, etc.