Effectiveness of Inter-Organizational Systems in Global Manufacturing: Evidence from Industrial Cases in Taiwan

Effectiveness of Inter-Organizational Systems in Global Manufacturing: Evidence from Industrial Cases in Taiwan

Jun-Der Leu (National Central University, Taiwan), Yu-Tsung Huang (Kaulin Manufacturing Company, Taiwan) and Li-Ting Huang (Chang Gung University, Taiwan)
Copyright: © 2011 |Pages: 16
DOI: 10.4018/jsds.2011010102
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Abstract

Enterprise Information Systems, such as Enterprise Resource Planning (ERP) systems, have been applied to integrate business processes within a global manufacturing enterprise. Recently, the inter-organizational systems are applied to assist in business data sharing and collaboration among enterprises based on the ERP application. However, their resource requirements and failure rates are high, and many enterprises are concerned about the Business-to-Business (B2B) effectiveness. In this research, the authors study global manufacturing enterprises, which developed their B2B systems with Taiwanese government sponsorship successfully. B2B effectiveness is evaluated through operational efficiency and profitability, while the business scale, Electronic Data Interchange (EDI) induced supplier numbers, and application scope are considered influencing factors. After the evidence of multiple regression models and non-parametric statistic testing, the results show that only the application scope has a significant impact on profitability. The authors discuss these results from the perspective of enterprise integration as well as the system application scope and give suggestions to global manufacturing enterprises that want to apply inter-organizational systems.
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Literature Review And Hypotheses

In past studies on the relationship between IT investment and performance, the focus has been on the quantitative assessment of IT costs and benefits, looking at return on equity (ROE), return on assets (ROA), return on investment (ROI), and so on (Kumar, 1990). However, IT applications bring other less tangible benefits including tighter systems integration, faster response time, more accurate data, and so on. Besides, there are some external factors that impact IT effectiveness, such as the industry environment, uncertainty of requirements, threats from competitors, and so on. These lead to mixed findings concerning the relationship between IT investment and financial performance and restrict the application of cost-benefit approaches (Roach, 1991). The problem forces researchers to not only study the effectiveness of IT investment but also analyze the influence of other factors.

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