Performance Implications of Internet-based Information Technology in Value Chain Management

Performance Implications of Internet-based Information Technology in Value Chain Management

Howard S. Rasheed (Department of Management, University of North Carolina Wilmington, Wilmington, NC, USA) and Hassan Rasheed (Taif University, Al Taif, Saudi Arabia)
DOI: 10.4018/IJISSCM.2015040101
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Internet-based information technology (I-IT) has become an integral part of the value chain for many firms, increasing the efficiency of existing activities and enabling new modes of doing business. Despite a significant amount of research on I-IT, however, its exact impact on firm performance has yet to be resolved. This study examines multiple issues regarding the relationship between I-IT investment made in support of value chain management and organizational performance as judged by profit and productivity. Conclusions are offered regarding the strength of this type of investment as a performance predictor, the types of firms for which it does improve performance and what modes of I-IT investment produce the greatest results. Data from 165 firms indicate that investment in I-IT can positively impact performance depending on the type of industry and the type of supply chain function being supported. In particular, results indicate that firms in industries such as banking and insurance stand to benefit most from the use of I-IT. This study also provides useful recommendations for how firms should design and deploy their I-IT resources for value chain management that maximizes their return on investment. Due to the importance of the internet in global economic development, the implications of this study are significant.
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2. Literature Review

Min and Galle (1999) defined electronic commerce as “an inter-organizational information system that is intended to facilitate business-to-business electronic communication, information exchange and transaction support through a web of either public access or private value-added networks.” Electronic commerce (EC) can be facilitated through a variety of media such as electronic data interchange (EDI), direct link-ups with suppliers, Internet, Intranet, Extranet, electronic catalog ordering, and e-mail. Much of the literature has investigated EDI, which, in a broad sense of electronic commerce, involves the movement of paper-based instruments through private dyadic electronic telecommunications channels (Kumar & Crook, 1999). With the advent of the Internet, many companies are migrating their information technology (IT) functions to the publicly accessible and cost effective World Wide Web as their preferred infrastructure for electronic commerce. Prior research has focused on the strategic benefits of private networks of electronic commerce such as electronic data interchange (EDI) (Clark & Stoddard, 1996; Angeles, Nath, & Hendon, 1998; Mukhopadhyay, Kekre, & Pokorney, 1998; Chatfield & Yetton, 2000; Ahmad & Schroeder, 2001).

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