Developing Inter-Organizational-Trust in Business to Business E-Commerce Participation - Case Studies in the Automotive Industry

Abstract

Inter-organizational-systems such as EDI have been the main form of business-to business ecommerce participation in the automotive industry for the last two decades. Previous studies in EDI adoption mostly examined environmental, organizational and technological factors. This study draws insights developed within the sociology of technology, in which innovation is not simply a technicalrational process of solving problems, but involves economic, behavioral and political processes required for building inter-organizational trust. The transition to cooperative relationships between buyers and suppliers may be more difficult for automotive companies because of complexity, compatibility, long lead times and ingrained adversarial supplier relationships (Langfield-Smith & Greenwood, 1998). Therefore, trust is important as organizations need to cooperate, collaborate and communicate timely and relevant information, in order to facilitate EDI that entails not only technological proficiencies, but also trust between trading parties, so that business transactions are sent and received in an orderly fashion. An analysis of the trust behaviors that influence EDI adoption will be useful for evaluating EDI participation. The aim of this study is to address the following intriguing questions: How does trading partner trust impact EDI participation? How do issues relating to coercive power among trading partners impact inter-organizational trust?, and What is the importance of trust within an inter-organizational dyad. Ford has been using EDI since the electronic data transmissions commenced in 1988. The aim of EDI is to communicate production requirements of five car manufacturers (namely, Ford, General Motors Holden, Toyota, Mitsubishi and Nissan), to their component suppliers in order to meet the demands of the Australian and overseas motor vehicle markets. The automotive industry had more experience than other industries in developing inter-organizational relationships. Ford Australia was nationally and internationally popular because motor vehicles were exported to New Zealand and the Asia Pacific region.