Exploring Relevance of Reliability in Interorganizational Information Systems and Sustainable Supply Chain Management

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1 Exploring Relevance of Reliability in Interorganizational Information Systems and Sustainable Supply Chain Management 1 LIU ZhenYu, 2 ZHUANG WeiQing 1, Dept. of Management Science, School of management,xiamen University China, [email protected] 2, Dept. of Management Science, School of management,xiamen University China, [email protected] Abstract In recent years, sustainable supply chain management(sscm) and interorganizational information systems(ios) both have received a great deal of attention from practitioners and scholars. This paper exploring the relationship mechanism of interorganizational information systems(ios) reliability and sustainable supply chain management (SSCM) is conducive to bulid and achieve sustainability in supply chains. The results are revealed that IOS reliability has a positive influence on SSCM(0.152, p= 0.000), IOS reliability has a positive relation with SCM(0.388, p= 0.000), and SSCM also positively influenced by SCM(0.194, p= 0.000). Finally, the results indicate that IOS reliability and SCM together explain the SSCM. 1. Introduction Keywords: IOS Reliability, Sustainable Supply Chain Management, Relevance In recent years, sustainable supply chain management(sscm) and interorganizational information systems(ios) both have received a great deal of attention from practitioners and scholars. There is an increasing number of special issues on sustainability, sustainable SCM and IOS in recent years(ageron et al.,2011[4]) have been edited in the Journal of Operations Management(Linton et al.,2007[12]), International Journal of Production Economics(Piplani et al., 2008[16]), Journal of Supply Chain Management(Pagell et al.,2008[15]), Supply Chain Management: an International Journal(Lindgreen et al.,2009[11]), Journal of Cleaner Production(Baumgartner, 2011[3]) and Information Systems Research(Banker, 2006[18]), Management Science(Frederick, 1994[7]), and MIS Quarterly(Subramani, 2004[13]). However, several possible actions for incorporating sustainability in various supply chain activities of firms to focuss on efforts reducing damage and help choose products/solutions with minimum environmental impact toward a low carbon aim need further to find out, and Gupta et al.(2011)[21] go on proposing that IT/IteS can certainly play an important role here in pioneering sustainable supply chain solutions and helping diffuse these solutions throughout the world. So, this paper exploring the relationship mechanism of interorganizational information systems(ios) and sustainable supply chain management (SSCM) is conducive to bulid and achieve sustainability in supply chains. In this paper, firstly, reviews the current state of academic research in interorganizational information systems(ios) and sustainable supply chain management (SSCM), and provides a crucial discussion of IOS reliability and SSCM in Section 2. In Section 3, is research model and hypotheses which proposing a model of the relevance of IOS reliability and SSCM, and definition and description of measuring factors of IOS reliability and SSCM. Section 4 presents a questionnaire survey and has empirical analysis on the relevance of IOS reliability and SSCM. Finally, gives a conclusion in Section Literature review Sustainability has become a significant concern for companies that integrate environmental and social issues in their strategy (Srivastava, 2007[19]; Ageron et al.,2011[4]). Gupta et al.(2011)[21] define sustainable supply chain management (SSCM) as a set of managerial practices that include all of the following: (i) Environmental impact as an imperative; (ii) Consideration of all stages across the Advances in information Sciences and Service Sciences(AISS) Volume5, Number2, Jan 2013 doi: /AISS.vol5.issue

2 entire value chain for each product; and (iii) A multi-disciplinary perspective, encompassing the entire product life-cycle. This definition implies to pay attention to the impact of suppliers, distributors, partners and customers. After being convinced of the importance of SSCM, how to carry out SSCM is practitioners and scholars care more. Vachon and Klassen(2008)[24] think of a supplier s capability to develop or acquire skills, infrastructure and information technologies and information systems (IT/IS) are essential for companies and green IT/IS is an important challenge because of their ability to better support SSCM (Watson et al., 2010[26]). Cognizant Inc. (2008)[5] suggests several possible actions for incorporating sustainability in various supply chain activities of firms: (i) focussing on efforts reducing packaging and in-transit damage; (ii) performing life-cycle analysis in helping choose products/solutions with minimum environmental impact; and (iii) aligning green initiatives with the strategic objectives of the firm. And Gupta et al.(2011)[21]think the burgeoning Indian IT/ITeS sector can certainly play an important role here in pioneering sustainable supply chain solutions and helping diffuse these solutions throughout the world. Generally, there are many literature to discuss IT/IS to improve performance of supply chain management. A. Gunasekaran, E.W.T. Ngai (2004)[1] in their paper do a job for classifying the literature available on IT in SCM using suitable criteria and then critically reviewing to develop a framework for studying the applications of IT in SCM. However, Elizabeth A Williamson et al. (2004)[6] suppose using techniques such as MRPII and JIT within SCM are not sufficient because they are limited in facilitating information sharing and coordination between internal and external partners in the chain, but IOS. Integration of IT systems has been identified as an important prerequisite of supply chain performance (Vickery et al., 2003[25]; Rai et al., 2006[17]) and advanced supply chain capabilities, such as flexibility and agility (Swafford et al., 2008[22]). Therefore, there is wide attention of applying interorganisational information systems to supply chain management. An interorganisational information system (IOS) is a collection of IT resources, including communications networks, hardware IT applications, standards for data transmission, and human skills and experiences (Elizabeth A Williamson et al., 2004[6]). IOS provides a framework for electronic cooperation between businesses by allowing the processing, sharing and communication of information (Haiwook, 2001[9]). The use of interorganizational information systems (IOS) is considered imperative for successful SCM and has been associated with significant supply chain efficiency improvements (Gunasekaran and Ngai, 2004[1]; Boone and Ganeshan, 2007[23]). However, there are few articles that address SSCM and IOS, in particular, the reliability in IOS. Information quality is about the accuracy, liability, reliability, and accessibility of information provided by a system(angela Lin,2006[2]), and reliability refers to measures used to prevent and detect the faults, such as measures that detect data corruption and try to correct it, if possible, or else it would stop and report the fault(ivan K.W. Lai et al., 2011[10]). The reliability in IOS is hot research issue, because it influences on performance of IOS directly. Realizing the importance of IOS to achieve SSCM, an attempt has been made in this paper to study the relevance of IOS reliability and SSCM that will influence SSCM by improving IOS reliability. This paper develops a theoretical framework and empirical analysis on the relevance of IOS reliability and SSCM. 3. Research model and hypotheses 3.1. A model of the relevance of IOS reliability and SSCM To examine the relevance of IOS reliability and SSCM, firstly, needs to make sure what factors compose the IOS reliability and SSCM. A research conceptual model including seven elements from Ageron et al.(2011)[4] is developed as shown in Fig. 1, there are (1) reasons for sustainable SSM, abbreviate as R, (2) criteria employed for SSM, abbreviate as SSC, (3) greening supply chains, abbreviate as GSC, (4) characteristics of suppliers, abbreviate as SC, (5) barriers for SSM, abbreviate as B, and (6) benefits and motivation for SSM, abbreviate as E. In this paper, giving 271

3 IOS reliability consists of heterogeneity( H ), collaboration( C ), trust relationship( TR ), information sharing( IS ) and transaction cost( TC ) of IOS. The content of heterogeneity includes heterogeneity in hardware, heterogeneity in software, heterogeneity in management, heterogeneity in strategy, etc as shown in Fig. 1. The content of collaboration of IOS includes collaboration in strategy, collaboration in business, collaboration in organization structure, collaboration in technology, collaboration in management, etc. The content of trust relationship of IOS includes trust of suppliers, trust of agents, trust of distributors, trust relationship in supply chain, etc. The content of information sharing of IOS includes accuracy of information transfer, value of information, extent of information diffusion, transparency of information, etc. The content of transaction cost of IOS includes cost of bargain, cost penalty, cost of decision making, cost of information, cost of supervision, cost of search, etc Hypotheses Figure 1. A concept model of the relevance of IOS reliability and SSCM Based on the research framework and model, three hypotheses are established. H1. IOS reliability positively influences sustainable supply chain management(sscm). H2. IOS reliability positively influences supply chain management(scm). H3. supply chain management(scm) positively influences sustainable supply chain management(sscm). 4. Methodology 4.1. Measure This paper uses a questionnaire survey. The questionnaire includes two sections. Section 1 is the questions and items of IOS reliability that contains five sets of questions related to a total of twenty three items for the five components. Section 2 contains six sets of questions related to a total of twenty eight items for the six components of sustainable supply chain management. For each parameter of the 272

4 item, respondents are asked for its relative level of importance to 35 representative interorganizational information platforms received effective 273 answers. Respondents were asked to rate the questions along a method just as Nickell et al.(2000)[14], as follows. 1 if Yij 1 2 if 1 Yij 2 RATINGk 3 if 2 Yij 3 4 if 3 Yij 4 5 if Yij 4 The value of item that your choice, RATING (1-5, from lowest to highest), is cardinalized Y ij Yij and translated into a latent variable. Respondents choose corresponding value to falls [ into the interval k 1, k], where i th is the which one of components and j th is the which [, ] one of items; for example, if an observation falls into the interval 1 2 ([0.2, 0.5]), the corresponding rating is Validity and reliability assessment Table 1 shows the means, standard deviations, KMO, Cronbach s Alpha and validity and reliability statistics of the components. Validity refers to the indicators can truly measure the extent of the things, it can identify the relationship between structural variables and measure indicators. The data were tested using the Kaiser-Meyer-Olkin (KMO) Measure of Sampling Adequacy and Barlett s test of sphericity. The KMO value generated from SPSS 19 is 0.872, which is greater than 0.6. It shows that the correlations among variables are relatively compact. Bartlett s test is also highly significant (Table 2 and Table 3), therefore, the correlation matrix is an identity matrix. Reliability concerns the measurement accuracy and reflects the extent to which the respondent can answer the same questions or close approximations in the same way each time (Straub et al. 2004[20]). The highest Cronbach s a is for transaction cost in IOS reliability. The lowest value is for trust relationship factor. In sustainable supply chain management(sscm), the highest Cronbach s a is for barriers to SSCM, and the lowest value is for reasons for SSCM factor. Because the Cronbach s Alpha for all components are higher than 0.6, the reliability of the study is accepted, based on the guidelines of Hair et al. (2010)[8]. Table 1. Means, standard deviations, KMO and Cronbach s Alpha of the components Mean S.D. KMO Cronbach s Alpha IOS Reliability Heterogeneity Collaboration Trust relationship Information sharing Transaction cost Sustainable supply chain Reasons for SSCM management(sscm) Supplier Selection criteria Greening Supply chains Suppliers characteristics Barriers to SSCM Expection of SSCM

5 Table 2. The results of the Exploratory Factor Analysis(IOS Reliability) KMO: df: 253 Sig.: Q1.580 Q2.735 Q3.750 Q4.601 Q5.685 Q6.655 Q7.873 Q8.866 Q9.805 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Table 3. The results of the Exploratory Factor Analysis(SSCM) KMO: df: 378 Sig.: Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q

6 4.3. Results The results are revealed in Figure 2 and Table 4 which presents the relevance of IOS reliability and SSCM, and the impact of IOS reliability and SCM on SSCM, respectively. As indicated, the results highlight that IOS reliability has a positive influence on SSCM(0.152, p= 0.000), supporting H1. Regarding the impact of IOS reliability and SCM, the results show that IOS reliability has a positive relation with SCM(0.388, p= 0.000), thus H2 was supported. The results also demonstrate that SSCM, is also positively influenced by SCM(0.194, p= 0.000), supporting H3. Finally, the results indicate that IOS reliability and SCM together, explain the SSCM. Hence, it can be seen that all three hypotheses are supported, resulting in a positive triangular relationship between IOS reliability, SCM and SSCM. In addition, the results of IOS reliability and heterogeneity, collaboration, trust relationship, information sharing, transaction cost show that heterogeneity of IOS has a positive relation with IOS reliability(0.381, p= 0.000), collaboration of IOS has a positive relation with IOS reliability(0.119, p= 0.000), trust relationship of IOS has a positive relation with IOS reliability(0.185, p= 0.000), transaction cost of IOS has a positive relation with IOS reliability(0.156, p= 0.000), but information sharing of IOS has a negative relation with IOS reliability(-0.086, p= 0.000). Figure 2. The results of SEM of IOS reliability and SSCM 275

7 Table 4. The results of regression Estimate S.E. C.R. P SCM<---IOS' Reliability SSCM<---IOS' Reliability SSCM<--- SCM IOS' Reliability<---H IOS' Reliability<---C IOS' Reliability<---TR IOS' Reliability<---IS IOS' Reliability<---TC Conclusion Several excellent reviews have been written over the years that examine various aspects of SSCMrelated research(gupta, 2011[21]). While there are few perspectives interested in exploring a particular aspect of interorganizational information systems(ios) how to support sustainable supply chain management(sscm). This paper develops a theoretical framework and empirical analysis on the relevance of IOS reliability and SSCM and then find out the relationship mechanism in order to make a strategic decision on how to support sustainable supply chain management used by IOS.[27] The goal of this study is to investigate the IOS reliability, particularly the significant positive impact of IOS reliability and sustainable supply chain management, besides explicitly investigating the role of IOS reliability in the enhancement of supply chain management. Towards that goal, multiple approaches from theoretical background of IOS reliability and sustainable supply chain management were synthesized to propose a research framework and three hypotheses were proposed(figure 1). The results fully support the three hypotheses which IOS reliability positively influences sustainable supply chain management(sscm), IOS reliability positively influences supply chain management(scm), supply chain management(scm) positively influences sustainable supply chain management(sscm).[28] 7. References [1] A. Gunasekaran, E.W.T. Ngai, Information systems in supply chain integration and management, European Journal of Operational Research,vol.18, no. 159,pp , [2] Angela Lin, The acceptance and use of a business-to-business information system, International Journal of Information Management, vol. 12, no. 26,pp , [3] Baumgartner R.J, Critical perspectives of sustainable development research and practices, Journal of Cleaner Production, vol. 19, no. 8, pp ,2011. [4] Blandine Ageron, Angappa Gunasekaran, AlainSpalanzani, Sustainable supply management: An empirical study, Int. J. Production Economics, vol. 18, no. 111, pp. 2-22,2011. [5] Cognizant Inc. Report Creating a green supply chain: Information technology as an enabler for a green supply chain, Cognizant Inc, [6] Elizabeth A Williamson, David K Harrison, Mike Jordan, Information systems development within supply chain management, International Journal of Information Management, vol. 24, no. 5,pp ,2004. [7] Frederick J. Riggins, Charles H. Kriebel, Tridas Mukhopadhyay, The Growth of Interorganizational Systems in the Presence of Network Externalities, Management Science, vol. 40, no. 8,pp , [8] Hair, J. F., Jr, Anderson, R. E., Tatham, R. L., and Black, W. C, Multivariate Data Analysis, 7th edition, Englewood Cliffs, NJ: Prentice-Hall Inc, [9] Haiwook, C, The effects of interorganisational information systems infrastructure on electronic cooperation: An investigation of the move to the middle, Ph.D. abstract. Proquest digital dissertations. accessed ,

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