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Enhancing international customer–supplier relationships through IT resources: A study of Taiwanese electronics suppliers

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Abstract

The growing popularity of outsourcing and offshore-partnering activities raises the issue of what strategies are appropriate for firms to successfully manage customer–supplier relationships in the international context. Little has been written about how information technology (IT) systems may impact on international exchange relationships. In the present study, we report on how suppliers use IT as a strategic resource to govern their international exchange relationships with multinational enterprise customers. Taking the supplier's perspective, we propose that two types of IT resources – IT advancement and electronic integration – create value for suppliers with respect to innovativeness and market performance. We argue that this value creation process is mediated by three specific forms of governance: cooperativeness, output monitoring, and behavior monitoring. To test these arguments, primary data, obtained from 240 Taiwanese electronics suppliers, are used for hypothesis testing. The survey results provide evidence that suppliers’ IT resources enable them to work effectively with their international key customers. Importantly, of the three governance mechanisms, cooperativeness has the strongest impact on supplier performance, owing to supplier electronic integration. Post-hoc analysis revealed that cultural distance does not play a role in moderating the relationship between IT resources and governance mechanisms in international exchange.

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Notes

  1. In international OEM–supplier relationships in the electronics industry, most of the buyers boast well-established international brands with superior bargaining position. According to the 2005 survey by the International Procurement Office (IPO) in Taiwan, the top five IPO purchasing companies (HP, Dell, Sony, Apple, and IBM) account for 73% of total international information technology purchasing in Taiwan. Thus a degree of power asymmetry is considered a key feature of the OEM supplying networks we examine (Kang et al., 2009).

  2. We follow Heide et al.'s (2007) terminology, which is equivalent to Bello and Gilliland's (1997) conceptualization. However, the context of Bello and Gilliland (1997) is manufacturer–distributor interaction, whereas Heide et al.'s (2007) empirical context is the inter-firm customer–supplier relationship. This is why we adopt Heide et al.'s operationalization for our study.

  3. As one of our reviewers pointed out, the empirical evidence on the issue of “impact of cultural distance on IT” is rather limited. To this end, we provide a post-hoc test to explore this issue further.

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Authors and Affiliations

  1. Department of International Business, National Chengchi University, Taiwan

    Ruey-Jer (Bryan) Jean

  2. Manchester Business School, University of Manchester, UK

    Rudolf R Sinkovics

  3. Institute of International Business, Georgia State University, Atlanta, USA

    S Tamer Cavusgil

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  1. Ruey-Jer (Bryan) Jean
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  2. Rudolf R Sinkovics
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  3. S Tamer Cavusgil
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Correspondence to Rudolf R Sinkovics.

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Accepted by David Tse, Consulting Editor, 11 October 2009. This paper has been with the authors for two revisions.

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Jean, RJ., Sinkovics, R. & Cavusgil, S. Enhancing international customer–supplier relationships through IT resources: A study of Taiwanese electronics suppliers. J Int Bus Stud 41, 1218–1239 (2010). https://doi.org/10.1057/jibs.2010.4

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