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Interorganizational Governance Value Creation: Coordinating for Information Visibility and Flexibility in Supply Chains *
Author(s) -
Wang Eric T. G.,
Wei HsiaoLan
Publication year - 2007
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.2007.00173.x
Subject(s) - supply chain , flexibility (engineering) , corporate governance , relational view , business , visibility , transaction cost , supply chain management , service management , knowledge management , supply chain risk management , industrial organization , information governance , process management , information system , computer science , marketing , economics , management information systems , engineering , physics , electrical engineering , management , finance , optics
More thoroughly understanding how interorganizational governance value can be created by information technology and other governance mechanisms is critical for supply chain management. Based primarily on transaction‐cost economics and supplemented by the resource‐based view, this study investigates how interorganizational governance (i.e., relational governance and virtual integration) can create value (i.e., information visibility and supply chain flexibility) in the supply chain context. The findings show that both relational governance and virtual integration benefit information visibility. Those results also support both direct and indirect (via information visibility) effects of relational governance on supply chain flexibility. Although failing to affect supply chain flexibility directly, virtual integration can still improve supply chain flexibility with its ability to enhance information visibility. Thus, interorganizational governance mechanisms emphasizing both control and collaboration can influence the gain from collaboration‐specific capabilities, leading to the competitive advantage of a supply chain. The results of the study suggest that firms can gain greater supply chain flexibility within existing interfirm relationships by enhancing information visibility through virtual integration and relational governance.