Cooperative adoption of complex systems a comprehensive model within and across networks

As industry rapidly moves toward a networked economy, cooperation among individual firms involved in overlapping network relationships is critical for success. Companies accustomed to competition need guidance on how to incorporate co-operative strategies into their internal operating procedures and their external relationships. Hausman et al. develop a model delineating the main factors that could influence the decision to adopt inter-organizational systems (IOS) innovations across a range of variables. IOS systems such as electronic data interchange, enterprise resource planning and vendor managed inventory, which act as electronic information conduits between partners, commonly include hardware, software, network facilities, procedures and rules, data and databases, plus knowledge exchange. They therefore involve major changes in the way individual firms operate, with the requisite adoption extending to encompass other networked firms. Most researchers have mainly focused on evaluating a few variables that affect the adoption of specific technologies by a single firm or consumer. Hausman et al. , in contrast, focus on the factors that might shape co-operative adoption in a network context.

The study draws managers' attention to inter-organizational influence factors, as well as relational factors under their direct control. In addition, strategies for dealing with structural factors, over which they have little control, are presented.

In terms of structural factors, the authors put forward the following propositions:

• Larger networks have a lower propensity to adopt an IOS innovation than smaller networks. This is because, in large networks, where firms are likely to be involved in overlapping networks, firms facing adoption decisions would have to weigh the potential operational and relational benefits of adoption against the complexity of maintaining multiple systems.

• Networked organizations offering a smaller amount of product variety or a very large amount of product variety will have a lower propensity to adopt an IOS innovation than organizations offering intermediate levels of product variety. The authors explain: "At relatively low and high levels of variety, adoption is negatively impacted, first due to an inability to capitalize of economies of scale, then to the size and overlap of networks required to provide for the variety. In the middle, variety does promote adoption due to favourable economies, without requiring networks that are too large or overlapping to function effectively."

• The rate of adoption of IOS innovation by a network will be positively related both to the degree of organizational readiness in member firms and to the extent of their partners' experience with the specific IOS innovations.

• The rate of adoption of an IOS innovation by networked organizations will be positively related to the value the recipient firms anticipate from the innovation.

In terms of inter-organizational influence factors the authors put forward the following propositions:

• The rate of adoption of an IOS innovation by networked organizations will be positively related both to communication between the focal and recipient firms and to their participation in the adoption decision.

• The rate of adoption of IOS innovation by networked organizations will be positively related both the presence of an innovation champion within the organization and to the extent of social ties between the focal firms and the recipient organizations.

In terms of relational factors, the authors put forward the following propositions:

• The rate of adoption of IOS innovation by a recipient firm will be negatively related to the use of power by the focal alliance.

• The rate of adoption of IOS innovation by a recipient firm will be negatively related to the dependence between the focal firm and the recipient firm. (Some prior researchers have found a negative relationship between dependence and adoption of innovations, while others have found a positive relationship.)

• The rate of adoption of IOS innovation by an organization will be positively related to the degree of entrenched trust between the recipient firm and other networked firms.

The authors focus on social variables that appear to be critical in encouraging co-operation, since "bureaucratic governance mechanisms...are fundamentally absent from network relationships". In particular, the authors believe that open communication helps to build trust and social ties and generates social capital to facilitate co-operation and empower champions. Hausman et al. conclude: "In dealing with these factors, it appears that firms must first establish a supporting organizational culture, since it seems implausible that firms can act co-operatively in their inter-organizational encounters and bureaucratically in the intra-organizational relationships. Specifically, firms must establish good internal lines of communication that rely on encouraging employees to work co-operatively toward mutually beneficial goals and build strong internal relationships among departments and their employees."

Obviously, the relationships proposed by the authors now need to be tested empirically.

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