Firm coordination

Transactions are a fundamental element of supply chain relationships, and coordination activities for such transactions are crucial for efficient channel activities (Clemons and Row, 1992). Firm coordination in this study is viewed as a channel capability, and conceptualized as the extent to which a firm coordinates transactions with channel partners efficiently (Clemons and Row, 1993; Kambil and Short, 1994; Malone et al., 1987; Shin, 1999). Some researchers view coordination as a multidimensional concept that embraces not only transactions but also information sharing and performance monitoring (e.g. Stank et al., 1999a). However, this study focuses on coordination activities for transactions only, as they already reflect the quality of information sharing and monitoring activities implicitly.

Typical interfirm coordination ranges from the collection of product- and price-related information such as inventory level, new product launch, and pricing, to order follow-up activities including order confirmation and shipment tracking. An SCCS with advanced IT should offer efficient coordination activities to the owning firm by either reducing coordination costs or enhancing the quality of the coordination activities at the same cost (Clemons and Row, 1992, 1993; Evans et al., 1993; Lewis, 2001; Roberts and Mackay, 1998; Steinfield et al., 1995; Wigand and Benjamin, 1995). Particularly, in the context of electronic hierarchy where a close relationship is key (Malone et al., 1987), firms should be able to improve efficiency in coordination as their IT for SCCS enhances (Clemons and Row, 1993).

Shin (1999) report empirical support for the positive effect of IT on interfirm coordination. Similarly, Clemons and Row (1993) argue that "IT reduces the cost of coordination, leading firms to coordinate more" (p. 10). The literature generally contends that adoption of advanced IT helps supply chain members reduce coordination costs associated with logistics activities (Lewis, 2001; Lewis and Talalayevsky, 1997). Thus, we offer the following hypothesis: H1. IT adoption for SCCS enhances firm coordination.

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