Influence of partner coordination on market performance of the firm

HPCa: 0.431 * LPCb: 0.421 * HPC: 0.209** LPC: 0.169** HPC: 0.672* LPC: - 0.037 HPC: - 0.237 LPC: 0.402**

Not supported Not supported

Supported Not supported

Notes: Structural model goodness of fit indices: chi-square = 251.973 on 146 df; CFI = 0.941; TLI = 0.926; SRMR = 0.085; RMSEA = 0.063.a High partner criticality; b low partner criticality. * p < 0.01; ** p < 0.05

Figure 2 The results of two-group-model estimation

Figure 2 The results of two-group-model estimation

Industrial Marketing Model

supply chain members improve their productivities by investing in information technology.

The study results further suggest that improvements in a firm's coordination stemming from IT adoption do not lead to better market performance. It is an intriguing finding in that IT adoption cannot be empirically linked to firm performance (i.e. market performance) through the improvement of coordination activities of the firm. However, the results also suggest that the empirical linkage can be established only when IT adoption is linked to market performance through partner coordination. There appear to be multiple implications for these results. First, the results may reveal that it is not always possible to improve market performance through the enhancement of its coordination activities from the adoption of advanced information technology. This is probably because supply chain relationships are dyadic in nature and, therefore, unidirectional IT investments of firms could not be readily embedded into the dyadic coordination process (Barney, 1991). Thus, in the supply chain relationship context, enhancement of coordination activities in one member firm would not promise a real improvement of interfirm coordination within the supply chain until improvements in coordination activities of its partners accompany.

Second, the findings suggest why some studies in the literature failed to find an empirical association of IT with firm productivities. According to present findings, studies that do not consider the right managerial processes that mediate the effect of IT adoption are unlikely to find significant linkages between IT adoption and firm performance. That is, if partner firm coordination was not included in the model, our study may have also produced insignificant impact of IT adoption on market performance.

Third, the results stress that it is critical to incorporate proper moderators in identifying the conditions under which IT adoption leads to enhanced firm performance. Without the moderator - partner criticality- our study could have reported that firm coordination does not affect firm market

Daekwan Kim, S. Tamer Cavusgil and Roger J. Calantone performance significantly. Fortunately, the two-group analysis indicates that IT adoption enhances market performance through firm coordination activities only with partners that are critical to the success of its business.

When a partner is critical to the success of the firm, enhancements in its interfirm coordination activities with the partner affect market performance positively. However, when a partner is not critical, such enhancements in coordination activities do not influence market performance of the firm according to the results. It clearly reveals the moderation of partner criticality on the impact of IT adoption on market performance through firm coordination enhancements, meeting our expectation that IT adoption will have a greater impact on market performance when the partner is critical. That is, as coordination activities of the firm with partners become critical, the impact of new IT adoption for SCCS on market performance follows the direction of the criticality of the partner.

In contrast, the improvements in coordination activities of a critical partner do not influence market performance of the firm positively. Only that of a less critical partner affects market performance of the firm positively. This finding suggests that enhancements in a partner's coordination that stemmed from IT adoption will help improve market performance of the firm only when the partner is less critical. Then, why are the enhancements in coordination activities of a critical partner not helpful to the firm?

It is likely that high partner criticality creates high dependence of the firm on the partner causing power imbalance (Emerson, 1962; Salancik and Pfeffer, 1974). That is, being a critical partner implies possible dependence on the partner (Pfeffer and Salancik, 1978; Salancik and Pfeffer, 1974). In such a scenario, enhancements resulting from IT adoption may not be materialized as enhanced market performance, as the partner shifts the distribution of additional value created by IT adoption toward its favor leveraging its relatively important position or dependency status of the IT adopting firm. Subsequently, if it is a very critical partner, an improvement in coordination of the partner, even though it stems from IT adoption of the firm, results in no significant market performance of the firm. On the other hand, an improvement in the partner's coordination leads to market performance of the firm when the partner is less critical, as the less critical partner entails low dependence of the firm on the partner and, thus, the firm is able to secure its adequate share of additional value from IT adoption.

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