The moderating effect of transactional type

The previous sections introduced the expected direct effects of trust and electronically mediated exchange on collaboration. This section suggests that the relative effectiveness of trust and electronically mediated exchange in achieving collaboration depends on the transactional type, the type of product being exchanged between the supply-chain partners.

In this study, we will center our attention on the two transactional types of standardized and customized products. These transactional types were identified because they allow us to study the nature of supply-chain collaboration and its proposed determinants of trust and electronically mediated exchange in contexts resembling the two contrasting types of information-processing situations identified in organizational information processing theory (Daft and Lengel, 1986; Leamer and Storper, 2001).

First, supply-chain relationships transacting standardized products require frequent information exchanges because of the typically high volumes of goods being transacted (Ryssel et al., 2004). Also, much of the information exchanged in such supply-chain relationships is routine in nature and is thereby neither complex nor sensitive. Since both high frequency and routine-type information exchanges can be conducted via electronically mediated exchange, we argue that supply-chain partners exchanging standardized products will be in a position in which they can reap significant and immediate collaborative benefits from the use of electronically mediated exchange. That is, companies involved in these supply-chain relationships can collaborate effectively even in the absence of a strong social foundation of trust. While we do not expect trust to be harmful, it may not be necessary either

given that routine information shared with the other company would not be of a very sensitive nature. Rather, the efficient exchange of useful routine information is what is necessary for collaboration to take place in these supply-chain relationships.

Second, supply-chain relationships involving exchanges of customized products need to be more concerned with establishing a trust-based social foundation before high degrees of collaboration can be achieved. This is because the exchange of customized products is a complex and, by definition, an idiosyncratic process, typically requiring partners to share critical and sensitive information across organizational boundaries, something only trusting partners would be willing to do. Also, trust makes it more likely that the receiver of the information finds it credible and acts upon it in a collaborative manner. The above discussion results in the following hypothesis:

H3. Transactional type will moderate the relationships between electronically mediated exchange and trust on the one hand, and collaboration on the other, such that, electronically mediated exchange is a more salient determinant of collaboration for standardized products exchange relationships, while trust is a more salient determinant of collaboration for customized products exchange relationships.

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