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Impact of IT Capability on the Performance of Port Operation

Author

Listed:
  • Ziping Wang
  • Dong‐Qing Yao
  • Xiaohang Yue
  • John J. Liu

Abstract

Based on the resource‐based view (RBV) and the transaction cost economics (TCE) theories, we study the impact of IT capability on the performance of port supply chain using an IT‐enabled transaction cost frontier model where the IT capability is modeled as a unique production input and as an endogenous transaction attribute as well. By examining the optimal levels of IT capability for different port systems from the viewpoint of production cost and transaction cost, we find theoretical evidence to explain why a port system with a horizontal competitive governance mode is less successful at integrating a port IT system in practice. Moreover, we find that the optimal IT capability of an individual port operator is lower than the IT capability in an integrated heterogeneous system. We further investigate how to improve IT capability to the desired system level through different forms of an incentive system that includes a subsidy offered by the port authority to coordinate the entire port system. The fixed subsidy is found to be the most cost‐effective and the easiest to implement. In addition, considering that information about effort cost for IT capability can be private under a market or hybrid governance mode, we study the performance of a direct revelation mechanism when revealing the port operator's private information and true cost to the port authority.

Suggested Citation

  • Ziping Wang & Dong‐Qing Yao & Xiaohang Yue & John J. Liu, 2018. "Impact of IT Capability on the Performance of Port Operation," Production and Operations Management, Production and Operations Management Society, vol. 27(11), pages 1996-2009, November.
    • Handle: RePEc:bla:popmgt:v:27:y:2018:i:11:p:1996-2009
    DOI: 10.1111/poms.12663
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    Cited by:

    1. Wang, Di & Liu, Weihua & Shen, Xinran & Wei, Wanying, 2019. "Service order allocation under uncertain demand: Risk aversion, peer competition, and relationship strength," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 130(C), pages 293-311.
    2. Alejandro Vega-Muñoz & Guido Salazar-Sepúlveda & Nicolás Contreras-Barraza & Lorena Araya-Silva, 2021. "Port Governance and Cruise Tourism," Sustainability, MDPI, vol. 13(9), pages 1-16, April.
    3. Rebecca Stekelorum & Shivam Gupta & Issam Laguir & Sameer Kumar & Subodha Kumar, 2022. "Pouring cement down one of your oil wells: Relationship between the supply chain disruption orientation and performance," Production and Operations Management, Production and Operations Management Society, vol. 31(5), pages 2084-2106, May.
    4. Jessica Pye & Arun Rai & John Qi Dong, 2024. "Business Value of Information Technology Capabilities: An Institutional Governance Perspective," Information Systems Research, INFORMS, vol. 35(1), pages 28-44, March.
    5. Wei Zhao & Qianqian Ben Liu & Xitong Guo & Tianshi Wu & Subodha Kumar, 2022. "Quid pro quo in online medical consultation? Investigating the effects of small monetary gifts from patients," Production and Operations Management, Production and Operations Management Society, vol. 31(4), pages 1698-1718, April.
    6. Liu, Weihua & Long, Shangsong & Wei, Shuang, 2022. "Correlation mechanism between smart technology and smart supply chain innovation performance: A multi-case study from China's companies with Physical Internet," International Journal of Production Economics, Elsevier, vol. 245(C).

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