Effects of information-processing mechanisms on Internet-based purchase order financing

This paper investigates how small and medium-sized original design manufacturers (SM-ODMs) obtain sufficient purchase order financing (POF) and ultimately improve their financial performance through Internet-based supply chain financial platforms. Based on information-processing theory, this paper explores the impacts of two information-processing mechanisms (formal information integration and informal information exchange) on Internet-based POF loans and financial performance from SM-ODMs’ perspective. The posited relationships are verified through analysis of second-hand project data derived from 207 distinct customer purchase orders and first-hand survey data collected from 33 SM-ODMs, using a structural equation modeling approach. The findings indicate that SM-ODMs can secure larger Internet-based POF loans and improve their financial performance by integrating formal information more extensively. This can be done by exchanging informal information more frequently and proactively at a high level. However, exchanging informal information more frequently and proactively at a low level results in smaller Internet-based POF loans. Finally, SM-ODMs can improve their financial performance through larger Internet-based POF loans. This paper contributes substantially to the literature by shedding light on information-processing mechanisms on Internet-based supply chain financial platforms through the lens of information-processing theory.