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Strategic and Operational Benefits of Electronic Integration in B2B Procurement Processes

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Listed:
  • Tridas Mukhopadhyay

    (Graduate School of Industrial Administration, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

  • Sunder Kekre

    (Graduate School of Industrial Administration, Carnegie Mellon University, Pittsburgh, Pennsylvania 15213)

Abstract

Our goal is to assess the strategic and operational benefits of electronic integration for industrial procurement. We conduct a field study with an industrial supplier and examine the drivers of performance of the procurement process. Our research quantifies both the operational and strategic impacts of electronic integration in a B2B procurement environment for a supplier. Additionally, we show that the customer also obtains substantial benefits from efficient procurement transaction processing. We isolate the performance impact of technology choice and ordering processes on both the trading partners. A significant finding is that the supplier derives large strategic benefits when the customer initiates the system and the supplier enhances the system's capabilities. With respect to operational benefits, we find that when suppliers have advanced electronic linkages, the order-processing system significantly increases benefits to both parties.

Suggested Citation

  • Tridas Mukhopadhyay & Sunder Kekre, 2002. "Strategic and Operational Benefits of Electronic Integration in B2B Procurement Processes," Management Science, INFORMS, vol. 48(10), pages 1301-1313, October.
  • Handle: RePEc:inm:ormnsc:v:48:y:2002:i:10:p:1301-1313
    DOI: 10.1287/mnsc.48.10.1301.273
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    References listed on IDEAS

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    1. Frederick J. Riggins & Charles H. Kriebel & Tridas Mukhopadhyay, 1994. "The Growth of Interorganizational Systems in the Presence of Network Externalities," Management Science, INFORMS, vol. 40(8), pages 984-998, August.
    2. Akbar Zaheer & N. Venkatraman, 1994. "Determinants of Electronic Integration in the Insurance Industry: An Empirical Test," Management Science, INFORMS, vol. 40(5), pages 549-566, May.
    3. N. Venkatraman & Akbar Zaheer, 1990. "Electronic Integration and Strategic Advantage: A Quasi-Experimental Study in the Insurance Industry," Information Systems Research, INFORMS, vol. 1(4), pages 377-393, December.
    4. Kekre, Sunder & Mukhopadhyay, Tridas, 1992. "Impact of electronic data interchange technology on quality improvement and inventory reduction programs: A field study," International Journal of Production Economics, Elsevier, vol. 28(3), pages 265-282, December.
    5. Kannan Srinivasan & Sundar Kekre & Tridas Mukhopadhyay, 1994. "Impact of Electronic Data Interchange Technology on JIT Shipments," Management Science, INFORMS, vol. 40(10), pages 1291-1304, October.
    6. Eric T. G. Wang & Abraham Seidmann, 1995. "Electronic Data Interchange: Competitive Externalities and Strategic Implementation Policies," Management Science, INFORMS, vol. 41(3), pages 401-418, March.
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