Modularized Interoperability in Supply-Chains: A Co-adoption study of RosettaNet’s XML-based Interorganizational Systems

Abstract

The factors that influence an organization’s decision to begin using a certain type of technology have come under much study. Several theoretical models, commonly referred to as technology diffusion models, have been developed to better understand the role of these factors in the adoption, diffusion and infusion of certain types of technology. The benefits of this line of research are pervasive and the opportunities are clear. Managers gain insight as to why a technological innovation may diffuse quickly, or may stagnate. Researchers gain insight into factors causing greater assimilation depths or wider adoption breadths. Managers may find the opportunity to influence or predict these factors. Researchers may detect common influential factors across several technology types and generalize their models to a broader scope. This paper introduces an innovation diffusion model regarding a recent technological innovation known as XML-based interorganizational systems. A theoretical framework is proposed to assess the influential factors leading toward adoption and internal diffusion of the target technology. The factors under study include compatibility, relative advantage, environment and three control variables (seller versus buyer, technology conversion type, and location in supply chain). A case study utilizing RosettaNet’s Partner Interface Process is presented, the results are compared to the theoretical model, and the findings stated. Overall the findings indicate substantial improvements in all financial and operational measures (ROI, transaction cost, payback, cycle time and through-put). Further, significant indirect benefits include: information ubiquity. improved employee morale, improved time allocation towards value-added activities, and significant product cost savings on the part of the buyer organization. Overall, environmental factors and the lack of compatibility with the old processes jointly resulted in the organizations’ adoption of RosettaNet-based solutions. The relative advantage construct was determined to be the key factor that would sustain interest in the target technology likely leading towards greater internal diffusion. The paper concludes with several managerial implications and recommendations for future research.