Supply Chain Technologies: Linking Adoption, Utilization, and Performance

• Author: Adegoke Oke,Daniel Prajogo,Zhongzhi Liu
• Published date: 01 October 2016
• DOI: http://doi.org/10.1111/jscm.12117
• Date: 01 October 2016

SUPPLY CHAIN TECHNOLOGIES: LINKING ADOPTION,

UTILIZATION, AND PERFORMANCE

ZHONGZHI LIU

Arizona State University

DANIEL PRAJOGO

Monash University

ADEGOKE OKE

Arizona State University

Much has been written in the literature on the adoption of supply chain

technologies (SCT). However, little has been written on why once

adopted, the levels of utilization and the effectiveness of SCT differ.

Therefore, the objectives of this study are to investigate (1) why firms

achieve more or less SCT utilization and (2) how SCT utilization relates

to performance. To address the first objective and, using a survey of man-

ufacturing firms in Australia, we identify and investigate how efficiency

and legitimacy motivations for adopting SCT can help explain different

levels of SCT utilization in firms. To address the second objective, we

investigate the link between SCT utilization and delivery performance and

the role that both information sharing and logistics integration play as

moderators of that link. Our empirical results show that: (1) efficiency

motivation for SCT adoption more significantly and positively relates to

SCT utilization in firms than does legitimacy motivation for adoption;

and (2) there is a positive relationship between SCT utilization and firm

performance and this increases when the level of information sharing

between supply chain partners increases. This study contributes to the

extant literature which has generally reported inconsistent results in terms

of how SCT utilization actually affects performance as well as taking a

nascent step toward understanding the conditions under which SCT

utilization is more or less effective in so far as it relates to delivery

performance.

Keywords: supply chain technologies; efficiency motivation; legitimacy motivation;

information sharing; logistics integration

INTRODUCTION

The environment in which firms operate has under-

gone tremendous changes in recent years. Many firms

now rely on supply chain technologies such as Enter-

prise Resource Planning (ERP), Advanced Planning

and Optimization (APO), and Warehouse Manage-

ment Systems (WMS) to communicate with their sup-

ply chain partners, deal with increasing levels of

market competition, and create value for shareholders

(Mishra, Modi & Animesh, 2013; Yao, Dresner & Pal-

mer, 2009). Supply chain technologies (SCT) refer to

“tools and/or techniques that may be implemented in

order to effectuate integrated supply chain manage-

ment within or across organizational boundaries”

(Autry, Grawe, Daugherty & Richey, 2010, p. 523).

The focus of many studies has been on the adoption

of SCT (Liu, Ke, Wei, Gu & Chen, 2010), while little

attention has been paid to SCT utilization (Naraya-

nan, Marucheck & Handfield, 2009). Simply adopting

SCT will not translate to benefits for firms unless such

SCT are actually utilized within existing business pro-

cesses to create capabilities and value (Barney, 1991;

Volume 52, Number 422

Wu, Cegielski, Hazen & Hall, 2013). In this study,

SCT utilization refers to the extent to which a firm

employs, utilizes, or implements SCT in its internal

and external business operations (Narayanan et al.,

2009).

As a subset of traditional information technology

(IT), SCT facilitate the boundary-spanning activities of

a firm (Saldanha, Mello, Knemeyer & Vijayaraghavan,

2015) and enable information sharing and communi-

cation across organizational boundaries (Ellram & Zsi-

disin, 2002; Saeed, Abdinnour, Lengnick-Hall &

Lengnick-Hall, 2010). As such, an understanding of

how to achieve better utilization of SCT or the antece-

dents of SCT utilization in supply chain management

is required (Setia, Sambamurthy & Closs, 2008). Such

an understanding can help managers facilitate SCT

utilization within supply chain networks and thus

increase operational efficiency. Moreover, given that

firms typically spend a large amount of money and

effort in implementing SCT within their supply chains

(Bala & Venkatesh, 2016; Sharma, Chandrasekaran,

Boyer & McDermott, 2016), the understanding of the

performance implications of SCT utilization would be

invaluable for executives, especially for supply chain

managers (Mishra et al., 2013; Narayanan et al.,

2009).

Our primary objective is to understand the drivers

and performance implications of SCT utilization. We

conceptualize SCT utilization as different from SCT

adoption. Our study is based on the assumption that

once SCT are adopted, they may or may not be fully

utilized. We focus on SCT utilization in this study

because in spite of the potential benefits of SCT for

efficient supply chain management, such technologies

are not always utilized as expected (Lee, Palekar &

Qualls, 2011). Anecdotal evidence demonstrates that

supply chain managers have some resistance to the

utilization of SCT (Patterson, Grimm & Corsi, 2004;

Saldanha et al., 2015). For example, consider a supply

chain manager whose firm has just adopted a WMS.

The manager may fully utilize the adopted WMS for

say all aspects of warehouse operations or utilize all

the functionalities of the technology while another

manager might use it for limited aspects of the opera-

tions or simply not use it at all. We thus intend to

investigate why, once adopted, some use it more than

others. We posit that to understand the antecedents of

SCT utilization requires an understanding of the dif-

ferent organizational motivations for adopting the

SCT in the first place, and, specifically how such moti-

vations influence the extent of SCT utilization in

firms. Based on transaction cost economics (TCE)

(Williamson, 1981) and institutional theory (DiMag-

gio & Powell, 1983), we identify two organizational

motivations for technology adoption: an economic

objective of adopting SCT to enhance efficiency and a

normative objective of adopting SCT to attain legiti-

macy (Sodero, Rabinovich & Sinha, 2013; Son & Ben-

basat, 2007). Scholars indicate that while it is

important to understand the motivations for SCT

adoption and their links with SCT utilization (Setia

et al., 2008), it is equally important to understand the

relative effects of the motivating factors on SCT uti-

lization. Such an understanding can help managers in

the selection, adoption, and utilization of the right

technologies and facilitate the diffusion of SCT within

the supply chain network. Thus, the first objective of

this study is to understand how the organizational

motivations (i.e., efficiency and legitimacy) for SCT

adoption relate to the extent of SCT utilization and to

investigate the relative strength of each motivational

factor in explaining SCT utilization.

Additionally, despite a vast amount of research on

the effectiveness of technologies, current technology

adoption literature still indicates inconsistent findings

in terms of the effects of technologies on a firm’s per-

formance, a phenomenon commonly referred to as

the technology productivity paradox (Richey, Daugh-

erty & Roath, 2007). For instance, a literature review

on the adoption of Electronic Data Interchange (EDI)

by Narayanan et al. (2009) indicates inconsistent

findings on the effects of EDI. It is pertinent to note

that many of the current empirical studies addressing

the effects of SCT on performance primarily focus on

the effect of technology adoption on performance. We

argue that the relationships between technologies and

performance are better elucidated when we consider

the relationship between technology utilization and

performance rather than the relationship between

technology adoption and performance. Furthermore,

many studies typically focus on one specific technol-

ogy (e.g., ERP) (Richardson & Dehning, 2007; Wu

et al., 2013), thus lacking a holistic view of the perfor-

mance implications of SCT. Studies have also focused

on the appropriateness or effectiveness of certain tech-

nologies, like the EDI study mentioned above. In the-

ory, technologies are designed to enable solutions to

problems—effectiveness. As such we argue that the

discussion should now move beyond simply investi-

gating whether a particular technology is effective or

appropriate, to understanding how the deployment of

such technology relates to performance. We intend to

address this gap in this study.

Specifically, previous studies have ignored the influ-

ence of contingent factors on the effectiveness of SCT

utilization (Narayanan et al., 2009). Research has

indicated that the effectiveness of SCT relies on effec-

tive information sharing and logistics information

flow between supply chain partners (e.g., Sanders,

2005; Ye & Wang, 2013). However, studies on how

information sharing and logistics integration specifi-

cally interact with the link between SCT utilization

October 2016

Supply Chain Technologies Utilization

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