The Case of the C‐TPAT Border Security Initiative: Assessing the Adoption/Persistence Decisions When Dealing With a Novel, Institutionally Driven Administrative Innovation

• Published date: 01 December 2013
• DOI: http://doi.org/10.1111/jbl.12027
• Date: 01 December 2013

The Case of the C-TPAT Border Security Initiative: Assessing the

Adoption/Persistence Decisions When Dealing With a Novel,

Institutionally Driven Administrative Innovation

Steven A. Melnyk

1

, William J. Ritchie

2

, and Roger J. Calantone

1

1

Michigan State University

2

James Madison University

The current study examines attributes of a diffusion process associated with an institutionally driven administrative innovation (IDAI) that

was designed to mitigate international supply chain logistic risk. Using a sample of firms who adopted this type of administrative innova-

tion (AI), we find that managers’adoption and persistence decisions differed from observed behaviors associated with economically driven AIs.

For example, with IDAIs, large firms are the characteristic early adopters and the innovation persists in spite of a lack of a clearly compelling

economic rationale for its continued support. These findings are drawn from an analysis of respondent data pertaining to Customs-Trade Part-

nership Against Terrorism—an AI that has been previously identified as being an example of such a development. The results prompt us to

rethink on the mechanisms governing AI adoption and persistence decisions and enhance the theoretical richness surrounding research into not

only IDAIs but also other related areas such as certified management standards.

Keywords: bandwagon; administrative innovation; standards; innovation diffusion

INTRODUCTION

Since its introduction in 1982, supply chain management has

experienced a continuous evolution and growth (Kransdorff 1982).

It has been shaped by developments such as Lean/Just-in-Time

(e.g., Womack and Jones 1996), Total Quality Management

(TQM; e.g., Crosby and LeMay 1998), Agile Manufacturing (e.g.,

Thomas et al. 2006), outsourcing (e.g., Hofer et al. 2009), and the

introduction of Third-Party Logistics (e.g., Bolumole 2003; Alex-

ander et al. 2010). With an emphasis on new methods to improve

business processes, these developments can be regarded as exam-

ples of administrative innovations (AIs). The concept of AIs recog-

nizes that an innovation is not simply limited to products and

services, but can also be applied to processes. By viewing supply

chain developments through the lens of AI frameworks, this study

offers fresh insights relating to adoption decisions associated with

new supply chain initiatives. It is noteworthy that this approach is

not unique; similar applications have been used previously in the

study of strategic initiatives (e.g., O’Neill et al. 1998).

Past research has shown that when managers are presented

with AIs, they are primarily concerned with two basic decisions:

(1) adoption (i.e., whether to adopt the innovation, and if yes,

when?); and (2) persistence (i.e., do the resulting adoption bene-

fits and costs justify the continued usage of the innovation?).

Both decisions are based on two important assumptions. First,

AIs are assumed to be economically driven. That is, the AI has

inherent potential economic benefits that might outweigh the

costs. As such, the adoption timing of an AI reflects the ability

to provide greater benefits for a given price, or through differen-

tiation—by cost reductions that lower prices for a given quantity

with increased quality (see, e.g., Westphal et al. 1997; O’Neill

et al. 1998; Terlaak and King 2007). Second, past research has

examined AIs with the assumption that they are either new to

the industry or new to the firm. In these cases, past experiences

with an AI in other industries or firms have enabled managers to

better assess adoption costs and benefits (e.g., Westphal et al.

1997).

Recently, however, supply chain managers have encountered a

new type of AI—one that does not satisfy the traditional assump-

tions. That is, these AIs offer no initial economic benefits and

are so novel that they have no record of application in other

firms or industries. These conditions render it impossible to

effectively perform a cost–benefit analysis prior to adoption. In

an effort to deal with this issue, the purpose of this study is to

address the following two questions:

•What happens when AIs violate traditional assumptions of

economic attributes and moderate levels of novelty?

•How does the violation of these two assumptions affect the

issues of adoption and persistence?

To address these two questions, this study examines Customs-

Trade Partnership Against Terrorism (C-TPAT) (see http://www.

cbp.gov/xp/cgov/trade/cargosecurity/ctpat/ for more information),

a voluntary supply chain security partnership involving Customs

and Border Protection (CBP) and industry. At the heart of C-

TPAT is a simple but critical proposition. Firms that agree to

participate in C-TPAT and achieve C-TPAT certification will

receive preferential terms at border crossings which include

reduced probabilities of being selected for inspection, and prior-

ity when waiting for inspection, including reduced border delays

and customs inspections. In exchange, these firms agree to

assume formal responsibility for ensuring the security of their

Corresponding author:

Steven A. Melnyk, Department of Marketing and Supply Chain

Management, Eli Broad College of Business, Michigan State Univer-

sity, 632 Bogue Street, East Lansing, Michigan 48824-1122, USA;

E-mail: melnyk@msu.edu

Journal of Business Logistics, 2013, 34(4): 289–300

© Council of Supply Chain Management Professionals