Accepted Manuscript

Title: Alignments between Depth and Breadth of

Inter-Organizational Systems Deployment and Their Impact
on Firm Performance

Author: Cheng Zhang Ling Xue Jasbir Dhaliwal

PII: S0378-7206(15)00088-9
DOI: http://dx.doi.org/doi:10.1016/j.im.2015.08.004
Reference: INFMAN 2835

To appear in: INFMAN

Received date: 9-11-2013

Revised date: 11-6-2015
Accepted date: 23-8-2015

Please cite this article as: C. Zhang, L. Xue, J. Dhaliwal, Alignments

between Depth and Breadth of Inter-Organizational Systems Deployment and
Their Impact on Firm Performance, Information and Management (2015),
http://dx.doi.org/10.1016/j.im.2015.08.004

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Alignments between Depth and Breadth of Inter-Organizational Systems

Deployment and Their Impact on Firm Performance

Cheng Zhang

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Department of Information Management and Information Systems,

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School of Management
Fudan University, Shanghai, China

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Email: zhangche@fudan.edu.cn

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Ling Xue (corresponding author)
Department of Information Systems & Supply Chain Management
Joseph M. Bryan School of Business and Economics

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The University of North Carolina at Greensboro
PO Box 26170, Bryan 479
Greensboro, NC 27402, USA
Email: l_xue@uncg.edu Tel: (336) 334-4992
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Jasbir Dhaliwal
Department of Management Information Systems
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Fogelman College of Business & Economics

The University of Memphis, Memphis, TN 38152, USA
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Email:jdhaliwl@memphis.edu
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 Alignments between the Depth and Breadth of Inter-Organizational Systems
Deployment and Their Impact on Firm Performance

Abstract

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This paper explores the performance impact of alternative deployment alignment strategies for
inter-organizational systems (IOS) in the supply chain context. Based on the asset orchestration

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perspective, we consider two deployment alignment strategies, namely, balanced alignment and
reinforcing alignment, which represent strategic choices made by firms in relation to the emphases

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placed on depth and breadth of IT deployment in supply chain operations. The results of our empirical
study show that the depth and breadth of IOS deployment enhance a firm’s competitive performance
through operational improvement, and the balanced alignment between IOS depth and breadth

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enhances the firm’s competitive performance.

Keywords: Asset Orchestration, Inter-Organizational Information Systems, Reinforcing Alignment,

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Balanced Alignment, Supply Chain Management
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1. Introduction
Many innovative practices in supply chain (SC) management have been developed based on the
intensive usage of IT [1-3], such as IT-based collaborative planning, forecasting and replenishment
(CPFR) [4]; standards-based vertical information systems [5]; supply chain partnerships management
based on electronic business interactions [6]; and digitalized inter-organizational business process

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standards such as Rosettanet [7]. In addition, firms are increasingly deploying IT to broaden the scope

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and strengthen the extent of collaboration with supply chain partners in order to sense and respond to
market demands quickly [8]. A key feature of IT-based supply chain coordination is the shift from

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connection of physical processes to the electronic integration of inter-firm processes and information
with supply chain partners [9]. Firms invest in various inter-organizational systems (IOS), such as

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electronic data interchange (EDI), Rosettanet-based systems, and business-to-business electronic
exchanges, to realize such electronic integration in supply chain management [42, 84]. Accordingly,
recent studies have considered supply chain management as a digitally enabled inter-organizational

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capability and viewed IOS as typical modern supply chain management systems [13].

Despite the general arguments on the benefits of IOS (for achieving SC integration), both academia
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and industry observers have long been concerned about the continued slow, painful process and many
cases of failure to realize the performance value of IOS [10-13]. While industry observers are usually
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concerned with the overall impact of IOS on performance [14, 15], academia has recognized the need
to adopt a more in-depth configuration analysis to consider the alignment between interdependent
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strategies of IOS adoption [11, 16]. A recent stream of literature has also suggested that IOS success
is dependent on the contingent fit among various deployment strategies, structures and contexts rather
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than the separate effects of them [17, 18]. This key idea is consistent with views in other literature on
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how the joint effects of multiple asset configuration and deployment dimensions contribute to the
firm’s performance and competitive advantage [19-21] . Industry reports also have revealed the
increasing differentiation of breadth and depth of firms’ IOS deployment and foreseen firms’ future
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competitive advantage from better leveraging both dimensions for strategic usage [22].

In line with the logic in these streams of literature, in this study, we consider how the alignment
between different dimensions of IOS deployment contributes to firm performance in the supply chain
context. We first examine the effects of specific IOS deployment dimensions, i.e., depth and breadth,
on firm performance. In addition, we explore the performance impact of the alignment between these
two IOS deployment dimensions. The consideration of alignment between these two dimensions is
nontrivial, as research in supply chain integration suggests that managers may focus differently on
these dimensions in different stages of building supply chain relationship [23]. However, the extent to

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which the alignment between these two dimensions contributes to performance is still not conclusive.
We propose that firms can better leverage IOSs by not simply pursuing IOS deployment along each
individual dimension, but selectively align between these IOS deployment dimensions in alternative
manners, such as in balanced or reinforcing manners that prioritize depth versus breadth functionality
differently. Our attempt to better understand the impact of such alternative alignment mechanisms of

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IOS deployment on firm performance is relevant to the consideration of net-enabled business value

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[12] and IT-enabled business value – a central issue in IS research [8, 24]. While we expect that both
the depth and breadth of IOS deployment are beneficial to the firm in operational improvement, an

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in-depth investigation on the alignment between these two dimensions should provide more insight
into how firms gain performance improvement from the deployment of IOS, especially long-term

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performance improvement. This investigation should also generate important managerial implications
on how firms achieve competitive advantage by appropriately configuring various aspects of IOS
deployment in supply chains.

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We conducted an empirical investigation to test our hypotheses using a sample of Chinese firms. Our
study generates important findings regarding how IOS depth and breadth separately as well as jointly
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contribute to firm performance. First, our results suggest that IOS depth and breadth both contribute to
the firm’s operational improvement, and enhance the firm’s competitive performance through
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operational improvement. However, our results also indicate that the direct effects of IOS depth and
IOS breadth on competitive performance of the firm are limited. Second, our findings suggest that the
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balanced alignment between IOS depth and IOS breadth contributes to the firm’s competitive
performance, which implies that the firm gains long-term competitive advantage by maintaining
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balanced development in IOS depth and IOS breadth. However, the reinforcing alignment between
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IOS depth and IOS breadth does not appear to significantly enhance the firm’s competitive
performance, which implies that the intensive development in either individual dimension of IOS
deployment does not necessarily enhance the marginal impact of the other dimension on the firm’s
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competitive performance. Therefore, the potential disproportional development in individual

dimensions of IOS deployment may not be justified. Furthermore, we do not find that the alignment
between IOS depth and IOS breadth significantly contributes to the firm’s operational improvement,
which further suggests that alignment of IOS deployment dimensions is more of a strategic concern
on long-term resource commitment than a tactical concern on operational improvement.

The rest of this paper is organized as the follows. In Section 2, we present the theoretical foundation
of this study and develop hypotheses. Section 3 explains the data and methodology used in the
empirical analysis. Section 4 presents the results of empirical analysis. Finally, Section 5 discusses the

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theoretical and managerial implications of the study and concludes the paper.

2. Theoretical Background and Hypothesis Development

We draw on insights from the asset orchestration perspective, e.g., [25], to investigate alternative
configurative approaches that relate to how firms deploy IOS assets in the context of the supply chain.

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The asset orchestration perspective suggests that firms can make more effective use of limited

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resources and assets by configuring resource deployment mechanisms [25]. Resource deployment
mechanisms include managerial actions and processes in search, selection, configuration and

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deployment of a firm’s assets; they can serve as mediators between firms’ resources and performance
[20, 26]. The impact of a resource deployment mechanism is therefore a function of the firms’

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managerial abilities to coordinate specialized assets, provide vision and nurture innovation [27].

Supply chain management (SCM) is widely accepted as an important value creation approach to

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improving supply chain operational performance [28, 29]. Concepts such as value-added chain [30]
and value network [31] in the SCM literature consider supply chains as a set of sequential organized
inter-firm processes that add value to material assets or products in a successive way [32]. As business
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environments have become more turbulent, firms that can leverage their assets, information and
knowledge more effectively are more likely to capitalize on emerging opportunities, as well as attain
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superior performance [33]. However, asset management and optimization processes are complex as
suppliers are external to the firm and leveraging resources to link with partners through IOS is
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challenging.
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Information systems that are forged through relationships between IT assets and organizational
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resources, such as IOSs for supply chain management, are firms’ valuable resources and assets that
can positively influence firms’ performance [34, 35]. System utilization and deployment can realize
systems’ value in improving firms’ new capabilities and performance [36-38]. It is important to note
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that even though an IT system has the potential to improve firm performance, its value cannot be
realized without an appropriate deployment mechanism. From a process-oriented perspective [37],
specific IT applications in supply chain management, such as B2B e-commerce, can improve
operational performance only when they are used appropriately in business processes (e.g., to enable
better decision making, improve operational efficiency, and increase coordination flexibility). Barua et
al. (1995) analyze an intermediate process of usage-linked IT and show how it improves firm
performance. Following this logic, Zhu and Xu (2004) further develop a technology usage depth
model to link IT usage to value realization. In this paper, we focus on firm-level IOS deployment
configuration to consider the deployment-performance link.

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The utilization of innovation and knowledge assets can be characterized primarily along two
dimensions: depth and breadth [21, 39]. The former concerns the intensity and scale of asset
utilization and the latter concerns the diversity and scope of asset utilization. Based on this logic, we
consider the depth and breadth of IOS usage as two underlying building blocks for deployment

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strategies. Depth of IOS refers to the scale of a firm’s IOS usage that complements other

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organizational practices to integrate with its supply chain partners, and breath of IOS refers to the
scope of a firm’s IOS usage. Firms with in-depth IOS usage often integrate and collaborate with

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partners tightly while firms with broad IOS usage often cultivate more inter-firm relationships. These
two dimensions of system usage also have been examined in other studies of various IT systems, such

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as EDI [40, 41], e-business [36] and IT standards [42].

When firms engage in IT-enabled supply chain management, both operational and strategic

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competitive performance can be improved [43, 44]. IT-enabled operational performance reflects in
improvements in business process efficiency, such as better inventory control, improved customer
service, reduced cost, or reduced response time, while strategic competitive performance reflects in
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improvement in the firm’s overall competitive advantage and better partner relationships [45]. In this
study, we follow the literature to consider both operational performance and competitive performance.
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2.1 Effects of IOS depth and breadth on operational improvement

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Inter-organizational systems are used as an important way to enhance performance by involving

partners and customers in value co-creation, as external partners and customers have become more
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engaged in focal firms’ product/service design and delivery processes. Many emerging business
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models/processes (e.g., distributed co-creation, the extended enterprise, networked organizations, and
self-service in organizations) are inspired by this rapidly shifting IT environment [46]. Understanding
how IOS usage can facilitate greater partner engagement in supply chain management is therefore
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critical to both operations management and information technology research. A critical tactical
consideration is how successful a firm has been and how willing it appears to be in establishing
electronic linkages to interact with customers, suppliers and other partners in supply chains for
offering new opportunities to develop dynamic capabilities by joint creation of IT-based value. The
more willing a firm is to improve its operations and business processes by leveraging inter-firm
electronic linkages, the more likely that the firm is to succeed in adapting to and competing in the fast
changing information environment.

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In this study, we consider the firm’s operation improvement as the enhancement that IOS deployment
causes to various aspects of the firm’s business operations, including cost reduction, better inventory
management, and better customer services [47, 48]. When the firm increases the depth of IOS
deployment with a specific partner, it digitizes its supply chain interaction with this supplier to a
greater extent. The higher level of digitization enables the firm to improve business operations by

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lowering transaction and production costs, and automating and rationalizing business processes [47].

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In addition, the higher level of digitization allows the firm to develop inter-firm capabilities to better
exchange information, cooperate, and collaborate with its supply chain partners [49]. Such capabilities

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benefit the firm in teaming with the partners to better serve customers. When the firm increases the
breadth of IOS deployment, it extends supply chain digitization and can benefit from digitization in its

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interactions with more suppliers. Therefore, we expect that IOS depth and IOS breadth both lead to
operational improvement for the firm. Therefore, we hypothesize:
H1a: Depth of IOS deployment is positively associated with the operational improvement of the

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firm.
H1b: Breadth of IOS deployment is positively associated with the operational performance of the
firm.
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Previous IS literature suggests that the implementation of IT-enabled business processes and models
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brings the firm various benefits, including operational improvement, enhanced competitive advantage,
and improved business relationships with supply chain partners [43, 44, 47, 48]. While the
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improvement in operational performance (performance relating to the efficiency of specific business

processes, such as inventory control, customer service, cost, and response time [44]) is likely to be
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achieved in the short term, improvement in competitive advantage and overall supply chain
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coordination can only be achieved in the long term. Competitive advantage reflects the firm’s superior
market performance relative to their competitors [48], which requires the firm’s long-term
commitment of strategic resources [35]. Overall supply chain coordination reflects the firm’s
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capability of maintaining good relationships with its supply chain partners and appropriate the gains
in the overall supply chain performance. The appropriation of gains in supply chain performance
essentially reflects the firm’s competition with its partners for the economic surplus to achieve
long-term profitability [35], and the premise of this competition is long-term sustainable partner
relationships in the supply chain. Therefore, in this study, we consider the firm’s competitive
performance as its long-term competitive advantage over its competitors and the good supply chain
relationships that sustain long-term profitability.

In accordance with the literature on IT business value, firms’ operational improvement is an

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intermediate dependent variable at the process level that leads to their competitive performance [44,
50]. In the supply chain context, the implication is that the resource value is achieved through the use
of operational processes such as inventory management, information exchange and customer service,
which consequently improves overall supply chain performance such as productivity and competitive
advantage. Consistent with this perspective, the literature has suggested that process level

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performance should be highly correlated with competitive performance and that a sequential

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relationship exists between the two types of performance measures [2].

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By supporting operational improvement of the firm, the depth and breadth of IOS deployment should
enable the firm to achieve long-term competitive performance. For example, the operational

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cost-efficiency realized by greater supply chain digitization through IOS depth allows the firm to
establish long-term cost advantage over its competitors. Streamlined inter-firm business processes
supported by IOS depth enable the firm to collaborate with its suppliers to jointly improve customer

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service quality and establish market advantage [51]. IOS breadth provides the firm the capability of
maintaining a large portfolio of potential suppliers and the flexibility to choose the most efficient
suppliers to improve operations. Such strategic flexibility should eventually lead to the long-term
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competitive advantage for the firm. Therefore, we hypothesize that IOS depth and IOS breadth
contribute to the firm’s competitive performance through operational improvement:
H2a: Depth of IOS deployment enhances the firm’s competitive performance through operational
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improvement;
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H2b: Breadth of IOS deployment enhances the firm’s competitive performance through operational
improvement.
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2.2 Strategic Alignment in IOS Deployment and Competitive Performance

With deployment features of breadth and depth, IOS represent a versatile service that can provide
balance between the scale for operational efficiency and the scope for customization. Firms with
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effective IOS deployment in both the breadth dimension and the depth dimension are likely to
outperform those that are more loosely connected [52]. Treating the depth and breadth as building
blocks of a firm’s key value creation and IT deployment mechanisms, the asset orchestration
perspective suggests that firms’ competitive performance ultimately depend on the joint effects of
these building blocks rather than the independent effects of these building blocks themselves [20, 53].
As Massetti and Zmud stated in relation to electronic data interchange (EDI), an
information-exchange type IOS, “when breadth and depth are considered together strategically, EDI
use becomes a versatile service that attracts new and old customers while improving internal
operating efficiency (Jelassi and Figon, 1994). Because each facet emphasizes its own set of

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considerations and impacts, initiatives that apply a limited view of EDI tend to produce ambiguity
regarding exactly how the organization will benefit from EDI use” (Massetti and Zmud, 1996,
p.341-342). So in this study, we consider how the joint deployment of both breadth and depth of IOS
may enhance the firm’s competitive performance.

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In considering the joint effects of different asset deployment strategies, the asset orchestration

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perspective suggests that the fit between these strategies is important for realizing the value of
strategic assets [27]. The literature on strategy alignment has identified “fit as matching” (FMA) and

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“fit as moderation” (FMO) as two distinct mechanisms of strategic fit [54]. FMA concerns the balance
between two strategic movements and suggests that the joint impact of two strategic movements is

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maximized when the two movements are comparable in magnitude. FMO concerns the
complementarity between two strategic movements and suggests that two strategic movements may
reinforce each other’s marginal impact on firm performance. Following this logic, this study focuses

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on two types of alignment between the depth of IOS deployment and the breadth of IOS deployment.
We consider “balanced alignment” as the case where the firm maintains comparable levels of IOS
depth and IOS breadth, reflecting the idea of FMA. Likewise, we consider “reinforcing alignment” as
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the case where the firm increases IOS depth or IOS breadth to increase the marginal impact of the
other IOS deployment dimension on firm performance, reflecting the idea of FMO. For example,
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suppose the firm adopts IOS to electronically coordinate with some, but not all, of its suppliers. In this
case, the firm maintains an intermediate level of IOS breadth. If the firm invests intensively on IOS
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depth to focus on more in-depth coordination with only this subset of suppliers, hoping to
significantly enhance the marginal contribution of this subset of supplier coordination to the overall
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performance, the firm actually pursues a reinforcing alignment strategy. In contrast, if the firm also
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maintains a moderate level of IOS depth with its current electronically linked suppliers (to match with
the moderate level of IOS breadth) and uses resources evenly to improve IOS breadth and IOS depth
subsequently, the firm actually pursues a balanced alignment strategy.
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The underlying difference between balanced alignment and reinforcing alignment can also be
illustrated mathematically as follows. Assume that a firm allocates a proportion of X of its resources
to improve the depth of IOS deployment and a proportion of Y to improve the breadth of IOS
deployment. Balanced alignment and reinforcing alignment determine how IOS depth and IOS
breadth jointly influence firm performance. The performance effect of balanced alignment can be
illustrated as 1-|X-Y|, a reversed form of |X-Y| so that the balance between X and Y maximizes this
term. In contrast, the performance effect of reinforcing alignment can be illustrated as X*Y as the
increase in X or Y may potentially increase the marginal performance impact of the other. It should be

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noted that similar logic has also been applied in the studies of ambidexterity in corporate strategy,
which suggests that the ambidextrous use of exploitation and exploration may generate reinforcing
and/or balanced effects on firm performance measures (e.g., sales growth, long-term profitability and
survival) [55, 56].

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By explicitly distinguishing between the two alignment mechanisms, we further explore how the

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deployment of IOS depth and IOS breadth influence the firm’s competitive performance. We focus on
competitive performance because alignment strategies essentially capture the firm’s strategic

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commitment of resources, the effects of which may be manifested more in long-term firm competition.
We propose that the relationship between IOS depth/breadth and the firm’s competitive performance

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is more complex than can be captured using independent direct effects of IOS depth and breadth.
Balanced alignment and reinforcing alignment capture how the firm, by strategically committing and
allocating its resources in different ways, may jointly leverage the effects of IOS depth and breadth to

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improve competitive performance in the long term. Despite the growing research focus on the need
for appropriately arranging different IT deployments in the supply chain context [17], empirical
evidence on a clear fit between different deployment strategies has so far been largely inconclusive.
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Our investigation tends to address the gap in the literature.
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The central idea of balanced alignment is that a closer match in a firm’s investment on two relevant
activities benefits its competitive performance through more structured control of activity cost and
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risk, while an imbalance may threaten performance by increasing such risk. For example, the
literature on organizational ambidexterity argues that a firm is more likely to face the risk of
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obsolescence when it overemphasizes exploitation and is more likely to face the risk of inefficient
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return when it overemphasizes exploration [55]. As a firm’s activities usually compete for its scarce
resources, a balance alignment strategy may help it to better manage its performance-risk tradeoff [57].
Considering the dynamics of innovation, researchers also argue that a balanced adoption of different
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innovations would more likely to boost firms’ performance [58].

In line with the literature, we expect that balanced alignment between IOS depth and IOS breadth
contributes to the firm’s competitive performance. Although the depth and breadth of IOS deployment
are critical for firms, the strategic movements along these two distinct dimensions compete for scarce
resources [57]. As a result, firms may have to tradeoff between them. The intensive investment in one
dimension is often made at the expense of lag in the other one. The imbalance between the depth and
breadth of IOS deployment, however, is likely to pose challenges to the firm in competitive
performance. For example, when the firm focuses much more on depth than breadth in IOS
deployment, it ties itself closely with a subset of suppliers but keeps loose relationships with others. In

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Page 10 of 27
this case, the imbalance makes the firm subject to the risk of over-dependence on certain supply
relationships and lack of capability to adapt to relational uncertainty. The unbalanced depth of IOS
usage across different supplier interactions also complicates the firm’s partner relationship
management over time. On the other hand, when the firm focuses much more on breadth than depth in
IOS deployment, it may lag behind its competitors and its partners in keeping up with the
technological advances and digitizing more in-depth business processes. Such a lag in IOS depth may

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also result in overall supply chain inefficiency and hurt the firm’s competitive performance. In this

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regard, the balance in allocating resources to improve both dimensions of IOS deployment is critical
for the firm to avoid the bottleneck in either dimension that may impede its benefiting from supply

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chain digitization strategies. Therefore, we propose the following hypothesis:
H3a. Balanced alignment between the breadth and depth of IOS deployment is positively associated

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with the firm’s competitive performance.

In addition to balanced alignment, reinforcing alignment is another potential way through which IOS

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depth and breadth may jointly enhance a firm’s competitive performance, even with unbalanced levels.
The central idea of reinforcing alignment is that the depth and breadth of IOS deployment may be
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complementary to each other and may reinforce each other’s marginal impact on the firm’s
competitive performance. Studies have noted that the IT-enabled integration of different inter-firm
coordination is an emergent capability to create competitive advantage [12, 38, 59]. The literature on
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organizational ambidexterity also suggests that a firm’s resource-committing strategies, such as

exploitation and exploration, can be aligned with each other in a reinforcing way to achieve strategic
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advantages in hypercompetitive environments [55].

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In line with the literature, we contend that IOS depth and breadth are likely to complement each another in
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enabling the firm to leverage coordination efficiency. For example, when the firm increases the breadth
of IOS deployment to electronically link with more of its suppliers, it builds a better infrastructural
platform for supplier management. Based on this platform, any collaborative experience that the firm
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obtains through the depth of IOS deployment with specific suppliers can be more easily applied to
other supplier interactions. Therefore, a higher degree of IOS breadth can also enhance a firm’s overall
coordination capability with partners. Over time, the breadth-oriented platform allows the depth
dimension of IOS to contribute more to the firm’s competitive advantage. Likewise, the experience
that the firm acquires through in-depth IOS-based collaboration with existing suppliers also provides
it with the capability and flexibility to effectively build more electronic relationships with new
suppliers. Therefore, a higher degree of IOS depth can improve a firm’s flexibility and responsiveness to
adapt to market changes timely and efficiently. As a consequence, depth-oriented collaboration allows
the breadth dimension of IOS to contribute more to the firm’s competitive performance over time.

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Page 11 of 27
Such mutual complementarity between the depth and breadth of IOS deployment may justify a certain
degree of imbalance between the depth and breadth of IOS deployment. Hence, we propose the
following hypothesis:
H3b. Reinforcing alignment between the breadth and depth of IOS deployment is positively associated
with the firm’s competitive performance.

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Figure 1 illustrates the research model of this study. In addition to the key constructs explained above
(depth and breadth of IOS deployment, operational improvement and competitive performance), we

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also include in the model some controls, such as firm size (measured by employee amount), firm
revenue (one-year lagged value), firm tenure, IS experience of IOS implementation (measured by the

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years of their IOS experience), and the industries that firms operate in.

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Balanced Alignment btw
IOS Depth
IOS Depth and Breadth
H3a

H1a
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H2a,b
Operational Improvement Competitive Performance
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H1b
H3b
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Control Variables
Reinforcing Alignment btw Firm Size
IOS Breadth
IOS Depth and Breadth Firm Revenue
Firm Industry
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Firm Tenure
Firm IS Experience
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Figure 1: Research Model

3. Research Method and Data Analysis

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We used a survey method to validate the proposed research model. An initial sampling frame included
firms listed on the China Stock Exchange’s Listed Company Directory and firms with senior
operations and technology executives attending a university’s MBA program in Shanghai. From these
sources, we mailed out a questionnaire to a total of 1,020 potential respondents. Altogether, 101 valid
questionnaires were collected through multiple rounds of contact. Table 1 presents the demographic
profiles of the respondent firms. Firms’ size in term of employee amount and annual revenue are
evenly distributed among the respondent firms. The respondents are at manager level with a good
balance between technology and business units.

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 Industry % Annual Revenue (in million dollars) %
Architecture/Engineering 6 <1 4

Business services 1 1–5 7

Chemicals 5 5–10 14

Computer/IT-related 17 10–50 15
2 12

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Finance/Banking/Insurance 50–100

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Manufacturing 41 100–1000 19

Pharmaceutical/Medical/Health Care 3 >1000 17

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Real Estate/Property 2 N/A 13

Retail/Trading 10 Respondent Title %

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Transportation 3 IT/Operations Manager 42

Travel/Tourism/Hotel 1 Business Unit Manager 39

Other 5 General Manager/Senior Director 7

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N/A 5 N/A 13

Number of Employees % Respondent Work Experience (in years) %

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< 100 9 <5 24

100–500 11 5–10 42

500–1000 11 10–20 21
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1000–2000 18 >20 3
18 11
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2000–5000 N/A
> 5000 21
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p

N/A
Table 1. Sample Characteristics N = 101
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We used the partial least squares (PLS) to examine the model and hypotheses by SmartPLS [60]. A
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common rule of thumb for sample size requirement is 10-times of the construct number affecting the
same construct [61]. Our sample size is above the minimum requirement for sample size.

Most of the constructs in this study were adopted from the established literature and adapted to the
context of this study. As shown in Appendix A, multiple-item measures were used to assess the
research constructs. All items were measured using a 7-point rating scale. The items for measuring
depth of IOS deployment capture the extent of IT support in five key internal operations in supply
chain collaboration [62]: supplier selection (getting quotes, bids, etc.), purchase-order processing,
procurement from suppliers (distribution, warehousing, logistics, etc.), invoicing and payment
processing, and demand management and procurement analysis. The items for measuring breadth of
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Page 13 of 27
IOS deployment capture the extent to which a firm has developed IT-based interactions with most of
its trading partners [40, 63]: how many suppliers the firm had interacted with, total supplier
transactions, and overall supplier interactions handled electronically. The impact of IT for supply
chain operations on performance was captured at two levels: the operational level and the competitive
level. Operational improvement was measured by the extent of firms’ improvement in customer

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service, cost reduction, inventory management, and cycle-time reduction. Competitive performance

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was measured by the extent to which the firms’ supply chain relationships and competitive advantage
improved. Items were adapted from [44, 64, 65].

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Following conceptualization we argue before, the performance effect of balanced alignment and

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reinforcing alignment are calculated as the reversed term of absolute extent difference between IOS
depth and breadth, i.e. 1-|IOS depth – IOS breadth|, where IOS depth and breadth is standardized
before calculation, and the product term of IOS depth and breadth , i.e. IOS depth * IOS breadth,

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where IOS depth and breadth is standardized before calculation The two variables are therefore the
single-item measures..
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To validate the instruments, we examined internal consistency, convergent validity, discriminant
validity and common method variance. We used composite reliability to evaluate internal consistency.
d
In PLS, composite reliability relies on actual loadings to compute the factor scores. As shown in Table
2, the composite reliability values for the constructs in the model were all above the suggested
te

threshold of 0.7 [66, 67].

p

Construct and Items Loading

ce

Depth of IOS deployment (composite reliability = 0.94 , AVE = 0.76)

Extent to which such applications (such as web-based B2B operations) are used in—
Supplier selection (getting quotes, bids, etc.) 0.84
Ac

Purchase-order processing 0.87

Procurement from suppliers (distribution, warehouse, logistics, etc.) 0.90
Invoicing and payment processing 0.87
Demand management (procurement analysis) 0.87
Breadth of IOS deployment (composite reliability = 0.98, AVE = 0.94)
Proportion of total suppliers who interact with firm through B2B supply chain 0.96
applications
Proportion of total supplier transactions done through B2B supply chain applications 0.98
Proportion of overall interactions with suppliers carried out through B2B supply 0.96
chain applications

14

Page 14 of 27
 Operational improvement (composite reliability = 0.93, AVE = 0.76)
Perceived benefits realized in:
Improved customer services 0.83
Better inventory control 0.89
Reduced operations costs 0.88
Reduced cycle time 0.87

t
Competitive performance (composite reliability = 0.94, AVE = 0.88 )

ip
Perceived benefits realized in:
Better overall supply chain coordination 0.94

cr
Greater competitive advantage 0.94
Table 2. Results of Confirmatory Factor Analysis (p < 0.01). CR = Composite Reliability, AVE = Average

us
Variance Extracted.

an
We performed convergent validity by measuring items’ factor loadings and construct’s average
variance extracted (AVE). As shown in Table 2, all items had a loading above the suggested 0.55 [68].
The AVE values for all constructs were above the limit of 0.50 as commonly suggested [69]. All
M
estimated standard loadings were significant at the 0.01 level. In summary, convergent validity was
supported.
d

We examined discriminant validity at the construct level. Table 3 presents each construct’s
te

inter-correlations and the square root of its AVE. In every case, the square root of the AVE was greater
than the correlation coefficient with any other construct.
p
ce

ID IB BA RA OPI SPI
IOS Depth (ID) 0.87
IOS Breadth (IB) 0.68 0.97
Ac

Balanced Alignment (BA) -0.03 -0.11 1

Reinforcing Alignment (RA) -0.12 0.02 -0.47 1
Operational Improvement (OPI) 0.57 0.52 0.01 -0.02 0.87
Strategic Improvement (ORI) 0.54 0.44 -0.14 0.03 0.84 0.94
Table 3. Correlations of Latent Variables (The bolded numbers in the diagonal row are square roots of the
average variance extracted.)

We further conducted Harmon one-factor test [70] and additional single method approach [71-73] to
measure the extent of common method variance [74, 75]. Result from Harmon one-factor test

15

Page 15 of 27
suggests that neither a single factor emerged from confirmatory factor analysis nor one general factor
accounted for the majority of the covariance among the measures. Result from additional single
method approach, i.e. the addition of a method factor was introduced to test the adjusted model,
showed that while the adjusted model remained significant, the method factor only accounted for 2%
of the variance of dependent variables. Results from these tests suggest that common method variance

t
is not a pervasive problem in this analysis.

ip
4. Results

cr
Results of the analysis are shown in the model in Figure 2. As indicated by the path loadings, both IOS
depth and breadth have significantly positive effects (β=0.449, SE=0.115, p<0.01; and β=0.217,

us
SE=0.101, p<0.05, respectively) on firms’ operational improvement. These results provide support for
H1a and H1b. In addition, the path coefficient from operational performance to competitive
performance is positive and significant (β=0.862, SE=0.040, p<0.01). Jointly considering this positive

an
impact of operational improvement on competitive performance, and the positive effects of IOS depth
and breadth on operational improvement, we find that IOS depth and breadth generate significant
indirect effects on competitive performance through operational improvement. Specifically, Sobel
M
tests suggest both the indirect effect of IOS depth on competitive performance (β=0.387, SE=0.101,
p<0.01) and that of IOS breadth (β=0.187, SE=0.087, p<0.05) are positive and significant. Therefore,
d
H2a and H2b are supported.
te

Balanced Alignment btw

IOS Depth
IOS Depth and Breadth
p

0.178**

0.449***
ce

0.862***
Operational Improvement Competitive Performance
Ac

R2=0.449 R2=0.738
0.217**
-0.032
Control Variables
Reinforcing Alignment btw Firm Size
IOS Breadth
IOS Depth and Breadth Firm Revenue**
Firm Industry
Firm Tenure
Firm IS Experience

Figure 2. PLS Structure Model *:p<0.1, **:p<0.05, ***p<0.01

Regarding the two types of IOS deployment alignment, the results indicate that the balanced
alignment has a significantly positive effect on firms’ competitive performance (β=0.178 SE=0.086,

16

Page 16 of 27
p<0.05). This means that the better that the firm balances between IOS depth and IOS breadth, the
more competitive performance that the firm achieves. Therefore, H3a is supported. However, the
effect of reinforcing alignment on competitive performance is not significant (β=-0.032 SE=0.054,
p>0.1). This result suggests that the increase of either dimension of IOS deployment does not
significantly increase the marginal impact of the other dimension on competitive performance.

t
Therefore, H3b is not supported. The results on H3a and H3b in general suggest that the firm is better

ip
off balancing between the resources committed to improving these two dimensions of IOS
deployment. Unilaterally increasing one dimension does not necessarily result in the complementary

cr
effect that improves the performance contribution of the other dimension.

us
Regarding the rival explanations on the performance variation, in our analysis, most of the control
variables do not play a significant role in explaining the performance variation, except firm revenue.
The significant effects of firm revenue on operational improvement and competitive performance

an
(p<0.05) suggest that firms with larger operational scales are more likely to achieve performance
improvement. Also, as shown in Figure 2, the key constructs of operational improvement and
competitive performance have reasonably good R2 values (0.449 and 0.738, respectively), suggesting
M
the important roles of the depth and breadth of IOS deployment and the alignment between them in
explaining the firm’s performance improvement.
d

To ensure the robustness of our findings, we have also conducted additional analyses with alternative
te

model specifications. Figure 3 illustrates the results of a model incorporating both the direct effects of
IOS depth and IOS breadth on competitive performance, and the effects of balanced alignment and
p

reinforcing alignment on operational improvement.

ce
Ac

17

Page 17 of 27
 0.132

Balanced Alignment btw

IOS Depth
IOS Depth and Breadth

0.462*** 0.168**
0.057

t
ip
0.786***
Operational Improvement Competitive Performance

cr
R2=0.453
R2=0.752
0.068

us
0.213** Control Variables
-0.004
Firm Size
Reinforcing Alignment btw Firm Revenue**
IOS Breadth
IOS Depth and Breadth Firm Industry
Firm Tenure

an
Firm IS Experience
0.059

Figure 3: Robustness Analysis with An Alternative Model Specification.

M
The results indicate that there is no significant direct effect of either IOS depth or IOS breadth on
competitive performance (β=0.132, SE=0.103, p>0.1; and β=0.059, SE=0.101, p>0.1, respectively).
d

These results further confirm that IOS depth and IOS breadth do not independently generate direct
te

impact on competitive performance. Similarly, the effects of both balanced alignment and reinforcing
alignment on operational improvement are not significant. A plausible explanation is that deployment
alignment mainly reflects strategic resource commitments, the performance effects of which tend to
p

be long-term and at the strategic level, rather than short-term and at the operational level. The results
ce

in Figure 3 also show that other path coefficients are qualitatively consistent with those in the original
model in Figure 2, which suggest the robustness of our main findings. We further consider an
alternative model that controls effects of firms’ size, revenue, industry, tenure and IS experience on
Ac

IOS depth and breadth, as well as their effects on IOS balanced alignment and reinforcing alignment.
The results are qualitatively consistent with the original model, indicating that the performance
impacts identified in the model are robust, even when we take into account how managers may make
diverse IOS deployment choices based on the breadth and depth dimensions in various firm
environments. Table 4 summarizes the results of all hypotheses testing.

No. Hypothesis Outcome

H1a Depth of IOS deployment (+) → Operational improvement Supported
H1b Breadth of IOS deployment (+) → Operational performance Supported
H2a Depth of IOS deployment (+) → Operational improvement (+) → Supported
18

Page 18 of 27
 Competitive performance
H2b Breadth of IOS deployment (+) → Operational improvement (+) Supported
→Competitive performance
H3a Balanced alignment (+) → Competitive performance Supported
H3b Reinforcing alignment (+) → Competitive performance Not Supported
Table 4. Results of hypotheses testing.

t
ip
5. Discussion
Prior research has focused more on the individual aspects of IOS deployment on supply chain

cr
performance improvement, e.g., [2, 47]. This study adopts an asset orchestration perspective [25, 27]
to explore both the individual and joint performance impacts of two distinct dimensions of IOS

us
deployment, i.e., the depth and breadth of IOS deployment. The individual effects of the two
dimensions of IOS deployment reflect the importance of technology deployment to enhancing the
firm’s supply chain capability. Theoretically, research on strategic and operations management has

an
suggested that firms coordinate closely with their supply chain partners to manage their
value-generation activities [13, 52, 76]. The depth and breadth of IOS deployment reflects the extent
and the scope of information and resource sharing that firms have with their supply chain partners in
M
value generation. These two dimensions of IOS deployment allow the firm to form a broad strategic
network of partnerships with more effective information exchange and close coordination [77]. Such
d

network provides the firms capabilities of more efficiently integrating and streamlining its supply
chain processes, which serve as the basis of improvement in operational performance [34, 78].
te

The asset orchestration perspective emphasizes the critical value of synergy between IT strategies.
p

While prior research has in general recognized how IT-based resources synergy helps improve the
ce

firm’s organizational performance [35, 59, 79], there still lacks an in-depth investigation of how the
synergy of different aspects of IOS deployment influences firm performance in the context of supply
chain management. Our analysis on the two IOS deployment alignment mechanisms reveals that firms
Ac

essentially benefit by balancing between IOS depth and IOS breadth, and such fit between the two
dimensions contributes to the long-term firm competitive performance. The implication is that
although the firm should pursue both dimensions of IOS deployment in supply chain management, the
two IOS deployment dimensions may compete for limited firm resources. Therefore, the balance
between these two dimensions should enable the firm to better allocate its resources to benefit from
both broad and tight inter-organizational relationships. Failure to achieve balance between IOS depth
and IOS breadth may expose the firm to the risk of less supply chain flexibility and lowered supply
chain efficiency.

19

Page 19 of 27
In contrast, our findings do not indicate a significant reinforcing effect between IOS depth and IOS
breadth, suggesting that the unilateral development in either of these two dimensions does not
necessarily improve the performance impact of the other dimension. In this regard, the potential
unbalanced deployment along these two dimensions is not justified from the perspective of

t
performance improvement.

ip
This study is also consistent with prior studies in revealing the general value creation mechanisms of

cr
IT usage. Prior research [43, 45, 80, 81] suggests that firms that deploy appropriate resources to
develop and adopt technology innovations should benefit from enhanced business performance. By

us
studying deployment alignment strategies, this research reveals the value of technology usage patterns
as important intermediate mechanisms in value generation. Such perspective is essentially in line with
the request in the prior IS literature for using intermediate process-level variables to examine the

an
realization of IT value in improving firm performance and competitive advantage [35]. Our research
suggests that the nature of IOS deployment alignment, even if considered at the organizational level,
captures such intermediate effects of IT usage mechanisms. From this perspective, it may be
M
appropriate to consider that IT deployment strategies mediate the impact of IT on firm performance
[2]. The basic logic is that IT deployment is tied with other organizational resources and processes
d
which, in turn, lead to competitive advantage. Therefore, the examination of IT deployment alignment
in a specific setting, such as the alignment between the depth and the breadth of IOS, helps develop
te

better understanding about how the firm leverages IT through the strategic mechanism of resource
allocation to improve firm performance [82]. This consideration is also consistent with the supply
p

chain coordination perspective, which focuses on ways to combine resources and skills across
ce

organizational boundaries to create an efficient supply chain [83].

6. Conclusions and Future Directions

Ac

In this study, we developed a research model to investigate how firms benefit from their IOS
deployment. Our study considers not only the individual effects of IOS depth and IOS breadth on firm
performance but also alignments in IOS deployment along the depth and breadth dimensions from an
asset orchestration perspective. We validated the model using an empirical analysis on a sample of
Chinese firms. The findings suggest that configurative approaches of IOS deployment generate
significant supply chain value for firms in different ways. Firms seeking to optimize benefits from
IT-enabled supply chain management need to consider these distinct configuration strategies of
inter-organizational information systems deployment.

20

Page 20 of 27
This study has some limitations. While we have worked diligently to ensure the internal validity of
our research model, we have to acknowledge the possibility that our findings may be contingent on
the specific research context. First, our empirical analysis is based on the sample from a single
country. Future research may consider further validating our finding using data samples from different
contexts. Second, our study relies on a cross-sectional analysis. Due to the nature of the analysis, our

t
study may be limited in revealing the inter-temporal effects of IOS deployment on firm performance.

ip
For example, although we distinguished between operational improvement and competitive
performance using survey instruments, the longitudinal process of how short-term operational

cr
improvement leads to long-term competitive performance cannot be fully illustrated in our model.
Therefore, future research may use different types of analysis to reveal more longitudinal dynamics of

us
performance improvement by IOS deployment. Third, although we have tried to ensure the
randomness of the sample by verifying the random distribution across firms in annual revenue, size,
type and respondents’ position, there is still disproportionate coverage in our sample of firms from

an
manufacturing industries. In this regard, our sample may be limited in revealing the relationships
between IOS deployment and firm performance in service industries. Future research may also
consider using samples from service industries to verify the insights gained from this study.
M
This study also provides direction for future research. First, our study has mainly considered the case
d
where the firm uses IOSs to electronically link to and integrate with its suppliers. IOSs used to
connect with other types of partners (e.g., customers) may also influence the firm’s operational and
te

competitive performance. Therefore, future research may consider depth and breadth of IOS
deployment in connection with customers and partners, and examine the deployment alignment in
p

different areas. Second, while we have focused on depth and breadth as two important dimensions of
ce

IOS deployment, future research may address other aspects of IOS deployment and the alignment
between them. Third, future research may also consider the impact of specific firms’ IOS deployment
and alignment strategies on their supply chain partners’ performance, which many capture the
Ac

spillover effects of IOS deployment in the supply chain context.

Acknowledgement
This work was supported by National Natural Science Foundation of China (71372112, 71232008),
Innovation Program of Shanghai Municipal Education Commission (12ZS012) and Shanghai Social
Science Fund (2013BGL003).

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Appendix A: Operationalized Questionnaire (as translated from Chinese)

Electronic business (EB) is the use of information technology (IT) for facilitating intra and
inter-organizational business operations, which is also widely recognized as Electronic Commerce
(EC). This study seeks to understand the factors impacting the adoption and implementation of
electronic business by organizations with established information technology departments or
divisions.

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In completing the questionnaire, please answer the questions from your personal knowledge and
experience. The questionnaire would require about 20 minutes of your time. We assure you that total
privacy of your responses will be maintained. Your company or yourself will not be identified in any
presentation of the survey results. Your completion and return of this survey indicates voluntary
consent to participate in this study.

As a token of appreciation for your participation, we will make available to you an executive

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summary of the results of the study, which will be useful to your company in formulating and

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implementing effective electronic commerce decisions and strategies.
Thank you very much for your co-operation!

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Note: An E-business application (EB) is a web-based information system that is used for
transacting business with your customers/suppliers/other partners. Web-based applications that

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are used purely for providing product/service information (brochure-ware) do NOT qualify as
EB applications.

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Check all the activities in your firm that are currently being performed using EB applications and
mention the extent to which the EB applications are being used in that activity
Extent of use of E-business in
activity
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None Large
extent
Supplier selection(getting quotes, bids etc) …………. 1 2 3 4 5 6 7
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Purchase order processing……………………………. 1 2 3 4 5 6 7

Procurement from suppliers (distribution, warehouse,
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shipping, logistics etc)…………………………………. 1 2 3 4 5 6 7

Invoicing and payment processing………………….. 1 2 3 4 5 6 7
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Demand Management(procurement analysis)……… 1 2 3 4 5 6 7

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How would you rate the extent of EB diffusion in your organization? Rate the extent of diffusion
in a 1-7 scale and also indicate a percentage (%) across each of the following items
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Low High
Proportion of total suppliers with whom you interact
through EB applications ………………………………… 1 2 3 4 5 6 7
Proportion of total supplier transactions done through EB
applications…….………………………………………… 1 2 3 4 5 6 7
Proportion of overall interactions with suppliers through EB
1 2 3 4 5 6 7
applications...…………………………………………..

Realized Benefits from Electronic Business Applications

Benefits realized till now
Low High
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 Improved customer service 1 2 3 4 5 6 7
Better inventory control 1 2 3 4 5 6 7
Reduced operations costs 1 2 3 4 5 6 7
Reduced cycle time 1 2 3 4 5 6 7
Better relationship with suppliers 1 2 3 4 5 6 7
Generate competitive advantage 1 2 3 4 5 6 7

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Background Information:

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Main operating industry:

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 Architecture/Engineering  Pharmaceutical/Medical/Healthcare

 Business services  Real Estate / Property

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 Chemicals  Retail / Trading

 Computer/IT-related  Transportation

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 Finance/Banking/Insurance  Travel/Tourism/Hotel

 Manufacturing  Others (specify) _____________

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Total number of employees:
Annual Revenue (in RMB¥ millions)
A: <1 B: 1–5 C: 5–10 D: 10–50 E: 50–100 F: 100–1000 G: >1000
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Years of EB used in your firm:

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Your designation: ______________________________________

Your work experience (in years)___________________________

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Note1: Questions that are not used in the model are removed.
Note2: The performance effect of balanced alignment and reinforcing alignment are calculated as
1-|IOS depth – IOS breadth| and IOS depth * IOS breadth, where IOS depth and breadth is
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standardized before calculation. The two variables are therefore the single-item measures built on
survey items of IOS depth and breadth.

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