Interorganizational System Standards Diffusion: The Role of Industry-based Standards Development Organizations

Integrating cross-company business process standards in an interorganizational system (IOS) context is an emerging phenomenon on several business fronts. The practice is viewed as an enabler towards solidifying business to business connections, streamlining cross-company processes and providing a foundation for web-services. Although the practice is not new, most notably electronic data interchange (EDI) with X12 standards, recent technological innovations have enabled the emergence of IOS standards that are web-enabled, modular, scaleable, cost efficient, and structured around cross-company business process standards. Despite their inherent benefits, the adoption and diffusion of web-based IOS standards has been an extraordinary challenge throughout many industrial groups. This paper examines the diffusion of interorganizational system standards among members of industrial groups where an IOS standards development organization (SDO) exists. A conceptual innovation diffusion model is developed as a basis to understand the factors, determinants and consequences concerning the diffusion of IOS standards. The innovation organizational environmental (IOE) lens is employed in the research design and extended to include attributes associated with the SDO and cross-company business processes. The diffusion process is examined through three stages: adoption, deployment, and assimilation. An empirical study is conducted based on cross-sectional surveys of 102 firms from 10 industrial groups encompassing 15 SDOs. During the adoption stage, the determinants were found to be; top management support, feasibility, technology conversion, competitive pressure, SDO participation level, and architecture. During the deployment stage the determinants were found to be; feasibility, competitive pressure, SDO participation level, compatibility, shared business process attributes, architecture and governance. We also examine industrial coordination of the IOS standards development process, consequences of diffusion, and SDO governance and management practices.