Information Processing View of Organizations: An Examination of Fit in the Context of Supply Chain Management

Supply chain management (SCM) and Business-to-Business (B2B) E-commerce has attracted significant attention in recent years as the availability of a ubiquitous network linking most businesses has created new opportunities for electronic integration between firms. Companies need to, however, be cognizant of the inter-organizational relationships and the requirements of business processes in their supply chain when choosing from among a wide range of communication technologies and implementation strategies. This study uses Galbraith's (1973) information processing theory to examine the fit between information processing needs and information processing capabilities in an inter-organizational supply chain context and examine its impact on performance. A taxonomy of information processing needs based on interorganizational transaction characteristics, and information processing capabilities based on IT use in various activities of the procurement life cycle is developed. The impact of the fit between these variables on procurement performance is examined. The study collected data on 142 products through personal interviews and surveys, used cluster analytic techniques to develop taxonomies, and ANOVA to test the fit between needs and capabilities. The results reveal two clusters each in information processing needs and information processing capabilities. ANOVA results show that the interactive effect of needs and capabilities has a greater effect on performance than the main effects, supporting our fit theory.