Information Technology And Supply Chain Governance: A Conceptual Model

In this theoretical essay we apply three theories of governance in proposing a conceptual model of the relationship between information technology (IT) and supply chain governance (SCG) and its conceptions (contractual, transactional, and relational). We argue, theoretically, that with contractual governance, IT is used to control activities and processes across the supply chain and to enforce coordination and contract compliance. IT, in transactional governance, is used to reduce costs and complexity of transactions. This is achieved through the reduction of losses and errors, the minimization of opportunism, and the decrease in total expenditures of the systems. With relational governance, IT can be used to support a closer and more trustful relationship among organizations through the collaboration and integration of supply chain activities. We provide testable propositions that emerge from this analysis and discussion. We also argue that e-procurement, enterprise resource planning (ERP), and electronic data interchange (EDI) could be used with the three conceptions of SCG. Implications for theory and practice are discussed.