The Impact of Public Policy on the Diffusion and Implementation of EDI - An Evaluation of the TEDIS Program

Objective of this paper is to elaborate the impact of the administrative and regulatory framework and the measures within the TEDIS program (Trade Electronic Data Interchange Systems) on the diffusion of EDI. The diffusion of highly standardized EDI solutions, based on EDIFACT and OSI standards, faces two major obstacles: Firstly, companies hesitate to invest in the development of public goods, while other companies and the state can become free riders. Secondly, the economic rationale of EDI solutions is based on a critical mass of participants. Therefore, the role of the CEC to create incentives for companies to invest in an area where part of the results will be public goods (EDIFACT messages) and to collaborate and cooperate with other companies in setting-up EDI networks will be scrutinized. The impact of TEDIS activities on companies are evaluated on the background of the transaction cost theory: How do specific measures in particular and the policies in general affect the costs of companies to handle their business transactions and, more specific, the costs to set up and maintain EDI links with their business partners be it other enterprises or public administrations. It is shown how TEDIS affects transaction characteristics and transaction costs. 1. EDI and the TEDIS Program TEDIS, an acronym for Trade Electronic Data Interchange Systems, is one of the smaller and hence lesser known programs of the Commission of the European Communities (CEC). It is, however, a vivid example of the industrial policy of the CEC and has significant implications for the restructuring of European industries and for the relationship between the public and the private sector. Goal of the TEDIS program is the facilitation of electronic data interchange (EDI) diffusion, thus forging ties between organizations from private industries and the public sector throughout Europe. When the TEDIS program was started in 1988, this action reflected the concern of the CEC about the competitive situation of European industries. EDI was perceived as a technology or rather information systems application that would yield competitive advantages for most of the European industries and the public administrations. A major goal of TEDIS was therefore the development of supportive conditions (technical, legal, security) for a successful implementation and swift proliferation of EDI. In this sense, the facilitation of EDI through the TEDIS program is instrumental for the industrial policy of the CEC and has been formulated accordingly. In contrast to other programs within the General Directorate XIII (DG XIII), TEDIS is primarily focused on the application and proliferation of emerging technologies rather than on their research or development.1 This policy reflects as much the characteristics of a technology whose major 1 This pragmatic turn of technology policy towards applied research and application of new technologies may reflect a critical assessment of the impact of interventionist technology programmes in comparison to the strong emphasis that the Japanese put on the application of technologies.