Investigating the Role of Information Technology in Building Buyer-Supplier Relationships

A widely held position observed through the lens of transaction cost theory (TCT) has been the role of information technology in decreasing transaction costs between buyers and suppliers and in creating more market based governance structures. However, observations have not supported this contention. In particular, buyer-supplier dyads often engage in cooperative behavior that could offset opportunistic tendencies espoused by TCT. The role of IT in this structure is unclear. This paper examines the relationship between perceived transaction costs and the concept of relationalism within buyer-supplier dyads. The role of IT in mediating this relationship is also examined. Survey data from 203 buyers in the OEM electronics industry is used to test proposed hypotheses. All major constructs, transaction costs, relationalism, and IT use are operationalized using validated multidimensional scales. The results suggest a positive role of IT in partially offsetting the negative relationship between transaction costs and relationalism. The results suggest that the decision to use IT within the dyad can encourage a commitment to establishing relational behavior. Journal of the Association for Information Systems (Volume 3, 2002) 217-245 218 Investigating the Role of IT in Building Buyer-Supplier Relationships by V. Grover, J. T. C. Teng, and K. D. Fiedler