Developing Inter-Organizational Trust in Business-to-Business E-Commerce Participation-Case Studies in the Automotive Industry

Developing Inter-Organizational Trust in Business-to-Business E-Commerce Participation–Case Studies in the Automotive Industry Pauline Ratnasingam IDEA GROUP PUBLISHING

Developing Inter-Organizational Trust 1

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Developing Inter-Organizational Trust in Business-to-Business E-Commerce Participation–Case Studies in the Automotive Industry Pauline Ratnasingam University of Vermont, USA

EXECUTIVE SUMMARY Inter-organizational-systems such as EDI have been the main form of business-to business ecommerce participation in the automotive industry for the last two decades. Previous studies in EDI adoption mostly examined environmental, organizational and technological factors. This study draws insights developed within the sociology of technology, in which innovation is not simply a technicalrational process of solving problems, but involves economic, behavioral and political processes required for building inter-organizational trust. The transition to cooperative relationships between buyers and suppliers may be more difficult for automotive companies because of complexity, compatibility, long lead times and ingrained adversarial supplier relationships (Langfield-Smith & Greenwood, 1998). Therefore, trust is important as organizations need to cooperate, collaborate and communicate timely and relevant information, in order to facilitate EDI that entails not only technological proficiencies, but also trust between trading parties, so that business transactions are sent and received in an orderly fashion. An analysis of the trust behaviors that influence EDI adoption will be useful for evaluating EDI participation. The aim of this study is to address the following intriguing questions: • How does trading partner trust impact EDI participation? • How do issues relating to coercive power among trading partners impact inter-organizational trust?, and • What is the importance of trust within an inter-organizational dyad. Ford has been using EDI since the electronic data transmissions commenced in 1988. The aim of EDI is to communicate production requirements of five car manufacturers (namely, Ford, General Motors Holden, Toyota, Mitsubishi and Nissan), to their component suppliers in order to meet the demands of the Australian and overseas motor vehicle markets. The automotive industry had more experience than other industries in developing inter-organizational relationships. Ford Australia was nationally and internationally popular because motor vehicles were exported to New Zealand and the Asia Pacific region. Copyright © Idea Group Publishing. Copying without written permission of Idea Group Publishing is prohibited.

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BACKGROUND EDI implementation at Ford started with the Button Car Plan in the mid-1980s. The objectives of the Button Car Plan included: • Creating a timeframe to restructure and modernize (1985-1992); • Increasing the industry’s efficiency; • Holding down vehicle price rises to no more than raises in the consumer price index; • Minimizing disruption during restructuring; and • Reducing job losses and providing job stability (Mackay & Rosier, 1996). In 1984, the Federation Chamber Automotive Industries (FCAI) was formed to set up a standard procedure for adopting EDI. FCAI committee members discussed business issues, ramifications, and operations before negotiating with General Electrics in Information Services (GEIS) and Telstra Tradelink to create an EDI Value-Added-Network (VAN) system. Ford was one of the earliest innovators of EDI inter-organizational network technology. In late 1987 and early 1988, the company conducted acceptance testing of EDI business transactions was carried out. Telstra developed the Tradelink software in 1988. EDI messages such as Materials Requirements Schedule (MRS) and Advanced Shipping Notice (ASN) were initially implemented followed by other documents. Thus, by 1997, EDI use at Ford was in a mature stage. Ford aimed to streamline its business processes and optimize its supply chain management activities. Ford implemented two EDI systems and many application systems across its five branches: Parts and Accessories, Original Equipment, Non-production, Purchasing, Ford Credit and Finance. Ford’s parent company in America was two to three years ahead of their Australian counterparts and supervised EDI implementation in Australia. The automotive industry remains a major segment of the Australian manufacturing sector, despite a general decline in the manufacturing output in Australia. It is particularly important in Victoria, where Ford Australia, General Motors Holden, and Toyota have their headquarters and principal assembly plants. Although it is only a small part of the global motor vehicle industry, the Australian automotive industry makes an important contribution to the gross domestic product of Australia. In this research, the original manufacturers are subsidiaries of large transnational corporations based in the USA or Japan. Figure 1 demonstrates the flow of EDI transactions between Ford and Toyota (the manufacturers) and their first tier supplier (Patent Brakes and Replacement Ltd). For example, the supplier sends an Advanced Shipping Notice (ASN) to the manufacturer before supplying the parts. At the same time, a copy of the ASN is sent to the Transport Company for the truck driver to deliver the right quantity. The truck driver also brings a copy of the ASN that was sent electronically to the manufacturer. The completed motor vehicle is sent to the finance company and they collaborate with motor vehicle dealers and arrange credit terms for selling the motor vehicles.

SETTING THE STAGE EDI is one form of business-to-business e-commerce inter-organizational system (IOS) which transmits standard business documents electronically among trading partners. EDI allows firms’ to fundamentally change the way they do business, thereby improving the firm’s performance and enhancing its competitive advantages (Emmelhainz, 1990). While EDI clearly provides economic benefits, it may be costly to implement, particularly when an organization lacks hardware or software compatibility. Security becomes an important issue because EDI systems do not operate unilaterally. Organizations motivated to adopt EDI must either find similarly motivated trading partners or persuade and/or coerce their existing trading partners to adopt EDI (Hart and Saunders, 1998; Webster, 1995). One key barrier to this is the lack of trading partner trust derived from uncertainties, lack of open communications and information sharing (Cummings & Bromiley, 1996; Doney & Cannon, 1997; Ganesan, 1994; Gulati, 1995). Despite the assurances of technological security mechanisms, trading

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Figure 1: EDI Implementation at Ford, and Patent, Brakes and Replacement Ltd.

Transport Company

Advanced

Shipping Notice

Materials Requirements Schedule Receiving Automotive Manufacturer (Ford)

Automotive Parts

Request for Quotation

Supplier

Quotation Purchase Order & Amendment Remittance Advice and Payment

(Patent, Brakes & Replacement

Ltd) Vehicle Finance Company

Bank

partners in business-to-business e-commerce do not seem to trust the “people side” of the transactions because of uncertainties. Uncertainties reduce confidence both in the reliability of business-tobusiness transactions transmitted electronically and, more importantly, in the trading parties themselves. For example, Scala and McGrath (1993), in their broad assessment of advantages and disadvantages of EDI, identified social and organizational issues that impact organizational culture, structure and low levels of adoption. The objective of this study is to investigate the importance of trading partner trust in EDI participation (adoption, integration and use). The automotive industry provides an interesting focus for studying this topic because of the following reasons: • The automotive industry has a well-developed supplier strategy, because it was the first Australian industry to introduce EDI on a coordinated industry-wide basis. For example, the automotive industry has been using EDI since electronic data transmissions commenced in 1988. Therefore, the automotive industry had more experience than other industries in developing trading partner relationships (Helper, 1991; Mackay & Rosier, 1996). • It has been suggested that the transition to cooperative relationships between buyers and suppliers may be more difficult for automotive companies, due to high levels of complexity,

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compatibility, long lead times and ingrained adversarial supplier relationships of the past (Langfield-Smith & Greenwood, 1998). Japanese automotive companies have a long established history of developing relationships with suppliers based on dependence and cooperation. Unlike the Japanese, in western countries like Australia and the U.S. recognizing cooperative partnerships is a relatively recent phenomenon, and may be a distinct contrast to the adhoc relationships of the past (Helper, 1991). Choosing two automotive organizations namely, Ford Motor Company of Australia Limited, and their first tier supplier Patent Brakes and Replacement Automotive Proprietary Limited in Australia–provides a better understanding of cooperative trading partner relationships and trust in EDI implementation.

CASE DESCRIPTION The Ford Motor Company of Australia Limited (Ford Australia), located in Melbourne, Australia, is a subsidiary of the Ford Motor Company at Dearborn, Michigan, USA. Employing 9,000 workers, Ford Australia is the second largest manufacturing enterprise in Australia. Ford produces about 125,000 motor vehicles per year. It uses approximately 8,000 local parts and 250 imported parts from their 220 parts suppliers. Ford is the largest consumer of locally manufactured parts. It is currently running an inventory of about 10 days stock (although the stock level of some components replenished by JIT is smaller than this). Ford’s main objective is to increase productivity and profitability by reducing costs. Patent Brakes Replacement (PBR Ltd) is a large company with 1,100 employees and is a major supplier, principally supplying original equipment (OE) to Ford and Toyota. PBR in aggregate supplies up to 92% of component parts to the Passenger Motor Vehicle (PMV) lines and/or spare parts divisions. PBR has two branches, namely Original Equipment (OE) and After Marketing Company (AMC). PBR started adopting EDI when their manufacturers (Ford and Toyota) demanded high efficiencies in EDI operations. Table 1 presents a summary of the background information of the two cases Ford and Patent, Brakes and Replacement Ltd.

Driving Factors for Adopting EDI Ford’s objective for adopting EDI is to streamline its business processes and contribute to more efficient transactions across the supply chain. Implementing EDI and electronic trading was expected to bring about a number of benefits in the automotive industry. The benefits include improvements in general logistics, increased productivity, improved product quality, enhanced customer service and lower inventory requirements. The automotive organizations were able to eliminate manual re-keying of data, thus reaping economics of scale in time and labor savings. “EDI was seen as a tool to transmit standard structured messages electronically from a computer application in one location to another computer application in another location. Therefore, EDI is an enabling technology which allowed Ford to meet their business goals, and the analogy is the same as if one wishes to purchase a mobile telephone or a fax machine, EDI gave us competitive advantage.” — Ford’s EDI project leader. The driving factors that led to EDI adoption include: • Time was saved from a faster trading cycle, because trading partners do not have to re-key the information. 70% of the output was treated as input into the receiving trading partner’s system, contributing to savings in time and cost. • Simplification of the business processes (via automation) eliminated the use of paper. • Speed from savings in time derived from the standardized routines and structured EDI messages, increased productivity and thus profitability. Table 2 presents a list of respondents who participated in the exploratory case study. Although, most of them were not directly involved in EDI adoption, they were employed for at least a decade and attended most of the meetings related to EDI implementation. The participants agreed that trust was important for EDI participation because business transactions had to be sent and received in an orderly fashion.

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Table 1: Background Information of Ford, and Patent, Brakes and Replacement Ltd. Background Information

Ford – Buyer

PBR Ltd First–Tier Supplier

Year Implemented EDI

Mid 1980s - 1989

1987

Type of EDI Technology

EDI/VANs

EDI/VANs

Type of Translation

Telstra Tradelink

Telstra Tradelink

Software

Software

Software

Number of EDI Systems

2

3

Number of Staff Operating

2

6

Volume of Transactions

40-60 daily

5-10 daily

Types Transactions

Purchase Orders

Purchase Orders

Advance Shipping

Advance Shipping

Notice

Notice

Remittance Advice

Monthly Statements

EDI Systems

Acknowledgment 350

150

Number of Branches

5

2

Number of Employees

9000

1100

Size of Organization

Large

Large

Stage of IT Growth

Mature

Mature

Number of Trading Partners

CURRENT CHALLENGES FACING FORD AUSTRALIA AND PBR LTD Technological Issues Issues relating to streamlining Advanced Shipping Notices (ASNs) with the actual physical shipment of goods were identified in EDI adoption. Ford currently requires about 95% of its part suppliers to send an Advanced Shipping Notice (ASN) in advance of the actual physical shipment accompanying a printed delivery docket. The ASN pre-loads the receiving system, prints a ‘receipt list’ and uses it to check the physical shipment. The ASN identifies the physical shipment with the delivery truck registration number, and uses it as a reference. Discussions with Ford materials management staff revealed the following technical problems with its current EDI systems. • Use of the truck registration number effectively limits the system to parts that are delivered no more than once per day, and also causes problems when several suppliers’ shipments are consolidated onto one truck;

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Table 2: Interview Participants from the Two Case Studies Title of Participants

Name of Organization

Years of EDI Experience

Directly Involved in EDI Implementation

Project Leader Communications Operations Process Leadership Auditor

Ford Motor Co

15

Ford Motor Co Ford Motor Co

General Accounting Manager IT Manager Supply Chain Management, Materials Planning and Logistics Core Group Management Manager FCAI Chairman and EDI Coordinator

Yes

Number of Interview Sessions 5

Is Trust Importan for EDI? Yes

10

No

2

Yes

12

Yes

3

Yes

Ford Motor Co Ford Motor Co

12

No

3

Yes

10

No

2

Yes

PBR Ltd

15

Yes

5

Yes

•

Ford’s leading position in the Australian automotive industry and its increasing insistence on JIT deliveries, forced Ford’s suppliers to be positioned less than 10 minutes drive away from the Ford plant. Ford currently polls its EDI/VAN service every 10 minutes, in order to retrieve the ASN data. As a result with parts that are being called by JIT, there is no guarantee that the ASN arrives before the physical shipments, thus causing delays and congestion in the production line; and • The EDI/ASN process is dependent on computers at the supplier’s site, and the VAN service at Ford. Given the computer-dependent nature of the automotive industry operations, the first problem can be solved by using a unique identifier for the shipment bar coded on the delivery docket or cartons. The second problem can only be solved within the existing framework by polling the VANS more frequently, and imposing an expensive option at a cost of $A0.50 upwards per call.

Political Issues - Power Among Trading Partners Power was seen as an important contextual factor in EDI adoption, because it was an important influence in the adoption of e-commerce and in building trust among trading partners. Power is “the capability of a firm to exert influence on another firm to act in a prescribed manner.” Ford applied power when its EDI network was introduced. Ford made it clear to its established suppliers that they should use EDI. Ford did provide its suppliers with initial training and software to run on IBM machines. Suppliers with incompatible systems or with no systems were requested to find appropriate solutions as quickly as possible. Clearly, this was a situation where coercive power exercised by Ford was seen in establishing connections that involved the expense of the suppliers

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buying new equipment (Ratnasingam, 2000). Dependence can arise due to limited supply alternatives or from an imbalance of power between suppliers and car manufacturers. Furthermore, the inconvenience of having to use Ford’s system in addition to other systems for trading with other customers was another issue, especially at a time when the smaller suppliers were unaware of EDI’s potential. Similarly, Hart and Saunders (1997) suggested that in most cases the adoption of EDI is due to pressure from the more powerful trading partners, usually buyers. Their findings indicated that power was negatively related to the volume of EDI transactions, reflecting that while electronic networks may facilitate easier exchanges, they may not necessarily lead to increases in the frequency of business transactions. EDI not only affects the efficiency of coordination, but also power dependency and structural aspects of inter-organizational relationships. Thus, power exists on two levels: (1) as a motive, and (2) as a behavior. It is quite clear from both the design and implementation of Telstra Tradelink, that Ford does not regard their trading partners as if they were partnerships made on equal basis, but relationships involving domination and their subordination. Companies who supply to Ford find their trading relationship coercive and the strictness of using their EDI system caused unnecessarily expense and inconvenience. The findings relating to power in the automotive industry reported that doing EDI with Ford has increased the costs of their trading relationship and has not reduced expenses in any way. Similarly, Ford’s attitude towards their trading partners was revealingly expressed by the reactions of their suppliers across Europe. “The Spanish were extremely obedient. Ford is their bread and butter. When we say ‘Jump,’ they jump. The Germans gave us the most trouble. Among other things, they didn’t like the dedicated network.” (Webster, 1995:p 34). Ford’s main objective was to gain competitive advantage by locking their suppliers into their system, and their competitors out of them. “We felt that we were coerced to adopt EDI, although initial support and directions via software for our IBM machines was given by Ford.”— PBR Ltd EDI Coordinator. Hence, the way power was used to influence trading partners determined the extent to which trust was built during EDI implementation.

Behavioral Issues – Performance Assessment Ford possessed a set of punishments they used when their suppliers did not cooperate. A check on their suppliers’ competencies, product quality, timeliness of delivery, service quality and how they resolved disputes were observed. The supplier performance checklist determined whether to renew the contracts of their suppliers. “Our suppliers do have to meet the standards outlined in the Suppliers’ Performance Assessment. Although, our suppliers have been trading with us for a long time, we usually undertake a screening test to examine their credibility, technical ability and skills. A standard of 85% and above was expected in their performance.” — Ford EDI Coordinator.

Trust Issues: Lack of Cooperation Among Trading Partners The more likely they are perceived to use these punishments, the stronger will be their coercive sources of power. Examples of coercive sources of power an automotive manufacturer may exercise include slow delivery on vehicles, slow payment on warranty work, unfair distribution of vehicles, turndowns on warranty work, threat of termination and bureaucratic red tape. There is considerable evidence of coercion by large manufacturers to smaller suppliers to move to EDI, in order to suit information technology and business strategies of manufacturers. It is here where trust develops. Ford can either choose to see it proactively and renew their suppliers’ contract or choose to punish their suppliers by terminating their contracts. The absence of collaboration or prior consensus about the structure, function, and design of these networks provided suppliers with little opportunities to develop their knowledge and expertise in EDI use. In the EDI user community, this practice has been

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associated with the catch phrase “EDI or die” meaning that suppliers are required to use the system or the manufacturer (Ford) will not trade with them at all. It is a practice that has been particularly prevalent among large retail outlets in United Kingdom (Webster, 1995).

Trading Partner Trust – Key Findings The findings indicate that trust was embedded in the EDI adoption procedures, and was seen as an implicit factor, because trading partners were expected to behave in a rationale manner. Trading partner trust was rated high because trading partner performance significantly impacts EDI operations and system. For instance, the EDI via Value-Added-Network mailbox was shared by all trading partners’, thus demanding confidentiality and integrity measures to be taken by all trading partners who were registered to use it. In some cases, the participants indicated that their status of trust was based on their management representation of knowledge of EDI implementation. Trading Partner Trust at Ford Mayer, Davis and Schoorman (1995:p.712) defined trust as “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of their ability to monitor or control that other party.” Trust is important for EDI operations and the participants agreed that trading partner trust is essential. “We define trust as a level of confidence we have in our suppliers in being honest, reliable, having integrity and not taking actions that is detrimental to our business.” — Ford Communications and Operations Manager. Two Types of Trading Partner Trust Two types of trading partner trust were identified in this study. The first type of trust “soft trust or relationship trust,” focuses on the trading partner relationship, (that is between a manufacturer and a supplier). “We do not only communicate using EDI, but other means such as telephone, fax and email when there is a discrepancy. This related to communication openness as in high trust derived from information sharing and concern. We do not check the delivery of goods, due to consistency in the quality service provided by our suppliers.” — Ford Supply Chain Management Materials Planning and Logistics Core Group Manager. Prior history of trading partner relationships enabled Ford to make predictions about their suppliers’ performance. The second level of trust, “hard trust or technology trust,” focuses on integrity issues with IT departments, and EDI/VANs infrastructure. Thus technology compatibility and organizational readiness were seen as important in EDI participation. In addition, the following interactions led to trading partner trust. • Increased communication during initial EDI adoption. “Although EDI was established in the 1980s, to reflect back on our initial implementing procedures, we would still print off the order, and fax the same order again. After sending the order via EDI we would call our suppliers to check if they have received it.” – Ford Accounting manager. During the early stages of EDI implementation Ford relied heavily on the daily audit trail, and other feedback mechanisms such as fax and telephone: • Information sharing on the potential use of EDI. The Advanced Shipping Notice is sent before the actual delivery of the parts arrive; • Reliability of the trading partners, (that they did what they said they will do). Prior history of trading experiences enabled trading partners to depend on each other;

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• •

Belief in trading partners’ ability to perform the required task; and Maintaining confidentiality and privacy of business information. Functional acknowledgments with unique identifiers and authorized mechanisms (user IDs and passwords) were implemented. Hence, beyond the apparent need for a cooperative relationship, trading partners formed a governance structure that brought about repeated encounters and used the passage of time to their advantage to build trust. These trust mechanisms, although coming from EDI, had a lot to do with trading partner interactions in the form of open communications and timely sharing of information that contributed to the smooth flow of EDI operations. Therefore, trust plays a very important role in EDI for two main reasons: • It encourages organizations to make investments necessary for electronic information exchange, which includes technical investments needed for supporting greater information exchange across organizational boundaries. This in turn contributes to improving inter-organizational coordination, in particular for EDI use and information-sharing requiring investments in computer integration at the time of EDI adoption. It is therefore important to reinforce trust during the EDI adoption process so that trading partners will be encouraged to make investments in computer integration, and over time will support expanded EDI use and information sharing; and • It discourages opportunistic behavior, which clearly reduces the opportunity for greater information sharing over time. Here trust is important because it reduces the probability of a firm behaving in an opportunistic way. Hence, trust mitigates risks and by reducing risks it reinforces the opportunity to expand information sharing over time. This study explored the impact of inter-organizational trust in EDI adoption between Ford Australia and their first tier supplier Patent, Brakes and Replacement Limited. The two case studies formed an inter-organizational-dyad between (a manufacturer and a supplier) in EDI participation paved the way to increased awareness and importance of trading partner trust in EDI. Implicit factors such as power among trading partners were found to impact trust among trading partners. Most of the participants agreed that their service-level agreements need to be amended in order to include trading partner trust development guidelines that will promote open communications, sharing of knowledge and information (that is accurate, timely, complete and relevant), thereby preventing privacy issues and encouraging good business practices. For example, trading partner agreements should encourage good business practices that will prevent trading partners from opportunistic behaviors.

The Future of the Australian Automotive Industry Australia’s automotive industry is moving closer to developing one of the largest industry-wide extranets seen in this country until now (in 1999). According to the new development, the Australian Automotive Network Exchange (AANX) project will specify and begin implementing a common TCP/ IP network infrastructure for the Australian automotive industry. The FCAI committee manages the AANX project, with members including nominees of the four Australian care manufacturers –Ford, Holden, Mitsubishi and Toyota. The Federation of Automotive Product Manufacturers (FAPM), importers and suppliers were also involved in this project. Telstra and Optus have been invited to participate in the initiative, but both were unable to meet the industry’s requirements. In addition, Telstra, with its X.400-based Tradelink network service is the current supplier of EDI, and links the Australian automotive industry. The decision to exclude Telstra will then raise a question on the future of the industry. The mission of the committee is to establish and govern a reliable and secure communication network capable of hosting applications of e-commerce and business-to-business transactions for the Australian automotive industry. The supplier (PBR Executive) describes the AANX project as an auto industry intranet and indicated that it is the next development of the industry’s EDI system. It will solve the main problems with doing EDI over the Internet, namely security and reliability. We are trying to duplicate precisely

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what they have in America and it looks like this is the way the rest of the world is going too (i.e., Japan and Europe). EDI is now becoming tired, and both it and our various other supply-chain links need to be brought into a Web-enabled e-commerce system.

FURTHER READINGS Emmelhainz, M. A. (1990) A Total Management Guide, NCC Blackwell. Frey, S.C., and Schlosser, M.M (1993) ABB and Ford: Creating Value through Cooperation, Sloan Management Review, Fall, 65-72. Raman, D (1997) The Internet and EDI, What is EDI’s place on the Information Superhighway? Tenth International Bled Electronic Commerce Conference, 66-73 Ratnasingam, P. (2000). The influence of power on trading partner trust in electronic commerce. Internet Research: Electronic Networking Applications and Policy, 10(1), 56-62. Rayport, J.F., and Jaworski, B.J (2001) Electronic Commerce, McGraw-Hill/Irwin Ring, P.S and Van de Ven, A.H (1994) Developing Processes of Cooperative Inter-organizational Relationships, Academy of Management Review, (19), 90-118. Saunders, C. and Clark, S (1992) EDI Adoption and Implementation: A Focus on inter-organizational linkages, Information Resources Management Journal, 5 (1), 9-19. Senn, J.A (1996) Capitalizing On Electronic Commerce – The Role of the Internet in Electronic Markets, Getting on Board The Internet, Information Systems Management, Summer, 15-25. Senn, J.A (1998) Expanding the reach of E-commerce, The Internet-EDI Alternative, Information Systems Management. Sullivan, J., Peterson, R.B., Kameda, N., and Shimada, J (1981) The Relationship Between Conflict Resolution Approaches and Trust – A Cross Cultural Study, Academy of Management Journal, 24 (4), 803-815. Sydow, J. (1998) Understanding the Constitution of Inter-Organizational-Trust, in Lane, C., and Bachmann, R eds, In Trust within and between organizations, Conceptual Issues and Empirical Applications.

REFERENCES Cummings, L.L. & Bromiley, P (1996) ‘The Organizational Trust Inventory (OTI): Development and Validation,’ in Kramer, R.M. and Tyler, T.R. (eds) Trust in Organizations: Frontiers of Theory and Research, Sage Publications, Thousand Oaks, CA, 302-220. Doney, P.M., and Cannon, J.P (1997) An Examination of the Nature of Trust in Buyer-Seller Relationships, Journal of Marketing, April, 35-51. Ganesan, S (1994) Determinants of Long-Term Orientation in Buyer-Seller Relationships, Journal of Marketing, (58), April, 1-19. Gulati, R. (1995) ‘Does Familiarity Breed Trust? The Implications of Repeated Ties for Contractual Choice in Alliances,’ Academy of Management Journal, 38 (1), 85-112. Hart, P. and Saunders, C. (1997) Power and Trust: Critical factors in the adoption and use of Electronic Data Interchange, Organization Science, 8 (1), 23-42. Helper, S. (1991) How Much Has Really Changed Between U.S Automakers and Their Suppliers?, Sloan Management Review, 32 (4), 15-28. Langfield-Smith, K. & Greenwood, M R. (1998) Developing Co-operative Buyer-Supplier relationships: A Case Study of Toyota, Journal of Management Studies, 35 (3), 331-353. Mackay, D., and Rosier, M (1996) Measuring organizational benefits of EDI diffusion, International Journal of Physical Distribution & Logistics Management, 26 (10), 60-78. Mayer, R.C., Davis, J.H., and Schoorman, F.D. (1995) An Integrative Model of Organizational Trust,’ Academy of Management Review, 20 (3), 709-734.

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Ratnasingam, P. (2000). The Influence of Power on Trading Partner Trust in Electronic Commerce, Internet Research: Electronic Networking Applications and Policy, 10(1), 56-62. Scala, S. and McGrath, R. Jnr. (1993) Advantages and disadvantages of electronic data interchange: An industry perspective, Information & Management, 25 (2), 85-91. Webster, J (1995) Networks of collaboration or conflict? Electronic data interchange and power in the supply chain, Journal of Strategic Information Systems, 4 (1), 31-42.

GLOSSARY EDI – is the computer-to-computer (application-to-application) exchange of standard formatted business documents transmitted over computer networks (Senn, 1996:p.17) EDI – is the structured exchange of information between applications in different companies (Raman, 1997:p.67). IOS– Inter-Organizational-Systems (IOSs) is simply “an automated information system shared by two or more companies” implemented for efficient exchange of business transactions (Cash & Konsynski, 1985, p.134). B2B EC – refers to the full spectrum of electronic commerce that can occur between two organizations. Activities include purchasing and procurement, supplier management, inventory management, channel management, sales activities, payment management and service and support (Rayport & Jaworski, 2001). TRUST - Mayer, Davis and Schoorman (1995) defined trust as “the willingness of a party to be vulnerable to the actions of another party based on the expectation that the other will perform a particular action important to the trustor, irrespective of the ability to monitor or control that other party” IOT – Inter-Organizational Trust is “the confidence of an organization in the reliability of other organizations regarding a given set of outcomes or events” (Sydow, 1997:35). This study defines IOT as “the confidence in the reliability of two organizations in a possibly risky situation that all trading partners involved in the action will act competently and dutifully.”

BIOGRAPHICAL SKETCH Pauline Ratnasingam is an Assistant Professor in the School of Business Administration, The University of Vermont, Burlington, Vermont. Before that she was a lecturerat Victoria University of Wellington, New Zealand. Her Ph.D dissertation examined the importance of inter-organizational trust in electronic commerce participation (extent of e-commerce adoption and integration). Her research interests include Business Risk Management, Electronic Data Interchange, Electronic Commerce, Organizational Behavior, Inter-Organizational Relationships and Trust. She has published several articles related to this area in conferences and refereed journals. She is an associate member of Association of Information Systems (AIS).