Inter-Firm it Capability Profiles and Communications for Co-Creating Relational Value: Evidence from the Logistics Industry

Abstract:     
This study seeks to identify the means by which information technology helps co-create relational value in the context of inter-firm relationships in the logistics industry — a large and information-intensive industry. We identify a set of IT functionalities — single-location shipping, multi-location shipping, supply chain visibility, and financial settlement — that can be used to manage the flows of physical goods, information, and finances across locations in inter-firm logistics processes. Progressively more advanced sets of IT functionalities, when implemented and used in the inter-firm relationship to execute logistics processes, are proposed to form four distinct IT capability profiles of increased sophistication. Inter-firm IT capability profiles of higher sophistication are proposed to help co-create greater relational value by facilitating the flows of physical goods, information, and finances across locations in the inter-firm logistics process. Besides their direct role in helping co-create relational value, these inter-firm IT capability profiles are proposed to further enhance relational value co-creation when complemented by inter-firm communications for business development and IT development.

Our empirical study was situated in one of the world’s largest logistics suppliers and over 2,000 of its inter-firm relationships with buyers across industries. Integrated data from four archival sources on the IT functionalities implemented and used in inter-firm logistics relationships, inter-firm communications, relational value (share of wallet and loyalty), and multiple control variables were collected. The results show that the proposed inter-firm IT capability profiles and inter-firm communications have both a direct and an interaction effect on relational value. Implications for co-creating relational value in inter-firm relationships with the aid of IT are discussed.

Accepted Paper Series