Risk-Mitigation in Supply Chain Digitization: A Study of System Modularity and IT Governance

Journal of Management Information Systems, Volume 30, Number 1/Summer 2013

41 Pages Posted: 1 Jun 2011 Last revised: 10 Sep 2014

See all articles by Ling Xue

Ling Xue

Georgia State University

Zhang Cheng

Fudan University

Ling Hong

Fudan University - School of Management

Xia Zhao

University of North Carolina at Greensboro - Information Systems & Supply Chain Management

Date Written: June 1, 2013

Abstract

Firms face significant risk when they adopt digital supply chain systems to transact and coordinate with their partners. Drawn upon modular systems theory, this study proposes that system modularity mitigates the risk of adopting digital supply chain systems and therefore motivates firms to digitize more of their supply chain operations. The study also theorizes how the risk-mitigating effect of system modularity can be enhanced by the allocation of decision rights to the IT unit. The main logic is that IT managers with more domain IT knowledge can better utilize their knowledge in decision making to achieve effective system modularity. We tested these theoretical propositions using a survey study of Chinese companies and found empirical support. We also found that the allocation of decision rights to the IT unit does not directly mitigate the perceived risk of digital supply chain system, which highlights the role of decision allocation to the IT unit as a key moderator in risk mitigation. The study generates theoretical and practical implications on how IT governance and system modularity may jointly mitigate risk and foster supply chain digitization.

Suggested Citation

Xue, Ling and Cheng, Zhang and Hong, Ling and Zhao, Xia, Risk-Mitigation in Supply Chain Digitization: A Study of System Modularity and IT Governance (June 1, 2013). Journal of Management Information Systems, Volume 30, Number 1/Summer 2013 . Available at SSRN: https://ssrn.com/abstract=1856513 or http://dx.doi.org/10.2139/ssrn.1856513

Ling Xue (Contact Author)

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Zhang Cheng

Fudan University ( email )

Beijing West District Baiyun Load 10th
Shanghai, 100045
China

Ling Hong

Fudan University - School of Management ( email )

No. 670, Guoshun Road
No.670 Guoshun Road
Shanghai, 200433
China

Xia Zhao

University of North Carolina at Greensboro - Information Systems & Supply Chain Management ( email )

401 Bryan Building
Greensboro, NC 27402-6179
United States

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