The Role of Interorganizational and Organizational Factors on the Decision Mode for Adoption of Interorganizational Systems*

The dramatic growth of interorganizational systems (IOS) has changed the way organizations conduct their business, and has resulted in significant tangible and intangible benefits being realized by participating firms. However, the implementation of these IOS requires the cooperation and commitment of all the participating members. These members may have complex economic and business relationships among themselves that can result in a number of social, political, and economic factors influencing the adoption and implementation of IOS. This study examines the role of interorganizational and organizational factors on the decision mode for adoption of IOS, in the specific context of electronic data interchange (EDI). Four interorganizational factors, based on the socio‐political framework derived from research in marketing, and five organizational factors based on research in IS were used in the study. The data for the study were collected through a large scale field survey. Two respondents, the sales/purchase manager and the IS manager, from 201 firms responded to the survey. The results of discriminant analysis of the data reveal that two interorganizational variables, competitive pressure and exercised power, and two organizational variables, internal need and top management support, are important variables to differentiate firms with proactive decision mode from firms with reactive decision mode. The study also evaluates the differences between proactive and reactive firms on three implementation outcomes. Proactive firms are found to have greater extent of adaptation, more external connectivity with trading partners, and better integration of EDI information in their internal IS applications.