Organizations are increasingly focusing on their value chain activities in an effort to improve their performance, especially in the recent economic times. Improving the effectiveness and efficiency of their channel activities has become a focal point for many organizations. Interorganizational systems (IOS’s) have played an important part in this effort. While in theory, IOS’s have the ability to enhance the degree of cooperation and coordination between two channel partners, often the results obtained are not what is expected. Hence, it becomes very important to understand the barriers to the assimilation of these technologies. Drawing upon theoretical perspectives of governance, including transaction cost analysis (TCA), control theory and agency theory, we develop an integrative model that examines the factors that influence an organizations assimilation process. The model identifies and examines three stages of assimilation: technological, exploitive and explorative assimilation that add value to an organization. The model features asset specificity, technological uncertainty, performance documentation, agent orientation and bilateral governance mechanisms as antecedents to assimilation. It also examines the moderating effects of bilateral mechanisms.
Our results suggest that theories of governance provide an additional lens to examine assimilation phenomena. In specific, our empirical analysis leads to several key findings: (1) channel partners who are locked in to the relationship with high levels of asset specificity are more likely to assimilate the technology; (2) bilateral governance mechanisms are a key force in the assimilation process, with both direct and moderated effects; (3) organizations that view the channel partner as an agent of the firm are less likely to adopt the technology, especially when the relationship exhibits low levels of bilateral governance mechanisms. Together these findings provide new insights into barriers to the assimilation of IOS’s in channel relationships
