Process Innovation Costs in Supply Networks: A Synthesis

This paper provides a synthesis of the literature on the costs incurred by organizations that develop, adopt and use inter-organizational process innovations in supply networks. A review of the literature in this area suggests that innovation costs influence the pattern of adoption. There is, however, a lack of consensus about what these innovation costs entail. Based on a review of innovation literature in the area of information systems, this paper develops an integrative framework of inter-organizational process innovation costs. The framework identifies six broad categories of costs (both tangible and intangible) that map onto different stages of organizational innovation: development and initiation costs associated with the generation of an innovation; switching costs and the cost of capital associated with the acceptance stage; and implementation and relational costs associated with implementation. The framework serves not only to organize the existing literature but also to provide the impetus for future research into the role that different categories of costs play in shaping inter-organizational process innovation in supply networks.