Cooperative Advantage and Vertical Information System Standards: An Automotive Supply Chain Case Study

Development, implementation, and effective use of interorganizational information systems (IOS) remain an elusive goal for many companies, despite growing complexity in supply chains and evidence that lack of interoperable information systems results in enormous costs. We use collective action theory and a pie sharing framework to explore factors influencing adoption of industry standard IOS. An automotive industry case highlights explanations for difficulties achieving acceptance of proprietary IOS within the supply chain, as well as potential benefits of an industry standard approach. The case suggests that a manufacturer-centric approach treating IOS as a source of competitive advantage can fail to achieve either private or collective benefits. Evidence from a pilot study of a standards-based effort suggests that a cooperative approach to IOS in the supply chain may enhance prospects for both firm and industry profitability. We conclude with several propositions to guide future research on adoption of industry wide IOS standards.