The Business Value of Process Sharing in Supply Chains: A Study of RosettaNet

Hsin-Lu Chang and Michael J. Shaw
International Journal of Electronic Commerce,
Volume 14, Number 1, Fall 2009, pp. 115.

Abstract: The research described in this paper builds on process theory and the resource-based view to examine the business value of process sharing in supply chains. Extending the two-stage model developed to define firm-level IT value, a measurement system is designed for assessing five business values resulting from process sharing: direct and indirect technological value, direct and indirect process value, and relationship value. To ensure that these business values can be fully realized on the firm level, the paper examines the relationship between them and firm performance and the moderating role of collaboration levels. An empirical study conducted in the context of the RosettaNet process-sharing initiative in the high-technology industry supply chain finds that (1) improving supply chain relationships can increase firm performance as much as business processes can; (2) improving indirect values can create greater firm performance than improving direct values, and (3) value conversion is more effective at high levels of collaboration. This valuation framework contributes to the literature by confirming the range of business values offered by process sharing and also by showing which value is of primary importance to firms in their business decisions. The findings will guide firms in identifying key value components, targeting those that can lead to higher firm performance, and enhancing collaboration levels to improve the value conversion.

Key Words and Phrases: Business value of IT, electronic commerce, interorganizational information systems, process sharing, supply chain collaboration.