Interorganizational information systems asymmetry and supply chain performance

Inter-organizational information systems (IOS) have been proposed as a way to mitigate the agency problems of information asymmetry, i.e., adverse selection and moral hazard. By introducing a new concept of IOS asymmetry, the imbalance in IOS visibility between the buyer and the supplier, this study asserts that IOS may not mitigate the problems of information asymmetry. Instead, IOS may consolidate the asymmetric relationship, reflecting the power asymmetry in a supply channel. IOS can change the nature of information asymmetry from supplier(agent)-advantage asymmetric information structure to manufacturer(buyer) advantage asymmetric information structure. Such IOS asymmetry leads to suboptimal SC performance due to the lack of information sharing from the supplier's perspectives. In addition, this study identifies antecedents of IOS asymmetry such as inter-organizational trust, strategic importance, joint governance structure, environmental uncertainty, and inter-organizational dependence, based on two competing theories of interorganizational relationships, i.e., resource dependence theory and relational view.