Information sharing with key suppliers: a transaction cost theory perspective

Purpose - The purpose of this paper is to explain variations in discretionary information shared between buyers and key suppliers. The paper also aims to examine how the extent of information shared affects buyers' performance in terms of resource usage, output, and flexibility. Design/methodology/approach - The data for the paper comprise 221 Finnish and Swedish non-service companies obtained through a mail survey. The hypothesized relationships were tested using partial least squares modelling with reflective and formative constructs. Findings - The results of the study suggest that (environmental and demand) uncertainty and interdependency can to some degree explain the extent of information shared between a buyer and key supplier. Furthermore, information sharing improves buyers' performance with respect to resource usage, output, and flexibility. Research limitations/implications - A limitation to the paper relates to the data, which only included buyers. A better approach would have been to collect data from both, buyers and key suppliers. Practical implications - Companies face a wide range of supply chain solutions that enable and encourage collaboration across organizations. This paper suggests a more selective and balanced approach toward adopting the solutions offered as the benefits are contingent on a number of factors such as uncertainty. Also, the risks of information sharing are far too high for a one size fits all approach. Originality/value - The paper illustrates the applicability of transaction cost theory to the contemporary era of e-commerce. With this finding, transaction cost economics can provide a valuable lens with which to view and interpret interorganizational information sharing, a topic that has received much attention in the recent years.