Risk Mitigation in Supply Chain Digitization: System Modularity and Information Technology Governance.

Author List: Xue, Ling; Zhang, Cheng; Ling, Hong; Zhao, Xia;
Journal of Management Information Systems, 2013, Volume 30, Issue 1, Page 325-352.
Firms face significant risk when they adopt digital supply chain systems to transact and coordinate with their partners. Drawn upon modular systems theory, this study proposes that system modularity mitigates the risk of adopting digital supply chain systems and therefore motivates firms to digitize more of their supply chain operations. The study theorizes how the risk-mitigating effect of system modularity can be enhanced by the allocation of decision rights to the IT (information technology) unit. The main logic is that IT managers with more domain IT knowledge can better utilize their knowledge in decision making to achieve effective system modularity. We tested these theoretical propositions using a survey study of Chinese companies and found empirical support. We also found that the allocation of decision rights to the IT unit does not directly mitigate the perceived risk of digital supply chain systems, which highlights the role of decision allocation to the IT unit as a key moderator in risk mitigation. The study generates theoretical and practical implications on how IT governance and system modularity may jointly mitigate risk and foster supply chain digitization.
Keywords: IT governance; modular systems; risk mitigation; supply chain management
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List of Topics

#52 0.343 supply chain information suppliers supplier partners relationships integration use chains technology interorganizational sharing systems procurement buyer interfirm coordination enterprises flexibility
#264 0.130 risk risks management associated managing financial appropriate losses expected future literature reduce loss approach alternative mitigate failures failure cause mitigation
#116 0.119 research study influence effects literature theoretical use understanding theory using impact behavior insights examine influences mechanisms specifically context perspective findings
#212 0.073 business digital strategy value transformation economy technologies paper creation digitization strategies environment focus net-enabled services processes insights challenges key response
#8 0.060 decision making decisions decision-making makers use quality improve performance managers process better results time managerial task significantly help indicate maker
#53 0.055 knowledge application management domain processes kms systems study different use domains role comprehension effective types draw scope furthermore level levels
#76 0.055 governance relational mechanisms bpo rights process coordination outsourcing contractual arrangements technology benefits view informal business formal exchange hybrid complementarity flexibility