Interorganizational System Standards Diffusion: The Role of Industry-based Standards Development Organizations

Matthew L. Nelson, Illinois State University, and Michael J. Shaw, University of Illinois at Urbana-Champaign

8/01/2008
(Original Publish Date: 6/1/2005)

Integrating cross-company business process standards in an interorganizational system (IOS) context is an emerging phenomenon on several business fronts. The practice is viewed as an enabler towards solidifying business to business connections, streamlining cross-company processes and providing a foundation for web-services. Although the practice is not new, most notably electronic data interchange (EDI) with X12 standards, recent technological innovations have enabled the emergence of IOS standards that are web-enabled, modular, scalable, cost efficient, and structured around cross-company business process standards. Despite their inherent benefits, the adoption and diffusion of web-based IOS standards has been an extraordinary challenge throughout many industrial groups. This paper examines the diffusion of interorganizational system standards among members of industrial groups where an IOS standards development organization (SDO) exists. A conceptual innovation diffusion model is developed as a basis to understand the factors and determinants concerning the diffusion of IOS standards. The innovation - organizational - environmental (IOE) lens is employed in the research design and extended to include attributes associated with the SDO, cross-company business processes and the perceived network effects. The diffusion process is examined through a multi-stage technology assimilation scale. An empirical study is conducted based on cross-sectional surveys of 102 firms from 10 industrial groups encompassing 15 SDOs. The significant determinants of web-based IOS standards diffusion were found to be: installed base, top management support, feasibility, SDO participation level, direct network effects, mission and conduciveness towards interoperability. Comparisons between determinants of adoption versus deployment stages are provided. We also examine the role of industry-based voluntary-consensus standards development organizations, the IOS standards development process, and industrial group coordination of IOS standards.