Information orientation and its impacts on information asymmetry and e‐business adoption. Evidence from China's international trading industry
| Published date | 01 July 2006 |
| Date | 01 July 2006 |
| DOI | https://doi.org/10.1108/02635570610671506 |
| Pages | 825-840 |
| Author | Chang‐Tseh Hsieh,Fujun Lai,Weihua Shi |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
Information orientation and its
impacts on information
asymmetry and e-business
adoption
Evidence from China’s international trading
industry
Chang-Tseh Hsieh
College of Business, University of Southern Mississippi, Hattiesburg,
Mississippi, USA, and
Fujun Lai and Weihua Shi
College of Business, University of Southern Mississippi – Gulf Coast, Long
Beach, Mississippi, USA
Abstract
Purpose – To define the term “information orientation” and to propose a model to investigate how
information orientation influences information asymmetry and e-business adoption.
Design/methodology/approach – The model was tested using survey data from 307 international
trading companies in Mainland China. Partial least squares was chosen to conduct data analysis in
this study.
Findings – Results suggested that information orientation could significantly reduce information
asymmetry. This influence may be mediated by information sharing and information collection. It has
been found that information orientation could also significantly influence e-business adoption.
Research limitations/implications – Further studies are needed regarding how information
orientation and such other strategic orientations as marketing and learning orientations may interact
to influence business performance and organizational innovation.
Practical implications – Companies with stronger information orientation may have less
information asymmetry problems and would be more capable to make appropriate decisions based
on information. The information orientation also motivates the e-business adoption, which in turns
would help the company to share information among supply chain members and among internal
employees.
Originality/value – This study provides valuable insights for managers that building a stronger
information orientation may help companies motivate e-business adoption and alleviate information
asymmetry, thus improve decision-making processes.
Keywords Information strategy, Informationmodelling, Electronic commerce,China
Paper type Research paper
Introduction
Strategic orientation refers to the firm’s philosophy of how to conduct business
through a deeply rooted set of values and beliefs (Gatignon and Xuereb, 1997). For
decades, two strategic orientations, namely customer and competitor orientations, have
been well defined and examined in the marketing and strategic management
The current issue and full text archive of this journal is available at
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Information
orientation and
its impacts
825
Industrial Management & Data
Systems
Vol. 106 No. 6, 2006
pp. 825-840
qEmerald Group Publishing Limited
0263-5577
DOI 10.1108/02635570610671506
literatures. Customer orientation emphasizes on driving business decisions to meet
customer needs (Gulati and Oldroyd, 2005), while competitor orientation emphasizes
on observing and responding to the competitive moves of competitors (Porter, 1980,
1985). Evidences are abundant that these strategic orientations help companies to
adapt to customer needs and respond to rival firms’ moves, and thus result in superior
performance (Narver and Slater, 1990; Porter, 1980, 1985; Lee and Tsai, 2005).
Importance of information orientation, another form of strategic orientation,
however, has only been barely addressed. Even though customer orientation and
competitor orientation may lead to superior performance (Narver and Slater, 1990), the
superior performance may, at least partially, come from strategic use of information
and effective information-based decision making (Lee and Tsai, 2005). A firm with
strong orientation regarding information processing, including such as integration,
capture, access and use, could achieve better performance and reducing information
asymmetry.
As more and more businesses are exploring the competitive opportunities that
internet might offer, how in formation orientatio n may influence informati on
asymmetry and e-business adoption would be another important area to investigate
into. Since, information asymmetry plays an essential role in decision making,
companies with more information about such things as price, quality, and, etc. tend to
enjoy better competitive advantages (Barney and Ouchi, 1986). Lesson learned from
supply chain management further suggests that information asymmetry is a key
source of bullwhip effects (Filia, 2005). Therefore, reducing information asymmetry is
imperative for companies.
For years, many previous studies have shown that organizational factors are
important determinants of e-business adoption (Tornatzky and Fleischer, 1990). But
the majority of organizati onal factors addressed invo lve such organizational
characteristics as size, industry type and business scope (Zhu et al., 2004, 2006).
Studies addressed the relationship between information orientation and info rmation
asymmetry are very limited.
In this report, theory and hypotheses pertaining to the relationship between
information orientation and information asymmetry will be presented. Methodologies
developed to conduct empirical testing of the presented hypotheses will then be
described. Data collected from companies in international trade industry in China will
then be used to empirically testing the validity of these hypotheses. Results derived
from empirically analyses will then be used to propose some practical managerial
strategies. A brief discussion on major findings of this study and the limitations
conclude this report.
Theoretical background
An important measurement of a firm’s capability is its strategic orientation, which
reflects the firm’s philosophy of how to conduct business through a deeply rooted set of
values and beliefs (Gatignon and Xuereb, 1997). These values and beliefs define the
resources to be used, transcend individual capabilities, and unify the resources and
capabilities into a cohesive whole (Day, 1994).
Several types of strategic orientations, such as customer, competitor, and
technological have been proposed in marketing and strategy literatures (Gatignon
and Xuereb, 1997). Customer orientation refers to company’s business decisions, which
IMDS
106,6
826
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