Computers & Industrial Engineering 65 (2013) 370377

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Computers & Industrial Engineering

journal homepage: www.elsevier.com/locate/caie

Effects of information technology alignment and information sharing on

supply chain operational performance
Fei Ye 1, Zhiqiang Wang
School of Business Administration, South China University of Technology, Guangzhou, 510640, China

a r t i c l e

i n f o

Article history:
Received 11 January 2011
Received in revised form 16 July 2012
Accepted 27 March 2013
Available online 6 April 2013
Keywords:
Information technology alignment
Information sharing
Resource-based view
China

a b s t r a c t
The paper aims to investigate the effects of information technology (IT) alignment and information sharing on operational performance in the context of supply chain. Based on the resource-based view, this
study identies IT alignment and information sharing as specic resources/capabilities for supply chain
partnership. Data from 141 Chinese manufacturers are collected to test the relationships among IT alignment, information sharing, and operational performance. The results show that (1) both IT alignment and
information sharing have direct and positive effects on operational performance, (2) IT alignment has an
indirect effect on operational performance through information sharing, and (3) IT alignment and information sharing have different emphases in operational performance improvement. The resource-capability-performance paradigm is extended to supply chain context in the emerging economy. Chinese
managers may have different emphases on IT resource/information sharing capability deployment for
operational efciency and effectiveness.
2013 Elsevier Ltd. All rights reserved.

1. Introduction
The productivity paradox in information system literature manifested that some organizations have spent great investment on
information technology (IT) with little benet, while others have
spent similar amounts of money with great success. Even IT is
investigated largely in the literature, mixed performance implications are provided in these studies (Lee, Johnson, & Tang, 2011).
It is argued that it is not the problem of IT itself, but how rms utilize and integrate their IT with their strategic partners (Kim & Lee,
2010). In recent two decades, increased outsourcing and collaboration in business have led companies to manage their businesses
from a supply chain perspective (Lambert & Cooper, 2000). Interrm partnership is a common practice in supply chain management (SCM) requiring that IT alignment should be achieved among
supply chain partners (Wu, Yeniyurt, Kim, & Cavusgil, 2006). In this
study, IT alignment refers to the similarity, connectivity, and compatibility of IT infrastructure between supply chain partners (Sanders, 2005; Seggie, Kim, & Cavusgil, 2006; Wu et al., 2006). Wade
and Hulland (2004) suggested that the greatest benets of IT
seemed to be realized when IT investment was coupled with other
complementary investment, and strategies, new business processes and new organizations. Although the marketing and nan Corresponding author. Tel.: +86 20 87112682.
1

E-mail addresses: yefei@scut.edu.cn (F. Ye), zhiqiangw@gmail.com (Z. Wang).

Tel./fax: +86 20 87110984.

0360-8352/$ - see front matter 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.cie.2013.03.012

cial performances are considered in the benets of IT alignment

(Seggie et al., 2006; Wu et al., 2006), we still have limited information on its operational impacts.
Information sharing is another critical factor for the success of
SCM implementation. Information distortion, which deteriorates
performance, is a key issue in SCM (Lee, Padmanabhan, & Whang,
1997). Thus, information sharing is highly emphasized in SCM by
both academics and practitioners. Information sharing is seen as
the fundamental capability in managing the ow of information
in the supply chain process (Shore & Venkatachalam, 2003). As a
key enabler of information sharing, IT alignment is a useful resource in realizing efciency and effectiveness in information management (Wu et al., 2006). Seamless information sharing among
supply chain partners needs IT infrastructure support. There are
arguments that some factors may mediate the relationship between IT and rm performance (Bharadwaj, 2000; Ravichandran
& Lertwongsatien, 2005). Therefore, the combined role of IT alignment and information sharing for operational performance needs
further investigation.
Moreover, our knowledge on these relationships is limited to
developed economies. It is interesting to test these relationships
in a developing country, such as China, where rms have different
supply chain practices and different levels of IT infrastructure. China is in the process of rapid development accompanied by rising IT
use. The Internet is widely accessible in large cities of China. However, although it is now much easier and more efcient for Chinese
rms to communicate with one another, China still lags behind

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F. Ye, Z. Wang / Computers & Industrial Engineering 65 (2013) 370377

western countries in terms of IT applications (Lockstrm, Schadel,

Harrison, Moser, & Malhotra, 2010). First, Chinese companies still
lack experienced, skilled, and capable IT employees. IT infrastructure, such as computers and telecommunications, is easy to acquire, but the lack of IT implementation skills inhibits the
effectiveness of IT in enhancing the operations of Chinese companies. Second, IT management in China is still weak. It may be due
to the observation that the governance and management of Chinese companies are dependent on the behavior and personality
of top managers rather than on standards and regulations (Chen,
Wu, & Guo, 2007). Third and most importantly, IT has not yet become a strategic resource for many Chinese rms. The strategic value of IT in Chinese rms is not as prominent as that in companies
in developed countries. The main purpose of IT in Chinese rms is
to improve administrative and operational efciency (Martinsons
& Westwood, 1997).
Despite the growing importance of Chinese manufacturers in
global supply chains and the growing use of IT, there has been
no previous solid empirical study on the relationships among IT
alignment, information sharing, and operational performance in
Chinas manufacturing industry. Foreign and Chinese scholars have
identied peculiarities in the case of China, indicating that western
management practices may not be applicable to the Chinese context (Lockstrm et al., 2010; Pun, 2001; Zhao, Flynn, & Roth,
2007; Zhao, Sum, Qi, Zhang, & Lee, 2006). For example, Lockstrm
et al. (2010) found that the use of standardized communication
technologies is very limited among automobile suppliers in China,
indicating that IT infrastructure in Chinese rms is substantially
different from that in the west.
China, an emerging economy, offers a fertile ground for investigating these issues in the context of supply chain. In recent
years, many companies have relocated their manufacturing
plants to China (Jiang, Baker, & Frazier, 2009), and China has become a power house in global supply chains. Since 1978, the
open-door policy and economic reforms have been changing
the way Chinese companies conduct their business. Before that,
most companies were state-owned and run under the central
planning system. A competitive market did not exist under such
system. Later, the country encouraged the establishment of private-owned companies and forced companies to compete in
the market. Most of the private companies that were rst established provided manufacturing services to western customers,
maximizing the cost advantage in China. Companies in China
have paid relatively more attention to business costs than those
in developed countries. Moreover, companies in China are developing rapidly and participating in global competition. Their
experience in providing manufacturing services enables them
to become responsive to customers.
Therefore, there is an urgent need to address the following
questions.
(1) How do IT alignment and information sharing inuence the
operational performance of Chinese manufacturers?
(2) How do Chinese manufacturers improve information
sharing in supply chain partnership through IT
alignment?
This paper is organized as follows. Section 2 reviews the related literature and hypothesizes on proposed relationships in
the conceptual model. Section 3 describes the design of the
questionnaire, the data collection procedure, and the validity
and reliability tests. Section 4 analyzes the data by structural
equation modeling (SEM) and presents the results. Section 5 discusses interesting ndings of the study. Finally, Section 6 concludes the paper, states the limitations of the study, and
presents prospects for future research.

H2a

IT Alignment

Cost Efficiency
H2b
H1
H3a
Information
Sharing

H3b

Customer
Responsiveness

Fig. 1. Conceptual model.

2. Theoretical foundation and hypothesis

Fig. 1 presents the model examined in this study. For manufacturers, the model shows relationships that are hypothesized to exist among IT alignment, information sharing, and operational
performance. The resource-based view (RBV) is adopted to support
the conceptual model of this study (Rai, Patnayakuni, & Seth, 2006;
Seggie et al., 2006; Wu et al., 2006). IT alignment among supply
chain partners (supply chain resources) is benecial to improvements in information sharing (supply chain capability). Moreover,
supply chain resources and capability improve operational performance. This study does not consider IT resources from the perspective of one rm but from the perspective of supply chains. There
are numerous IT resources in a company, including computeraided design/engineering, computer-aided manufacturing, computerized production planning, electronic data interchange (EDI),
and exible manufacturing systems. However, for IT resources to
bring rms competitive advantages in supply chain context, they
must be embedded in supply chain processes. IT alignment is a
valuable, rare, inimitable, and non-substitutable resource embedded into supply chain processes (Wu et al., 2006). The synergy of
IT infrastructure along the supply chain can be a source of competitive advantage (Bharadwaj, 2000; Rai et al., 2006). Moreover, supply chain resources are leveraged to build high-order supply chain
capabilities, such as supply chain integration (Rai et al., 2006).
Information sharing is also seen as a key component of supply
chain integration. Information sharing is dened as the extent to
which rms intend to exchange crucial and proprietary information with their supply chain partners (Hsu, Kannan, Tan, & Leong,
2008; Li & Lin, 2006; Monczka, Petersen, Handeld, & Ragatz,
1998). Information sharing is one kind of fundamental supply
chain capability that helps rms effectively deploy internal and
external resources to acquire competitive advantages (Shore &
Venkatachalam, 2003; Wu et al., 2006). It reects the dynamic aspect of a higher level of organizational capability that protects
rms against imitations (Teece, Pisano, & Shuen, 1997).
In this study, we focus on the operational performance of rms.
Cost efciency and customer responsiveness are two important
operational components of supply chain performance (Beamon,
1999). This study assumes that IT should rst improve operational
performance before rm protability. Moreover, the operational
impacts of IT are seldom investigated in the information system literature. Therefore, operational performance is used as a dependent
variable in the conceptual model of this study.
IT can be classied according to where it is used. Inter-rm IT is
widely used in transactions among rms. IT has been discussed in
the supply chain context (Gunasekaran & Ngai, 2004; Humphreys,
Lai, & Sculli, 2001), and electronic data interchange (EDI) has been
used for business transactions among supply chain partners in the
past (Srinivasan, Kekre, & Mukhopadhyay, 1994; Webster, 1995).
However, EDI standards are complex and difcult to learn; thus,
special technical skills are required to understand them. In addition, a high degree of customization is needed for this technology.

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F. Ye, Z. Wang / Computers & Industrial Engineering 65 (2013) 370377

In recent years, with the Internet boom, the use of electronic commerce has become widespread in the business world. The Internet
helps supply chain partners exchange information on demanded
products, available inventory, manufacturing process, and product
delivery (Lancioni, Schau, & Smith, 2003). The use of ERP systems,
such as SAP and Oracle, has been extended to supply chain partnership, enabling supply chain partners to plan and synchronize their
processes (Overby & Min, 2001). However, inter-rm IT necessitates huge investments that may not easily be met by rm nancial
resources. A case study by Lockstrm et al. (2010) found that Chinese automotive suppliers lack knowledge and experience in interrm IT, and have unreliable and under-performing IT infrastructure. Widely used inter-rm IT in the west, such as online supplier
portals, e-sourcing, and EDI, are not popular among Chinese rms.
Inter-rm IT is used to reduce operational costs and improve
customer service (Premkumar, Ramamurthy, & Crum, 1997). IT is
well accepted to facilitate rm operations (Dewett & Jones,
2001). IT can institutionalize the supply chain process and help
rms deal with organizational complexity (Kotzab, Skjoldager, &
Vinum, 2003). For example, Customer Relations Management system helps categorize customers and realize a systemic control of
customer relationship. Moreover, the use of IT increases the frequency of buyersupplier communication (Carr & Smeltzer,
2002), and inter-organizational systems, such as EDI and ERP, are
adopted to achieve better delivery goals through the reduction of
incomplete and erroneous orders (Ahmad & Schroeder, 2001; Salvador, Forza, Rungtusanatham, & Choi, 2001).
IT reduces communication and transaction costs (Mller &
Seuring, 2007; Malone & Crowston, 1994). With IT, open standards
become very important to inter-rm coordination. The development of open standards between rms can dramatically reduce
communication costs (Shapiro & Varian, 1999). As a popular platform for inter-rm coordination, the Internet can be easily used
in inter-rm communication because of its open standards (e.g.,
Transmission Control Protocol/Internet Protocol and eXtensible
Markup Language). Compared with the propriety technology of
EDI, the Internet is more easily applied in determining communication protocols and message formats.
In this study, IT alignment, which is one attribute of inter-rm
IT, is investigated. IT alignment among supply chain partners improves efciency in coordination (Sanders, 2005). The barriers to
inter-rm communication can be overcome by well connected IT
systems (Byrd & Turner, 2001; Kim, Cavusgil, & Calantone, 2006).
Moreover, IT alignment can enhance the effectiveness of customer
service. With compatible IT systems, the focal rm can easily store
and retrieve past information to support current business, thus
ultimately improving customer responsiveness. Therefore,
improvements in IT alignment can help enhance both the efciency and effectiveness of SCM.
H1a. An increase in the level of IT alignment enhances the cost
efciency of a focal rm.

H1b. An increase in the level of IT alignment enhances the customer

responsiveness of a focal rm.
Inter-organizational information sharing, as dened in operations management, includes real-time information on material
ow, order entry, shipping, and billing, as well as on collaborative
forecasts and plans (Marquez, Bianchi, & Gupta, 2004). Liu and Sahinidis (1996) classied information sharing into different kinds,
namely, demand information, inventory information, and transportation information. These kinds of information are seen as part
of supply chain integration (Welker, van der Vaart, & van Donk,
2008). By supplier integration, rms may ask for production information, design information, engineering change information, qual-

ity information, delivery information, and cost information (Chen &

Chen, 1997). Firms may also share order information, operational
information, strategies, and competition information with their
suppliers (Lee & Whang, 2000). There is also a classication based
on the level of information shared: transactional, operational, and
strategic (Li, Sikora, Shaw, & Tan, 2006).
It is argued that the imbalanced use of IT among supply chain
partners may inuence the level of information sharing (Forster
& Regan, 2001). IT, such as quick-connect electronic interfaces,
helps rms facilitate information sharing and processing, and aids
in SCM co-operation (Akkermans, Bogerd, Ycesan, & Van Wassenhove, 2003). IT is widely applied in different processes, such
as manufacturing, planning, and product development. In manufacturing processes, IT is mostly used to synchronize and automate
production processes in shop oors (Banker, Bardhan, Chang, & Lin,
2006). Through connections with other systems, manufacturing
data are easily shared among rmsand even with customers
and suppliers. Suppliers may know how the parts they have provided are used in the production process, and customers may monitor the production of the products they have ordered. ERP systems
are also widely deployed in the planning process. It facilitates
seamless information sharing and efcient resource deployment
in rms. In addition, a well established ERP system facilitates a
wide range of supply chain activities. In the product development
process, the application of computer aided design (CAD), computer
aided manufacturing (CAM), and computer aided process planning
(CAPP) helps in product and process design through the creation of
a common language (Boyer & Pagell, 2000), making redesign easy
and allowing the prompt reuse of past data. Through these IT infrastructures, information is easily transferred to other departments.
Communication channels are greatly improved by IT applications.
H2. An increase in the level of IT alignment among supply chain
partners enhances information sharing.
Previous SCM studies have emphasized the advantagessuch as
cost reduction and improved differentiationthat partners gain
from information sharing (Grifn & Hauser, 1996; Petersen, Handeld, & Ragatz, 2005; Yu, Yan, & Cheng, 2001). By improving the
accuracy of exchanged demand and performance information, a
manufacturer reduces product design and production planning
time, including inventory obsolescence, thus allowing greater
responsiveness to customer needs. One value of information sharing is cost reduction (Cachon & Fisher, 2000; Gavirneni, 2006; Wu
& Cheng, 2008). A manufacturer can control costs by reducing
redundancy through real-time information sharing. Intensive communication between external supply chain partners and a focal
rm offers opportunities to improve the accuracy of demand and
supply information, thus reducing inventory obsolescence.
Without information sharing with customers, it is difcult for
manufacturers to transfer promptly the delivery needs of customers to suppliers, thus inhibiting speedy delivery and reliable customer service. Real-time connection along material ows and
integrated inventory management can streamline production planning and strengthen the control of physical transformation processes and other logistic activities, leading to shorter lead time
(Cachon & Fisher, 2000) and higher delivery reliability (Rosenzweig, Roth, & Dean, 2003). The real-time sharing of information
with suppliers also helps meet the requirements of delivery strategy. The delivery performance of a rm is determined by the consistent and on-time receipt of the correct number and type of parts
from multiple suppliers (Ahmad & Schroeder, 2001). Hence,
improving the delivery capability of suppliers is crucial. Suppliers
receive high-quality information on the product and schedule
needs of manufacturers. Moreover, they share information on their
schedules and capabilities with manufacturers. This mutual ex-

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F. Ye, Z. Wang / Computers & Industrial Engineering 65 (2013) 370377

change of information should lead to improved delivery performance both for suppliers and manufacturers. Focal rms could arrange their production and delivery in advance and reduce the
drawbacks of uncertainties.
H3a. An increase in the level of information sharing among supply
chain partners enhances the cost efciency of a focal rm.

H3b. An increase in the level of information sharing among supply

chain partners enhances the customer responsiveness of a focal rm.

Since there was a single respondent for each company, the common method bias was assessed by the means of a Conrmatory
Factor Analysis (CFA) to Harmans Single-factor Model (Podsakoff,
MacKenzie, Lee, & Podsakoff, 2003). The models t indices were
worse
(v2 = 338.54,
d.f. = 65,
RMSEA = 0.173,
CFI = 0.639,
NNFI = 0.567). Such indices suggested that a single factor model
was not acceptable, thus the common method bias was small
and should not be a serious concern. Based on the above bias analysis, we were condent to proceed with these samples.

3.2. Measurement
3. Methodologies
3.1. Sampling
In this study, the survey method was used, and manufacturing
rm was taken as the unit of analysis. We chose middle managerswho usually take the title of plant or functional managers
as target respondents.
To ensure questionnaire reliability, the English version of the
questionnaire was rst developed and reviewed by knowledgeable
professors of operations management. The Chinese version was
then translated back into English. The back-translated English version was then checked against the original English version. In the
end, some questions were reworded to better reect the original
meaning of the questions in English. In addition, the Chinese version questionnaire was pilot-tested with more than 15 managers
from Chinese manufacturing companies. The data collected from
the pilot study was used to check the face validity of the measure.
China is a very large country with 28 provinces and autonomous regions, four cities under the direct administrative guidance
of the central government, and two special administrative regions
(Hong Kong and Macau). Pearl River Delta (PRD), one of the areas in
China experiencing rapid development, was chosen for data collection. Sample rms were selected through their connections with
the New Industrialization Research Institute of the university attended by one of the authors. In total, 365 manufacturing companies were selected for questionnaire distribution in October 2006.
Of the number, 141 respondents completed the questionnaire (response rate = 38.63%). Table 1 shows the prole of the responding
companies.
To investigate the possibility of non-response bias in the data,
responses from the early and late batches of returned surveys were
compared by t-tests. The last batch of survey responses received
was considered to be representative of non-respondents (Armstrong & Overton, 1977; Lambert & Harrington, 1990). The absence
of signicant statistical differences between the early and late response groups would imply that the non-response bias is not a
serious concern in the study.

The constructs and measurements of this study are shown in

Appendix A. The measurement items for IT alignment were extracted from various sources, including Seggie et al. (2006) and
Wu et al. (2006). The measures of IT alignment reect the level
of similarity, connectivity, and compatibility of the IT systems between the focal rm and its supply chain partners. They are perceived value by the managers of the focal rms. The measures of
information sharing were mainly adopted from the existing literature (Li et al., 2006; Zhou & Benton, 2007). For IT alignment and
information sharing, the respondents were asked to answer the
question To what extent do you agree with the following statements concerning your relationship with your supply chain partner? based on a ve-point Likert scale ranging from 1 (strongly
disagree) to 5 (strongly agree). We adopted the most commonly
used measures of operational performance: customer responsiveness and cost efciency (Ramdas & Spekman, 2000; Scannell, Vickery, & Droge, 2000). The respondents were asked to indicate
their performance improvement, on account of supply chain partnership, along these items. We used a ve-point Likert scale ranging from 1 (strongly disagree) to 5 (strongly agree).

3.3. Psychometric test

Unidimensionality means that a set of indicators relates to one
and only one constructs (Narasimhan & Jayaram, 1998). Conrmatory Factor Analysis (CFA) is used to evaluate unidimensionality.
The results in Table 2 showed that all factor loadings are statistically signicant and the model t is acceptable (v2 = 87.171,
d.f. = 59, RMSEA = 0.058, CFI = 0.963, NNFI = 0.951). The unidimenstionality is satisfactory according to Hu and Bentler (1999).
We assessed convergent and discriminant validity by CFA. Convergent validity was tested using the average percentage of variance extracted (AVE) from the construct items (AVE should be
P0.5) according to OLeary-Kelly and Vokurka (1998). The t index
is satisfactory (Table 3). To test for discriminant validity, we compared AVE for any two constructs with the square of the correlation
estimate between these two constructs. The AVE must be greater

Table 1
Respondent prole.

1. Employees
Below 50
51150
151300
301500
Above 500
2. Total Assets (10 thousands RMB)
Below 500
5011000
10015000
500110,000
Above 10,000

Number

Percentage

Total: 141
16
23
11
16
75
Total: 141
12
11
26
21
71

Total: 100%
11.35%
16.31%
7.80%
11.35%
53.19%
Total: 100%
8.51%
7.80%
18.44%
14.89%
50.35%

3. Industry
Automobile
Chemicals
Food
Computers
Electrical
Machinery
Communication
Textile
Others

Number

Percentage

Total: 141
10
15
11
29
17

Total: 100%
7.09%
10.64%
7.80%
20.57%
12.06%

10
7
5
37

7.09%
4.96%
3.55%
26.24%

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F. Ye, Z. Wang / Computers & Industrial Engineering 65 (2013) 370377

Table 2
CFA and composite reliability.
Construct

Items

Loadings

Error

Sig.

IT alignment

ITC1
ITC2
ITC3

0.609
0.892
0.834

0.199
0.176

7.357
7.327

***

INF1
INF2
INF3
INF4
INF5

0.666
0.853
0.777
0.598

0.099

7.988

***

0.092
0.091

9.436
7.067

***

PF1
PF2
PF3

0.790
0.606
0.742

0.134
0.131

7.930
6.413

***

PF4
PF5
PF6

0.733
0.838
0.769

0.124
0.113

8.305
9.218

***

Information sharing

Cost efciency

Customer responsiveness

***

CR

AVE

0.827

0.620

0.813

0.818

0.533

0.811

0.759

0.515

0.757

0.824

0.610

0.819

***

***

***

***

p < 0.001

Table 3
CFA t index (N = 141).

v2

df

v2/df

RMSEA

RMR

CFI

IFI

NNFI

PNFI

GFI

87.171

59

1.477
<3.0

0.058
<0.080

0.037
<0.050

0.963
>0.900

0.964
>0.900

0.951
>0.90

0.678
>0.5

.917
>0.900

Reference value

than the squared correlation estimate in order to have the discriminant validity (Hair, Black, Babin, Anderson, & Tatham, 2006).
Internal consistency or the reliability of the scale was assessed
by composite reliability (Fornell & Larcker, 1981). All composite
reliability values were acceptable (above 0.70; Table 2).

IT Alignment

0.301
Cost Efficiency
0.471***

0.430**
0.471***

4. Analysis and results

Information
Sharing

Table 4 shows the means, standard deviations, and inter-correlations of IT alignment, information sharing, cost efciency, and
customer responsiveness. Correlations between variables were calculated to evaluate roughly the proposed relationships (Table 4).
The proposed relationships are all signicant. As expected, cost
efciency and customer responsiveness are positively correlated
with IT alignment and information sharing. Information sharing
is positively correlated with IT alignment. Table 4 also shows that
IT alignment has a relatively lower value than information sharing.
It indicated the imbalance and incompatible use of IT among supply chain partners in most Chinese rms. However, there are quite
higher needs for information sharing capability.
The hypothesized model in Fig. 1 was further tested by SEM
using AMOS 7.0 software (Arbuckle, 2006). Maximum-likelihood
estimation was used with the input of covariance matrix of all
the items. Fig. 2 shows the results. The corresponding t indices
are shown in Table 5. These indices include the absolute ones
(the Chi-square, the root-mean-square error of approximation,
goodness-of-t index, etc.) and relative ones (the comparative t

Table 4
Correlations between variables.

IT alignment (1)
Information sharing (2)
Cost efciency (3)
Customer responsiveness (4)
Mean
SD
**

p < 0.01

(1)

(2)

(3)

(4)

1.000
0.370**
0.364**
0.477**
3.04
0.68

1.000
0.524**
0.410**
3.74
0.61

1.000
0.521**
3.81
0.60

1.000
3.82
0.57

Customer
Responsiveness
0.257***

** p<0.05, *** p<0.01

Fig. 2. Structural equation model of hypothesized research model.

Table 5
SEM t index.

v2(60) = 102.598, p = 0.001, GFI = 0.903, RMR = 0.041, RMSEA = 0.071,

AGFI = 0.854, ECVI = 1.176, ECVI = 1.300, ECVI = 6.157
CFI = 0.944, IFI = 0.945, NFI = 0.877, NNFI = 0.927
PGFI = 0.596, PCFI = 0.726, PNFI = 0.675, v2/df = 1.710

index, the incremental t index, etc.). The t statistics shows that

our model is adequate to t the data. The overall t conrms the
relationships among IT alignment, information sharing, and operational performance. IT alignment has a signicant and positive impact on information sharing supporting H1. No signicant
relationship between IT alignment and cost efciency is found
(p > 0.05). Thus, H2a is not supported. IT alignment has signicant
and positive impact on customer responsiveness, in support of
H2b. Information sharing has both signicant and positive impacts
on cost efciency and customer responsiveness supporting H3a
and H3b. Moreover, IT alignment has a greater effect on customer
responsiveness than on cost efciency, whereas information sharing has a greater effect on cost efciency than on customer responsiveness. Information sharing fully mediates the relationship
between IT alignment and cost efciency and partially mediates
the relationships between IT alignment and customer responsiveness. These ndings are discussed in the next section.

F. Ye, Z. Wang / Computers & Industrial Engineering 65 (2013) 370377

5. Discussion
The results of this study validate the direct effect of IT alignment on customer responsiveness in the supply chain context.
The literature provides inconsistent ndings of the role of IT in
SCM (Mller & Seuring, 2007; Saeed, Malhotra, & Grover, 2011).
IT actually affects rm performance, but the effects are sometimes
dependent upon IT alignment with a rms strategy, structure, and
environment (Tanriverdi, 2006). As stated by Brynjolfsson and Hitt
(1998), the greatest benets of IT seem to be realized when IT
investment is coupled with other complementary investment and
strategies; new business processes and new organizations all seem
to be important in realizing the maximum benets of IT (Wade &
Hulland, 2004). SCM requires that IT resource deployment be considered beyond a rms boundary. It may need complementary IT
investment from supply chain partners. IT alignment with supply
chain partners should be achieved to synchronize and coordinate
complex supply chain activities among supply chain partners
(Thun, 2010). Therefore, beyond IT alignment with a rms strategy
and structure, the benets of IT are achieved through IT alignment
with supply chain partners (Dong, Xu, & Zhu, 2009). Although Chinese manufacturers maybe lag behind in the managerial skill of IT
implementation (Lockstrm et al., 2010), IT do help in supply chain
competition if they are well connected and compatible with their
supply chain partners.
The results of this study also validate the indirect impacts of IT
on operational performance in the supply chain context. IT is a critical resource for supply chain agility (Ngai, Chau, & Chan, 2011).
The ndings from western countries neglected the indirect impact
of IT on supply chain agility through information sharing (Bayraktar, Demirbag, Koh, Tatoglu, & Zaim, 2009; Swafford, Ghosh, &
Murthy, 2008). By sharing the required information, IT enables
rm to perform better in cost efciency and customer responsiveness. The results are in accord with the resource-capability-performance paradigm (Bharadwaj, 2000). IT resources have an indirect
impact on operational performance through information sharing
capability. It is clear that IT alignment leverages on information
sharing to improve operational performance. For example, IT facilitates corporate processes related to information sharing, coordination, and activity integration (Wu et al., 2006), thus indirectly
inuencing rm performance. The relationship between IT and
rm performance is an enduring research topic in the IS literature
(Kohli & Devaraj, 2003). However, some rms gain from IT and
other do not. As such, researchers argue that there is a very indirect
causal link between IT and rm performance (Li, Yang, Sun, & Sohal, 2009). Previous studies may have overlooked some intermediate factors that mediate the relationships between IT and rm
performance (Barua & Mukhopadhyay, 2000; Sambamurthy, Bharadwaj, & Grover, 2003). IT is a mechanism that enhances information ow (Flynn & Flynn, 1999), which ultimately reduce the cost
and enhance the responsiveness. The use of compatible IT system
could help in transferring more valuable information. The more
the information is shared, the higher the synergy effects are created from the shared information.
The results of this study demonstrate that there exists a clear
difference between the effects of IT alignment and information
sharing on operational performance. Specically, the results reveal
the non-signicant effect of IT alignment on cost efciency. It
seems that cost is not the key concern in the adoption of inter-rm
IT infrastructures. Huge investments may be required to ensure
that the IT infrastructures of supply chain partners are similar,
seamlessly connected, and compatible. Therefore, service may be
the major concern in the adoption of inter-rm IT infrastructures,
possibly indicating that inter-rm IT infrastructures are differentiation focused. The purpose of IT infrastructure alignment with sup-

375

ply chain partners is to fulll the requirements of external

customers. However, it seems that information sharing is more
efciency focused. Transparency in supply chain information ow
may facilitate the material ow of supply chains. This is even more
important in China, as well as in other developing economies,
where the external environment changes rapidly. The logistics
infrastructure of the country is not well established in facilitating
integration among supply chain partners. Cost advantage is still a
major concern for Chinese manufacturers. IT alignment can only
inuence cost efciency through information sharing. It indicates
that IT investment may not be rewarded from cost reduction directly but from sharing valuable information. The ndings of this
study are very important in understanding why Chinese manufacturers should enhance information sharing to improve cost
performance.
6. Conclusion
This study empirically tests the impact of IT alignment and
information sharing on the operational performance of Chinese
manufacturers. Generally, both IT alignment and information sharing affect cost efciency and customer responsiveness. IT alignment also has an indirect effect on cost efciency and customer
responsiveness through information sharing, thus validating the
resource-capability-performance paradigm. Specically, IT alignment is more useful for customer responsiveness, whereas information sharing is more useful for cost efciency. Therefore,
sharing different kinds of information with supply chain partners
is most likely an efciency-focused mechanism. On the other hand,
IT alignment is an infrastructural mechanism that is more focused
on differentiation. It only inuences cost efciency through shared
information, indicating that it is not enough to improve cost efciency only through the construction of IT infrastructure without
sharing important information.
The ndings of this study have managerial implications for
companies that conduct business in China. Both IT alignment and
information sharing are needed for operational performance
improvement in supply chains. However, companies may have different emphases, depending on whether their competitive strategy
is efciency or differentiation focused. One unchanged thing is that
inter-rm IT can be leveraged to improve information sharing. In
addition, for Chinese manufacturers, the ndings are meaningful
in building supply chain partnerships. They show Chinese managers how supply chain-based IT and information sharing improve
operational performance.
This study has several limitations. First, we only focused on one
attribute of inter-rm IT, and future studies may emphasize on
other components. Second, there is no distinction in measuring
IT alignment and information sharing between the supplier and
customer sides. IT alignment and information sharing with customers or suppliers may have different effects on operational performance. Last, we assessed IT alignment and information sharing
with supply chain partners as perceived by focal rms. It will be
more rigorous if the perceived value is validated by the supply
chain partners of focal rms.
Acknowledgements
The authors greatly appreciate the anonymous referees for the
valuable and helpful suggestions to improve the paper. The paper
is supported by Natural Science Foundation of China (70971042,
71001041, 71090403/71090400, 71131003), Social Science Innovation Team Project of Guangdong Province Universities
(08JDTDXM63002), the Fundamental Research Funds for the
Central
Universities,
SCUT
(2011ZM0037,
2011SG003,

376

F. Ye, Z. Wang / Computers & Industrial Engineering 65 (2013) 370377

X2GSD2118490), and the Institute for Supply Chain Integration

and Service Innovation.
Appendix A
IT alignment.
To what extent do you agree with the following statement concerning your relationship with your supply chain partner? (scale:
15. 1 = strongly disagree, . . . 5 = strongly agree.)
ITC1: Our IT system is similar to those of our supply chain
partners.
ITC2: Our IT system can be seamlessly connected with those of
supply chain partners.
ITC3: Our IT system is compatible with those of our supply
chain partners.
Information sharing.
To what extent do you agree with the following statement concerning your relationship with your supply chain partner? (scale:
15. 1 = strongly disagree, . . . 5 = strongly agree.)
IF1: we prefer to share order processing information with supply chain partners.
IF2: we prefer to share maternal or nished product inventory
information with supply chain partners.
IF3: we prefer to share production capacity planning information with supply chain partners.
IF4: we prefer to share production planning information with
supply chain partners.
IF5: we prefer to share order forecasting information with supply chain partners.
Cost efciency.
To what extent do you agree with the following statement concerning the performance change due to the supply chain partnership? (scale: 15. 1 = strongly disagree, . . . 5 = strongly agree.)
PF1: total cost reduction.
PF2: manufacturing cost reduction.
PF3: inventory cost reduction.
Customer responsiveness.
To what extent do you agree with the following statement concerning the performance change due to the supply chain partnership? (scale: 15. 1 = strongly disagree, . . . 5 = strongly agree.)
PF4: increase order ll rate.
PF5: increase on-time delivery rate.
PF6: reduce out of stock rate.

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