Findings and Discussion

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Background Information of the Case Sites

The importer in Figure 2 provides shipment information to the customs broker, who then prepares customs clearance documents in order to clear the importer's goods. The customs broker transmits those documents to the ISP, who translates them to suit the format required by NZ Customs. NZ Customs follows a routine check, which includes intelligence testing, and issues a delivery order to their Internet service provider, who translates it back to suit the format of the customs broker. The customs broker then issues an invoice, together with a customs declaration document, to the importer who can now collect their goods. Figure 2 also shows three inter-organizational-dyads (shown as oval shapes A, B, and C); that is, between NZ Customs and their ISP (A), ISP and customs broker (B), and the customs broker and importer (C).

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Figure 2: Contextual Rich Picture of the Four Sites.

Antecedent trust between the importer and customs broker is high, as the customs broker requires complete accurate shipment information from the importer in order to prepare customs clearance documents. Alternatively, the importer is dependent and relies on the ability of the customs broker to clear their goods quickly and promptly. On the other hand, the situation between NZ Customs and their Internet Service Provider (ISP) was slightly different. It was expected of the Internet service provider to undertake prompt delivery and receipt of B2B e-commerce transactions (documents) within certain time frames, as some goods may be perishables. Hence, inter-organizational-trust was important, as it determines the extent of e-commerce participation by all four sites.

Background Information of the Case Sites

The first case, NZ Customs, is a large public sector organization with seven hundred employees. NZ Customs undertakes the clearance of importing and exporting documents. It uses CusMod (Customs Modernization), a complex sophisticated alert system that performs intelligence testing via message queue series (a priority-based software). CusMod uses X400 with EDI, integrates information and electronic processes in order to identify and process goods and passengers. The objectives of CusMod included:

  • have all invoice information transmitted electronically before shipment,

  • enable pre-clearance of most shipments,

  • enable consistency of declarations to customs,

  • reduce customs clearance costs through the elimination of line fees, and

  • assist with automated calculation of landed costs.

CusMod's main business functions include providing clearance service and information regarding import and export (of goods, services and people) coming in and leaving the country (both nationally and internationally). NZ Customs has more than 200 trading partners, including custom brokers, (agents), regular importers and exporters. Their B2B e-commerce transactions include cargo information, shipping documentation, clearance documents, and passenger information (both flight and sea) that are transmitted via Cusmod. All incoming transactions have to go through NZ Customs Internet service provider.

The second case is NZ Customs Internet Service Provider (Electronic Commerce Network Limited (ECN)). It is New Zealand's leading trusted electronic business intermediary. ECN's main role is to facilitate technical and operational processes for organizations that want to adopt B2B e-commerce, and they provide services that enable business transactions between applications across any network and organizations. In other words, ECN outsource their client-based technological services and operations to almost four thousand trading partners. ECN's technology provisions are designed to meet their trading partners' business requirements through mapping and translation services. ECN thus creates a gateway for business electronic transactions (including purchase orders, invoices, way bills, compliance with government agencies, and value added services, such as payment and fulfillment transactions).

The third case, Customs Agent Wellington Limited (CAWL), is a customs broker. It is a small organization with seven employees. Their main role (as a trade facilitator) is to provide customs clearance services for importers and exporters. Their business reach is local (that is, within the Wellington region), where they serve fifteen importers (their trading partners). They use 'Trade Manager', a software designed to meet the needs of New Zealand exporters and importers. Trade Manager is an e-commerce application which uses Microsoft access together with visual basic application, and provides real-time tracking information. The system enables the creation of purchase orders, thus helping to manage shipping procedures. Exporters use it to prepare export documentation, including invoices, shippers' letters of instruction, picking and packing lists, order acknowledgments, certificates of origin, and customs declarations. Importers use Trade Manager to manage their orders, keep a database of all their shipments, and calculate accurate landed costs. All events are recorded against each job and order on a date/time basis, and memos can be created and referenced/filed to each job for future reference, thus enabling importers to achieve lower clearance costs.

The fourth case is an importer who imports kitchen gadgets, plastic, baby wear, and cosmetics, and distributes them to the big five supermarkets in New Zealand (including Woolworth, New Worlds, Big Fresh, Countdown, and Pak & Save). The importer obtains their goods cleared through their customs broker. The importer has been using Trade Manager for the past five years. Their business transactions include invoices, line items, local charges, freight charges and storage charges. Most of these charges are automatically calculated in the Trade Manager via prearranged agreements on prices and charges. Thus, when a shipment arrives at the port the importer provides information to their customs broker, who will then process the clearance of their shipment through customs.

Tables 3 and 4 provide additional background information about the four case sites.

Table 3: Case Study Characteristics.

Case Sites

Organization Type, Size and Number of Employees

Nature of business

Type of B2B e-commerce application

Case Study - 1

(C1)

NZ Customs Public Service Sector Large 700 employees

Intelligence and clearance testing of goods imported and exported

Custom Modernization (CusMod) since 1997 EDI X400, X25, now via the Internet

Case Study - 2

(C2)

Internet Service Provider Private organization SME 14 employees

Service provider for electronic transactions exchanged between Customs NZ and their trading partners (importers & exporters)

Internet EDI X400, X25

Case Study - 3

(C3)

Customs Broker (Agent) Private organization SME 7 employees

Clear goods from customs for importers and exporters

Trade Manager using Microsoft Access and Visual basic applications

Case Study - 4

(C4)

Importer Private organization SME 13 employees

Imports kitchen gadgets, plastic, baby wear and cosmetics

Trade Manager Using Microsoft Access and Visual basic applications

Table 4: Characteristics of Participants.

Case Study Participants

Job Title

Age Range

E-commerce Experience

Case Study 1 (C1)

Intranet administrator

40-50

Mature - 9

Case Study 1 (C1)

Consultant

40-50

Medium - 6

Case Study 1 (C1)

CusMod coordinator

35-45

Medium - 5

Case Study 1 (C1)

Manager - IT Services

35-45

Medium - 6

Case Study 2 (C2)

Chief Executive Officer

45-55

Mature - 9

Case Study 3 (C3)

Director

50-65

Mature - 9

Case Study 4 (C4)

Financial Administration Manager

20-29

Minimum - 2

In Table 4, e-commerce experience was measured via a Likert (Minimum - (0-3), Medium - (4-6), Mature - (7-10)). The data collected from the interviews, discussions and documents were analyzed in order to test the research propositions. The next section discusses the findings of the four case studies.

Research Proposition 1 -: Technology Trust is Positively Associated with Perceived Benefits of E-Commerce

The findings suggest that the relationship between trading partner trust and perceived benefits of e-commerce was strongly supported. NZ Customs outsource all incoming and outgoing business transactions to their Internet Service Provider, who is responsible for accurately and correctly processing these transactions before transmitting them to NZ Customs for intelligence testing.

The intranet administrator of NZ Customs stated:

"This massive re-engineering of computer systems and processes is our single biggest investment made by the government, and it has put us firmly at the forefront of Customs innovation world-wide. If our ISP was unable to provide us with security and efficiency, then we always have a choice to outsource our business processes to another Internet service provider."

NZ Customs sales consultant stated:

"Since, we are paying our ISP, we trust them to provide us with transaction integrity. We have to establish a successful track record in order to survive the competitive e-commerce environment."

Thus, role competence (as in quality of services) from the ISP led to increased credibility and confidence.

The importer indicated that:

"By demonstrating a willingness to share information, that is timely, accurate, and relevant, we are able to perceive high competence trust from our customs broker. Competence trust was seen in the form of receiving real time tracking information thus saving the importer with a lot of time, and costs. Furthermore, the customs broker also assisted us in building our reputation, as we were able to provide accurate estimate arrival dates of goods to our customers."

Therefore, trust reduces the need to implement extreme control safeguards and paper trials contributing to economic benefits, and opened up the willingness to share information and communicate.

NZ Customs reported that:

"The entire process involving intelligence testing was automated and cannot be tampered by NZ Customs employees or any unauthorized persons. However, when we first implemented CusMod, the error rate was 40-50%, but with tolerance from our ISP, and adequate training given to our employees, we now achieve an error rate of less than 10%. Furthermore, the Cusmod system, produces three outputs namely, CUSDER for customs declaration, CUSCAR for customs cargo, and CURRES for customs response that either confirms or rejects CUSDER and CUSCAR. If the output was confirmed, then the system will automatically issue a delivery order and an invoice, or else, return an error message. The error message in most cases is due to insufficient information about the goods to be cleared."

The director of ECN stated:

"Sometimes we need to deliver EDIFACT format type of messages. During these times we will charge our trading partners a transaction fee for receiving and transmitting messages in EDIFACT format. We do consult with other trading partners regarding electronic trading as most small businesses lack the capital, knowledge, skills and awareness of the full potential of Internet e-commerce applications, and in order to remain competitive in the global e-commerce market (other trading partners) they have outsourced their business transactions to us."

The Internet service provider also provides additional services that include 24 hours x seven availability of the network, maintenance of network, help desk, maintenance of trading partner relationships, providing (correct details), reporting of fault, and direct debit authority schedules that contributed towards economic and relationship related benefits. The ISP CEO stated:

"We do have a firewall in our system in order to separate the flow of transactions between our trading partners. We allocate unique identifiers for each of our 4000 trading partners. Furthermore, our trading partners used a dial-up facility to access our mailbox. Hence, each one of them have to log onto our system via User IDs and passwords, thus achieving confidentiality, authenticity, non-repudiation, availability and transaction integrity."

NZ Customs sales consultant stated:

"Since, we are paying our ISP, we trust them to provide us with transaction integrity."

NZ Customs and the importer reported that:

"They have installed an anti-virus software program in all their computer systems, in order to protect their databases. In addition, NZ Customs undertakes a daily backup of their system, while the importer carries a hardcopy version of all purchase order numbers, invoice numbers, reference numbers as a daily backup via a ledger."

In order to provide a basis for comparison between technology and trust, some argue that benefits are derived from technology, rather than from the trading parties. Nevertheless, it is the trading partners who actually input data into the system for responses.

Research Proposition 2 -: Technology Trust is Negatively Associated with Perceived Risks of E-Commerce

The findings suggest that the relationship between technology trust and perceived risks of e-commerce was not strongly supported. One possible explanation for this could be the role of the Internet service provider, who is responsible for all incoming and outgoing transactions. The importer indicated that:

"Their risks lie in their shipment information being leaked out to other competitors by their customs broker, whom they say sometimes fax documents, and the fax may be seen by their employees. The fax actually reveals our quantity of stock imported for each delivery order."

Hence, there are risks in applying poor business practices, particularly in a small firm, as most employees perform multi tasks, and hence, the risks of information being exposed is even greater.

Research Proposition 3 -: Relationship Trust is Positively Associated with Perceived Benefits of E-Commerce

The findings suggest that the relationship between relationship trust and perceived benefits was strongly supported. NZ Customs outsource all incoming and outgoing business transactions to their Internet Service Provider, who is responsible for accurately and correctly processing these transactions before transmitting them to NZ Customs for intelligence testing. The ISP CEO stated:

"We have to establish a successful track record in order to survive the competitive e-commerce environment."

Thus, the consistent competence relationship trust (as in quality of services) from the ISP led to increased credibility and confidence.

Research Proposition 4 -: Relationship Trust is Negatively Associated with Perceived Risks of E-Commerce

The findings suggest that the relationship between relationship trust and perceived risks was not strongly supported. The importer admitted that:

"We did face initial uncertainties in using the Trade Manager which led to dependence on our customs broker. These interdependencies gradually led to an imbalance of power. Although, our customs broker did provide us with free software, and initial training, we were left in a difficult position. It is not something that you have outsource as, we had to change our internal business processes, in order to facilitate and simplify the business processes of the customs broker which took us some time to get it completely right."

Opportunistic behaviors between trading partners led to perceived relational risks of e-commerce. The importer reported:

"Our customs broker did appear to exercise opportunistic behaviors, when they increased the charges and costs for clearance. Thus handling discrepancies arose from a misunderstanding in calculating charges, due to the conversion of currencies from different countries did cause a situation of conflict. In most cases the customs broker had to end up explaining to us, how they derived at the figures."

Research Proposition 5 -: Perceived Benefits of E-Commerce are Positively Associated with E-Commerce Participation

The findings suggest that the relationship between perceived benefits of e-commerce and e-commerce participation was strongly supported. All four cases reported a gradual increase in the volume and dollar value of their B2B transactions sent and received via e-commerce applications. NZ Customs stated, "it was a legal thing, we had to provide a statutory declaration via an electronic signature stating that the goods were cleared." Furthermore, both NZ Customs and the importer reported that they did experience savings from storage costs. The importer indicated:

"Our customs broker did assists us in maintaining long-term relationships with their trading partners' due to fast and efficient service that contributed to accurate real time information, in turn enabling them to make strategic decisions."

Research Proposition 6 -: Perceived Risks of E-Commerce are Negatively Associated with E-Commerce Participation

The findings suggest that the relationship between perceived risks of e-commerce and e-commerce participation was not strongly supported. NZ Customs admitted that it was a big decision for them to outsource their transactions to their Internet service provider. Their concern was that poor business practices could lead to perceived risks of e-commerce. The security analyst indicated that:

"The time we required to train our staff on the new system and managed our 250 trading partners (comprising of regular exporters, importers, customs brokers and agents) would have created additional administrative time and costs."

Although a cost benefit analysis was seen as critical in e-commerce participation, we realized that establishing a cooperative network of trading partner relationships was equally important in order for trading partners to communicate, cooperate, and collaborate effectively.

The refined model of inter-organizational-trust within inter-organizational-dyads in e-commerce participation was developed from both the multiple case study findings and the theoretical foundations on trust in business relationships. Table Five outlines the characteristics of a refined model of the three stages of inter-organizational-trust in e-commerce participation. The similarity between NZ Customs, customs broker and importer was trading with each other, which was almost 10 years. The impact of e-commerce participation by smaller organizations such as the customs broker and importer was successful. One possible explanation for this is the simplicity of their e-commerce application, and that for security reasons their e-commerce application was not connected to the networks. The differences between NZ Customs and their Internet service provider include the outsourcing of part of their e-commerce processes to their Internet service provider.

It is clear that trust needs time to develop, and it evolves gradually from one stage to the next stage, although B2B e-commerce systems and applications facilitate the development of initial competence trust. The model identified three stages leading to the development of inter-organizational-trust, thus paving a way for trading partners to identify which stage of trust they and their trading partners belong to. For example, new e-commerce adopters would concentrate on training trading partners to use their e-commerce applications correctly, thus taking a bottom-up approach in analyzing antecedent trust behaviors. Hence, the focus is on an individual trading partner's competence, skills, and ability to operate B2B e-commerce applications, transactional objective trust, thereby emphasizing economic benefits.

Business promises derived from automated e-commerce applications provide economic benefits and consistent positive behaviors of trading partners led to trading partner satisfaction, thereby contributing to relationship-related benefits. Consistent positive competence trust led to interpersonal interactions between trading partners of both organizations. Repeated, consistent achievement of relationship-related benefits from reliable trading partners led to predictability and trustworthy behaviors of trading partners. This further encouraged trading partners to invest in their trading partner relationship (as in renewing the trading partner contract), increasing the order (as in volume, dollar value of goods), and reducing opportunistic behaviors (power, control, and imposing strict deadlines). Thus, repeated behaviors of trading partners enable predictability trust to develop, thereby leading to a middle-out approach in analyzing antecedent trust behaviors. Hence, the focus gradually evolves from transactional objective trust to relational subjective trust. Finally, goodwill trust focused on institutional (organizational) reputation and brand names of products accomplished through best business practices, which in turn contributed towards perceived strategic benefits. Although goodwill trust is an accumulation of both competence and predictability trust, the focus is on the organization as a whole, thus taking a top-down approach in analyzing antecedent trust behaviors of trading partners. Figure 3 presents the model of inter-organizational trust within inter-organizational dyads.

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Figure 3: Model of Inter-Organizational Trust within Inter-Organizational Dyads in E-Commerce Participation.

The model demonstrates the impact of trading partner trust in a socio-economic e-commerce situation, where business relationships begin with transactional trust that gradually moves to relational trust, where the focus is on building trading partner relationships.



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Advanced Topics in Global Information Management (Vol. 3)
Trust in Knowledge Management and Systems in Organizations
ISBN: 1591402204
EAN: 2147483647
Year: 2003
Pages: 207

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