Introduction

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Inter-organizational systems such as Electronic Data Interchange (EDI) have been the main form of business-to-business e-commerce application in the automotive industry for the last three decades. Previous studies in EDI adoption examined its competitive advantages from an environmental, organizational and technological perspective. This study draws upon insights developed within the sociology of technology, in which innovation is not simply a technical-rational process of “solving problem,” but also involves technical, political and behavioral perspectives required for building inter-firm trust. The transition to cooperative relationships between buyers and suppliers may be more difficult for automotive companies due to high levels of complexity, compatibility, long lead times and ingrained adversarial supplier relationships of the past (Langfield- Smith & Greenwood, 1998). Further, security has become an important issue because EDI and most e-commerce systems do not operate unilaterally. For example, the Japanese automotive companies have a long- established history of developing relationships with their suppliers based on dependence and cooperation. Moreover, unlike the Japanese, in western countries like Australia, cooperative partnerships are a relatively recent phenomenon, and may be a distinct contrast to the adhoc relationships of the past.

We describe the Australian automotive industry followed by a discussion of the security issues from three perspectives: namely technical, political and behavioral. We then discuss the importance of trust amongbusiness partners in the automotive industry and conclude the chapter with implications for businesses.

Background Information of the Australian Automotive Industry

The Australian automotive industry has a well-developed supplier strategy which began from traditional EDI applications via value-addednetworks to Internet-based EDI and today e-marketplaces (e.g., Covisint.com). E-marketplaces involve many buyers and suppliers trading over the Internet. The automotive industry was the first Australian industry to introduce EDI on a coordinated industry-wide basis and has been using EDI since electronic data transmissions commenced in the mid-1980s. EDI was used as a medium to communicate and transact production requirements for the five car manufacturers (namely Ford, General Motors Holden, Toyota, Mitsubishi and Nissan) to their component suppliers.

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