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Inter-organizational systems emerging in recent years tend to be much more complicated than those illustrated in this paper. Their configuration is often a combination of horizontal and vertical linkages. For example, the Covisint joint electronic marketplace announced in February 2000 by General Motors, Ford, and DaimlerChrysler is an example of an IOS that goes beyond the distinctive categories depicted in the framework. The exchange formed by the Big Three automakers is expected to account for purchases of approximately $250 billion a year and involve about 60,000 suppliers (Lewis, 2001). This type of partnership provides operational support rather than strategic support. However, it is a hybrid of operational cooperation and operational coordination in that it involves horizontally linked firms (i.e., automakers) and vertically linked firms (i.e., an automaker to part manufacturers or to distributors). The vertical linkage is for the basic buy and sell functions, whereas the horizontal linkage is to create a critical mass by pooling resources, such as IT or capital, so that they can lower the costs via economies of scale.
While there is such a new trend toward industry-wide IOSs that are far more complex and larger in scale than those that appeared earlier, we need a conceptual framework that will enable us to gain fundamental insights into the way that an IOS is configured. This paper presents a new classification framework, focusing on the linkage of participants’ roles. It recognizes that IOSs need to be examined in terms of how their participants’ roles are linked (horizontal or vertical) and what key motivator drives the IOS development (i.e., strategic or operational). Based on these two dimensions, our framework classifies IOSs into four categories, including resource pooling, complementary cooperation, operational cooperation, and operational coordination.
Firms that consider introducing a resource-pooling IOS can rely on a growth strategy designed to expand the market, and can use joint databases as a key means to share business information. A complementary cooperation IOS can be implemented via a differentiation strategy in conjunction with a focus strategy, such that the existing product or service is combined with related products or services along the industry value chain to attract a specific customer segment with added values. Joint databases can be employed to provide real-time information sharing for this type of IOS. An operational cooperation IOS can be accompanied by a differentiation strategy to improve customer service and use a joint database as a key means to share information. Importantly, this type of IOS should be tightly integrated with existing operational systems. Finally, an operational coordination IOS can be built based on a cost leadership strategy designed to increase control and coordination.
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