Information technology-enabled interactions, mutual monitoring, and supplier-buyer cooperation: A network perspective

This study, which integrates the literature on IT (information technology)-enabled interactions and governance mechanisms in interfirm relationships, proposes facilitated access to a network of partners as a key feature that distinguishes IT-enabled interactions from those that occur offline. Specifically, IT-enabled interactions improve interfirm network embeddedness, which in turn improves firms' perceived ability to mutually monitor each other. In contrast to the unilateral monitoring prevalent in prior research, the network-induced mutual monitoring, which reduces information asymmetry and improves power equity, improves cooperation performance without the backfiring “reactance” effect. Moreover, this study offers conceptual distinctions between formal and informal IT-enabled interactions and their different roles in supplier-buyer cooperation. A sample of 240 manufacturing firms in China contributes to this research, and the results strongly support the hypotheses. Overall, this study provides a better understanding of the role of IT-enabled interactions in supplier-buyer cooperation.