Internet-based financial EDI : Towards a theory of its organizational adoption

Financial electronic data interchange (FEDI) is an emerging technology that permits the exchange of structured financial documents via computers among trading organizations and banks. It can improve the efficiency and effectiveness of corporate business processes through the rapid transmission of financial information and the elimination of paper work. Amongst the many benefits of FEDI is better cash management, which enables an organization to conduct its business at a minimum net cost of cash surpluses and deficits. FEDI can be seen alongside EDI and supply logistic management as means of automating the typical trading cycle consisting of ordering, delivery and payment activities. However, despite its many advantages, FEDI as an innovation has yet to be widely adopted. Traditionally, FEDI uses private communication networks or value-added-networks for message transport. This has the drawback of high costs and the lack of a large user base. As the Internet is becoming ubiquitous in the business world, there is now a very large and still growing user base. In addition, the cost of using the Internet as a means of message transport is much lower than using other means of transport. Internet-based FEDI may therefore be a candidate for widespread organizational adoption in the near future. After a review of the Internet-based FEDI phenomenon, and drawing on the innovation diffusion and organizational studies literature, this paper develops a theoretical model for the organizational adoption of Internet-based FEDI, identifying the antecedent variables having a bearing on the organization decision to adopt financial FEDI. This model contributes an insight to the Internet-based FEDI adoption process, and provides useful anchoring points for directing further empirical investigations. © 1998 Elsevier Science B.V. All rights reserved.