Effects of inter-organizational compatibility on supply chain capabilities: Exploring the mediating role of inter-organizational information systems (IOIS) integration Rajesh Rajaguru a, 1 , Margaret Jekanyika Matanda b, ⁎ a SolBridge International School of Business, South Korea b Monash University, Australia abstract article info Article history: Received 14 February 2011 Received in revised form 14 January 2012 Accepted 8 September 2012 Available online xxxx Keywords: Inter-organizational compatibility Inter-organizational information systems (IOIS) integration Supply chain capabilities Retailing chains Growing globalization and environmental uncertainty have increased the challenges managers face in delivering services or products to the customer. Integration of information systems across partnering organizations has be- come the backbone of supply chain management, as amalgamation facilitates the sharing of information required to enhance organizational flexibility and responsiveness while minimizing risk and inventory costs. Using data from the Australian retailing sectors, this study investigates the mediating role of inter-organizational information system (IOIS) integration on the relationships between inter-organizational compatibility and supply chain capa- bilities. The results indicate that inter-organizational compatibility of technical, strategic, and cultural inter- organizational dimensions facilitate IOIS integration and supply chain capabilities. To maximize benefits for all chain members, IOIS integration needs to be embedded in the strategies and goals of partnering organizations. Business-to-business and industrial marketing managers need to be aware that IOIS integration processes require support of top managers of the partnering organizations and should be embedded in the organizations' strategic goals. © 2012 Elsevier Inc. All rights reserved. 1. Introduction Growing globalization, market dynamism, and environmental un- certainty have increased the challenges that managers face in deliver- ing the right service or product to the customer, at the right time, in the right quantities and condition, and at lowest delivered cost (Li & Lin, 2006). Dynamic environments require managers to create new value propositions that use relationship-driven customer agreements (Badii & Sharif, 2003), and in managing business-to-business rela- tionships. Information and computer technology has emerged as a crucial tool in managing business-to-business relationships (Pereira, 2009; Thomas & Griffin, 1996), and integration of information sys- tems across partnering organizations has become the backbone of supply chain management as it facilitates information sharing, there- by enhancing organizational flexibility and responsiveness while minimizing risk and inventory costs (Hartono, Li, Na, & Simpson, 2010; Krause, Handfield, & Tyler, 2007; Vickery, Jayaram, Droge, & Calantone, 2003). Inter-organizational information systems (IOIS) comprise boundary- spanning technologies and value-added networks that link suppliers and buyers (Craighead, Patterson, Roth, & Segars, 2006). IOIS can include value-added network-based electronic data interchange (EDI), Internet- based EDI, extranets, electronic exchange in supply chain management, and other decision support systems that use a common technology under a single ownership (Lyytinen & Damsgaard, 2011). Therefore, an IOIS can comprise two or more autonomous organizations that share in- formation and communication technology built around shared or com- mon IT capabilities that facilitate the creation, storage, transformation, and transmission of information across organizational boundaries (Johnston & Vitale, 1988). However, because of their boundary-spanning properties, IOIS are inherently complex, as these systems involve multiple partners with di- verse interests, cultures, and strategic intentions (Ireland & Webb, 2006), and as a result, their implementation can be problematic, as it re- quires significant effort to redefine and extend the boundaries of the participating organizations (Kim, Ryoo, & Jung, 2011). Consequently, inter-organizational compatibility is a key ingredient of IOIS integration (Waarts, van Everdingen, & van Hillegersberg, 2002). Within these boundary-spanning networks, effective integration requires business partners to be highly embedded operationally, technically, and strategi- cally (Hult, Ketchen, & Slater, 2004). Prior investigations in business- Industrial Marketing Management xxx (2012) xxx–xxx ⁎ Corresponding author at: Peninsula Building D4, Room 24, Peninsula Campus, Melbourne, VIC 3199, Australia. Tel.: +61 3 990 44021. E-mail addresses: rajeshrajaguru@solbridge.ac.kr, rajeshhorti@gmail.com (R. Rajaguru), Margaret.Matanda@monash.edu (M.J. Matanda). 1 151-13 Samsung 1-dong, Dong-gu, Daejeon 300-814, South Korea. Tel.: +82 42 630 8538, +82 10 7564 6662. IMM-06786; No of Pages 13 0019-8501/$ – see front matter © 2012 Elsevier Inc. All rights reserved. http://dx.doi.org/10.1016/j.indmarman.2012.09.002 Contents lists available at SciVerse ScienceDirect Industrial Marketing Management Please cite this article as: Rajaguru, R., & Matanda, M.J., Effects of inter-organizational compatibility on supply chain capabilities: Exploring the mediating role of..., Industrial Marketing Management (2012), http://dx.doi.org/10.1016/j.indmarman.2012.09.002