One view holds that organizations are virtual to the extent that they outsource key components of their production processes, and that electronic networks make it easier to do this. The goal of the present paper is to examine explicitly the effects that use of electronic networks for transactions with suppliers has on firms' degree of virtualization. In so doing, we also highlight factors that influence the use of networks for coordination with suppliers, and the impact such use has on coordination success. Contrary to much recent speculation, the use of electronic networks for transactions was not associated with increased outsourcing, but rather with greater dependence on internal production. Moreover, the use of interpersonal relationships for coordination, which many think of as an alternative to electronic network use, was positively associated with greater network use. Surprisingly, use of electronic networks was negatively associated with such outcomes as order quality and efficiency, and satisfaction with suppliers, while more reliance on personal linkages was associated with better outcomes and mitigated the negative consequences of using electronic networks.

One view holds that organizations are virtual to the extent that they outsource key components of their production processes, and that electronic networks make it easier to do this. The goal of the present paper is to examine explicitly the effects that use of electronic networks for transactions with suppliers have on firms' degree of virtualization. In so doing, we also highlight factors that influence the use of networks for coordination with suppliers, and the impact such use has on coordination success. Contrary to much recent speculation, the use of electronic networks for transactions was not associated with increased outsourcing, but rather greater dependence on internal production. Moreover, the use of interpersonal relationships for coordination, which many think of as an alternative to electronic network use, was positively associated with greater network use. Surprisingly, use of electronic networks was negatively associated with such outcomes as order quality and efficiency, and satisfaction with suppliers, while more reliance on personal linkages was associated with better outcomes and mitigated the negative consequences of using electronic networks.

Understanding people and how they factor into complex information technology (IT) implementations is critical to reversing the growing trend of costly IT implementation failures. Accordingly, this article presents an approach to dissecting the social and organizational influences impacting peoples’ acceptance of technology designed to improve business performance. This article applies the diffusion of innovation theoretical framework to understand and analyze IT innovation implementation challenges. The diffusion approach is applied to two recent cases of implementations of IT supply chain innovations at two aerospace firms, both with complex, global, inter‐firm supply chains. Results indicate that several social and organizational factors do affect the implementation's success. Those factors include users’ perceptions of the innovation, the firm's culture, the types of communication channels used to diffuse knowledge of the innovation and various leadership factors.