Enhancing interfirm relationship and performance through internet driven management of knowledge processes

Abstract

With the emergence of the internet, interorganisational interactions are significantly going digital. However, researchers are strongly divided over the effect of the internet on firm performance. This theoretical paper discusses the effect of internet usage for transactions, communications and marketing between value chain partners, on interfirm relationship and performance. This analysis is done holistically through the theoretical lens of computer mediated communication, knowledge management, organisational learning, and the resource-based view. The paper's argues that internet usage between partner firms does have a positive effect on information sharing and joint problem solving, in turn positively affecting interfirm relationship and performance. Propositions and a theoretical framework of internet driven management of interfirm relationship and performance are developed to reflect these effects.Biographical notes: Samit Chakravorti holds a Bachelors degree in Science, and an MBA and PhD in Business Administration from AACSB accredited institutions in the USA. He has published multiple articles in academic journals, conference proceedings and a trade book on customer relationship management. His research interests fall in the areas of customer relationship management, sales and distribution. He also has nine years of teaching experience in the USA and six years of sales experience working in multinational firms in India. His teaching interests include customer relationship management, international business/marketing, marketing management and sales. favour of CMC because it may allow more focus on the task and less focus on the social aspects of communication, leading to higher quality of task related communication (Hollingshead and Contractor, 2002). The task-technology fit theory clarifies the effectiveness of the electronic communication media by saying that electronic media with different capabilities are needed for different types of collaborative tasks (e.g., problem tasks vs. judgment tasks) for it to be effective and all electronically mediated communication are not universally less effective than FTF communication (Zigurs and Buckland, 1998). All the above mentioned theories are in essence arguing that electronic communication will be just as effective as face o face communication in the long run despite comparative lack of social presence and media richness, because individuals will adapt to the electronic communication. Kock (2004) in his effort to reconcile all the conflicting theories on CMC took an evolutionary view of analysing CMC coming up with his psychobiological model. The psychobiological theory asserts that over time the 'unnaturalness' of the electronic medium will lessen and it will become an effective means of communication because with repeated interaction with the medium and communication partners, participants will develop CMC related schemas which may counter the effect of schemas which are biased towards FTF interaction. Overtime, Kock argues that repeated use of the internet f...