The effect of EDI on market channel relationships in retailing

Many of the economic advantages of using Electronic Data Interchange (EDI) result from improved relationships between business trading partners. This study develops and tests a model explaining the effects of EDI on three structural variables of inter-organizational relationships: channel intensity, formalization and information quality. The model also includes the effects of these structural variables on cooperation and conflict between trading partners, and on satisfaction and performance in a marketing channel. The model is based on Van de Ven and Ferry's theory of inter-organizational relations and the literature on marketing channels. Responses from 97 retail companies to a mail survey indicated support for the effects of EDI use on channel intensity and formalization but not on channel information quality. Moreover, intensity and formalization were positively related to channel cooperation but not to conflict. Channel performance was positively related to channel cooperation and negatively related to channel conflict. These findings suggest that EDI use improves cooperation between trading partners and leads to greater satisfaction and performance in electronically-mediated business transactions. (C) 1997 Elsevier Science B.V.