Strategic payoff from EDI as a function of EDI embeddedness

A key issue facing IT researchers and practitioners has been the difficulty in realizing strategic payoff from IT investment. This study, drawn on sociological theories of embeddedness, addresses this key issue, with particular attention to the perspective of EDI network initiator. Cross-case analysis is conducted comparing three initiators of sophisticated EDI networks, who realized different levels of strategic payoffs. Results reveal that the achievement of strategic payoffs is a function of EDI embeddedness, which is defined as how central or peripheral a specific EDI network is to managing interfirm interdependence. In a model of EDI initiator strategic payoff, we argue that EDI embeddedness, which is influenced by existing interfirm relationship, moderates the impact of adopter EDI use on initiator strategic payoff derived from the EDI investment. Specifically, while high embeddedness motivates adopter strategic use, low embeddedness deters such use. The model is validated against three reported cases in the literature.