Using Organizational Information Processing Theory to Examine the Relationship between Information Sharing and Supply Chain Performance

Supply chains operate under conditions of uncertainty, and chain members exchange information as a means to mitigate such uncertainty within the chain. While these exchanges have largely been viewed as a positive method of achieving operational cohesion, some supply chains appear to benefit more from increased levels of information sharing than others. To assist in explaining the performance differences experienced by supply chains engaged in information-sharing activities, a new perspective of information sharing within supply chains based on organizational information processing theory (Galbraith, 1973) is introduced. More specifically, it is posited that individual supply chains may be examined as single information processors and that their characteristics can induce complexities in the shared information—ultimately an issue that affects how supply chains process this information. Furthermore, the degree to which supply-chain members’ information systems are compatible with each other is posited to also play a significant role in information-processing capabilities.