Information & Management 43 (2006) 336–349

www.elsevier.com/locate/dsw

Assimilation patterns in the use of electronic procurement

innovations: A cluster analysis
Arun Rai a,*, Xinlin Tang b,1, Paul Brown c,2, Mark Keil d,3
a
Department of Computer Information Systems, Center for Process Innovation, Robinson College of Business,
Electronic Commerce Institute, Georgia State University, 35 Broad Street, Atlanta, GA 30303, USA
b
Center for Process Innovation; Robinson College of Business, Georgia State University, Atlanta, GA 30303, USA
c
Clark Atlanta University, Atlanta, GA 30314, USA
d
Department of Computer Information Systems, J. Mack Robinson College of Business,
Georgia State University, Atlanta, GA 30303, USA
Accepted 28 August 2005
Available online 24 October 2005

Abstract
Electronic procurement innovations (EPI) have been adopted by many firms as a means of improving their procurement
efficiency and effectiveness, but little research has been conducted to determine whether the assimilation of EPI really increases
procurement productivity and which factors influence its assimilation. Drawing on data from 166 firms, we conducted an
exploratory study to address these questions, using cluster analysis that revealed four different clusters or patterns of EPI
assimilation: none, focused niche, asymmetric, and broad-based deployment. The level of EPI assimilation was closely related to
procurement productivity. Greater levels of EPI assimilation were associated with higher levels of top management support and
greater IT sophistication. Also, interesting patterns emerged between the various elements of EPI infrastructure capability,
specifically flexibility and comprehensiveness of standards, EPI security, and the level of EPI assimilation.
# 2005 Elsevier B.V. All rights reserved.

Keywords: Electronic procurement innovations (EPI); Procurement productivity; Cluster analysis

1. Introduction procurement process [34]. This process, which serves

As companies strive to provide more value to
customer by improving site performance and reducing
costs, they are also turning their attention to the
* Corresponding author. Tel.: +1 404 651 4011;
fax: +1 404 463 9292.
E-mail addresses: arunrai@gsu.edu (A. Rai),
xinlin.tang@eci.gsu.edu (X. Tang), pbrown@cau.edu (P. Brown),
mkeil@gsu.edu (M. Keil).
1 purchased [6]; e.g., on average it costs $ 107 to process
Tel.: +1 404 463 9309; fax: +1 404 463 9292.
2
Tel.: +1 404 880 8154.
3
Tel.: +1 404 651 3830; fax: +1 404 651 3842.
as the interface between an organization and its suppliers,
used to be viewed as having little strategic importance
[39,44,56]. Many purchasing departments were viewed
as merely ‘‘buying’’ or ‘‘shipping’’ units. In addition,
their function was inefficient [47], e.g., nearly 95% of the
non-production goods, which account for a third or more
of a corporation’s expenditures, are still acquired using
paper-based processes [18]. The lack of efficiency is so
bad that many companies spend far more on managing
the procurement cycle than on the goods actually
a paper-based purchase order with an average cycle time
of 7.3 days from order to fulfillment [10].

0378-7206/$ – see front matter # 2005 Elsevier B.V. All rights reserved.
doi:10.1016/j.im.2005.08.005
 A. Rai et al. / Information & Management 43 (2006) 336–349 337

IT provides a means to improve the procurement
process by providing a digital infrastructure for
collaboration [51]. General Electric (GE) in the USA
is a company which is realizing benefits by using the
Internet. Its trading process network (TPN) is an online
business community that allows it to transact over $ 1
billion worth of business with more than 1400 suppliers
around the world. TPN simplifies the old time-consuming
contract bidding and award processes. Unlike industry
giants, most companies are using off-the-shelf solutions
to facilitate their procurement process. Electronic
procurement tools are targeted at procurement related
activities that enable organizations to integrate processes
with suppliers and yield benefits for participants in the
value chain [11,13].
Benefits associated with investment in electronic
procurement tools are supposed to include increased
information visibility and reduced search time. How-
ever, these possible benefits cannot guarantee perfor-
mance gains: a link should be established between
technology adoption for different facets of the
procurement process, how these facets are facilitated
by technology, and performance improvement.
Since there has been no prior research on the usage
patterns of EPIs across buyer organizations, we decided
to conduct a survey to discover distinct usage patterns and
investigate their relationship to procurement productivity
and its technical and managerial enablers. Towards this
end, we addressed the following three questions:
(1) What distinct EPI usage patterns can be observed by
examining different levels of EPI assimilation
across key EPI innovations?
(2) How do different EPI usage patterns relate to
procurement productivity?
(3) How do IT-enabled process innovation enablers,
specifically top management support, IT sophistica-
tion, and EPI infrastructure, influence EPI assimila-
tion?
2. Electronic procurement innovation
To improve the procurement process, many
organizations have started to use electronic pro-
curement innovations (EPIs); these, when acquired
and deployed, change how an organization conducts
procurement. Core procurement processes include
supplier selection, order placement, order fulfillment,
and payment and settlement [57]. Each of these
processes is supported through EPIs that have been
developed for reverse auctions, catalog management,
order fulfillment, and payment and settlement [29].
Table 1 provides the definitions for each of these four
EPIs.
Traditionally, if a buyer needed some specific
product or service, he or she had to investigate, qualify,
and negotiate with several potential suppliers before
selecting one. To facilitate this process, the online
reverse auction was introduced to enable temporal and
geographical convenience, reduced cost of contact,
instant feedback, and privacy. In electronic reverse
auctions, a buyer offers a tender to invited suppliers who
bid for the contract at the lowest price, usually in a short
time span (hours or minutes). By putting these auctions
online, buyers can streamline the process. This creates

Table 1
Definition of electronic procurement innovations
Major procurement processes
Supplier selection
Order placement
Order fulfillment
Payment and settlement
Electronic procurement innovations
Electronic reverse auctions (ERA)
Electronic catalog management
innovations (ECM)
Electronic order fulfillment
innovations (EOF)
Electronic payment and
settlement innovations (EPS)
Definition
Reverse auctions are the reverse of traditional auctions in which
the seller accepts bids from potential buyers. In reverse auctions
that are now commonly hosted on web sites, a buyer receives bids
from several would be sellers and settles on an offer. Goods are
bought and sold, and information is exchanged among buyers and
sellers in a private (i.e., hosted by a single company) or public
(i.e., with many firms) electronic marketplace
Refers to the generation, maintenance, and presentation of web-based
data about products offered by suppliers. Typical data include price,
availability, and quality
Refers to automation of processes conducted after sale is confirmed.
Includes automated ordering, shipping and reordering, and receiving.
Allows provision for real-time order tracking and requisition status
Provide for issuance of billing, payment and reconciliation of debits,
credits and invoices between partners. Also supports product returns
and their associated financial impacts
338 A. Rai et al. / Information & Management 43 (2006) 336–349
the potential for savings by stimulating increased
competition. Such auctions have increased in popular-
ity, because they emphasize short-term price savings
and easy negotiation. They have been found to achieve
as much as 5–40% savings [52], with average savings of
15–20% [16]. They also drastically reduce the average
time from 6 weeks to a few hours.
The electronic catalog provides an electronic
representation of information about products and/or
services offered by an organization [48]. In contrast to
paper-based catalogs, they can carry an almost
unlimited volume of product related information. They
are also much easier to maintain; therefore, they usually
carry more accurate, real-time product information.
Web-based catalogs simplify searches, thus providing
easy location and comparison of supplier goods [9,58].
Its use also creates an interorganizational system that
allows organizations to exchange information in an
automated, electronic, form [14].
Electronic order fulfillment innovations refer to the
automation of processes conducted after a sale. Such
innovations provide web-based interaction to custo-
mer processes so that buyers, sellers, and logisticians
can coordinate their activities. Key processes include
picking and shipping of orders, analyzing solutions to
ship quantities, and tracking the orders when shipped.
Its assimilation enables fast and continuous commu-
nication within and between firms, which helps both
to avoid lost orders and to find and correct errors. It
can also be used to speed delivery by tracking the
location of products and the status of orders [40].
Electronic payment and settlement systems involve
the issuing of bills, payment and reconciliation of
accounts, and logging of credits and invoices between
partners. They also support transactions associated with
product returns. Electronic funds transfers are cheaper,
safer, and easier to make and track. An electronic
payment can be made for less than 2 cents, compared to
43 cents by check. Further, they will prevent check-
related crimes, including mail theft and forgery [21].
Electronic payments benefit payers by cutting payment
processing costs. Payees, on the other hand, have an
alternative means to get their payment, which can be
deposited directly into their account. In addition, time
and cost of reproduction, retrieval, and distribution can
be significantly reduced.
Two aspects of EPIs make their investigation unique.
First, they represent a related set of partially com-
plementary innovations which have potential synergies
when deployed together. Second, when they integrate
processes distributed across firms and suppliers, their
deployment is shaped by both.
3. Assimilation of electronic procurement
innovations
Assimilation of EPI is the extent to which an
organization has progressed from understanding the
concept to deploying it in their procurement. Prospec-
tive users encounter significant challenges in learning
about the technology and re-conceptualizing their work
process activities to use it [7,45]. Moreover, successful
use often requires mutual adaptation of the technology
and the organizations in which the technology is being
introduced [30], as IT assimilation also involves
managerial factors.
4. Research approach
A cross-sectional survey was used to collect
information on a broad range of companies. The survey
and a cover letter stating the purpose of this research
was sent to 1200 senior procurement professionals
randomly drawn from the membership database of the
Institute of Supply Management (ISM). In the letter,
they were asked to complete the survey if they were the
most informed respondent for EPI assimilation in their
organization. Alternatively, if they were not, they were
asked to re-direct it to the appropriate individual in their
organization. Our respondents included presidents, vice
presidents, and operations and purchasing managers.
The sample covered Industrial Machinery and Equip-
ment, Electronics Equipment, Wholesale Trade of
Durables, and Business Services, which are represented
by US SIC codes, 35, 36, 50, and 73.
The initial survey was mailed in May 2003 and a post-
card reminder was sent to non-responders in the first
week of June. One hundred and sixty-six responses were
received, representing a response rate of about 14%.
4.1. Constructs and measures
The survey instrument included measures developed
to assess: EPI assimilation, EPI usage, procurement
productivity, top management support, IT sophistica-
tion, and EPI infrastructure. After initial development of
the instrument, multiple steps were taken to ensure its
quality and accuracy. First, three faculty members with
experience in survey development were involved in
examining the survey. Then three purchasing managers
scrutinized it to further ensure accuracy of its wording.
Finally, the instrument was pre-tested with 35
purchasing professionals across the United States using
both online and paper-based formats. Several survey
questions were changed based on feedbacks.
 A. Rai et al. / Information & Management 43 (2006) 336–349 339

Table 2
Guttman scale for EPI assimilation
Stage Criteria to enter stage Survey items to use to classify assimilation stage
1. Aware Key decision makers are aware of XXX technologies Is informant familiar with XXX technologies?
2. Interest The organization is committed to actively learn Is informant aware of plans to use XXX
more about XXX technologies technologies within the next 12 months?
3. Evaluation/trial The organization has acquired specific innovation-related Has the location acquired any XXX technologies?
products and has initiated evaluation or trial
Is the location evaluating or trialing any
XXX technologies?
4. Commitment The organization has committed to use XXX technologies Are any specific XXX technologies
in a significant way for one or more products or suppliers planned, in progress, implemented or cancelled?
5. Limited deployment The organization has established a program of regular Organization uses XXX technologies for
but limited use of XXX technologies for part of between 5% to less than 25% of its purchases
their procurement process
6. Partial deployment The organization has established a program of regular Organization uses XXX technologies for
but limited use of XXX technologies between 25 and 50% of its purchases
7. General deployment The organization has reached a state where XXX Organization uses XXX technologies for
technologies are used on a substantial fraction of purchases more than 50% of its purchases
XXX was replaced by online reverse auction, electronic catalog management, electronic order and fulfillment, and electronic payment and
settlement in the survey.

4.1.1. EPI assimilation and EPI usage
Our first research question focused on identifying
distinct patterns in the four EPI assimilations. A
Guttman scale was used to define seven stages of EPI
assimilation; respondents were asked to indicate their
assimilation stage for each of the EPI. This scale is
similar to, and based on, the scale used by Fichman [20]
to measure the assimilation of software process
innovations. Table 2 lists the criteria for each stage
and the survey items used.
In addition, usage of each EPI for catalog manage-
ment, payment and settlement, and order fulfillment
was measured in two ways:
 What percent of the specific procurement activity was
conducted through EPI?
 With what percent of suppliers did the buyer interact
through EPI?
Measuring EPI usage from these two aspects should
provide a more complete picture than from a single one.
In the case of reverse auctions, respondents were asked
to specify the number of them that they had
electronically conducted since 1 January 2002. During
the pilot, the purchasing professionals suggested this
was an appropriate measure of usage, due to its novelty
in the marketplace.
4.1.2. Procurement performance
Our second question concerned the relationship
between patterns of EPI assimilation and procurement
performance. There is much literature on the impact of
IT on organizational performance. Commonly used
measures have included intermediate process-level
measures, such as inventory turnover and process
productivity, and organizational level measures, such as
profitability improvement and competitive advantage
[27]. The importance of focusing investigations con-
cerned with value created by information technology
innovations on appropriate process-level ‘‘intermediate
performance’’ variables was noted by Rai et al. [42] and
Mukhopadhyay et al. [35]. Since our focus here was on
the specific procurement process, we used procurement
productivity as the measure of performance, defining it
as the total dollar value of goods organizations procured
divided by the total number of individuals employed in
the procurement unit [19].
4.1.3. Enablers of EPI assimilation
Our third question focused on technical and
managerial enablers and their relationships with
patterns of EPI assimilation. Recent studies on IS
success concluded that IS usage behavior must focus
both on the IT innovation and the task context in which
it is applied [41]. Therefore, we focused on three
factors: top management support, IT sophistication, and
the EPI infrastructure capability. Though the first two
factors have been proposed as enablers of technology
assimilation, including inter-organizational data
exchange [15], they have never been examined in the
context of EPI for procurement.
The role of top management support has been
identified as a critical factor in successful IT
implementations [23,28,50]. A multi-item measure
340 A. Rai et al. / Information & Management 43 (2006) 336–349

Table 3
Constructs for EPI infrastructure capability
Construct Definition
EPI standards comprehensiveness The degree of comprehensiveness or the extent that written rules and procedures
regarding electronic procurement standards have been instituted within an organization
EPI standards flexibility The degree to which latitude is provided in deviating from the prescriptions of action
described in the electronic procurement standards. Standards with greater flexibility
allow choice from a wider set of options, whereas restrictive standards specify
a narrow set of options
EPI security The degree to which electronic procurement systems provide safeguards and protections
for users to transact business

was adapted from Chatterjee et al. [12] and refined to
assess top management support, as shown in
Appendix A.
IT sophistication describes the extent to which IT is
important for a firm to achieve its core business objec-
tives. Firms with high levels are less likely to be intimi-
dated by technology, possess a superior corporate view of
data in information management, and have access to
advanced technological resources. Therefore, the pos-
session of and experience with technological resources
may directly impact the likelihood of EPI assimilation. IT
sophistication was assessed by using a multi-item
measure adopted from Pare and Raymond [37].
EPI infrastructure capability refers to the degree to
which the adopting firm believes that a digital
infrastructure is in place to promote the success of
EPI. The enabling role of the IT infrastructure in core
business process innovation was suggested in [32,55].
Based on these, we defined a capable EPI infrastructure
as one that was able to support procurement processes
comprehensively, flexibly, and securely. To cope with an
ever-increasing rate of change in the business environ-
ment, EPI standards should be both comprehensive and
flexible to handle inter-organizational integration needs
and the increasing variety of customer demands without
substantially increasing costs [25,54]. Since the
procurement process also involved private information
exchange, organizations should be more willing to use
EPIs if they addressed key security concerns [22,38].
Accordingly, three constructs were used: EPI standards
comprehensiveness, EPI standards flexibility, and EPI
security. Their definitions are given in Table 3.
Multi-item measures were developed for each of
these constructs (see Appendix A for the items).
4.2. Sample demographics
Although the survey response rate (14%) was not
high, Babbie [8] suggested that ‘‘a demonstrated lack of
response bias is far more important than a high response
rate’’. Therefore, two tests were conducted for non-
response bias. Armstrong and Overton [5] suggested that
respondents should be classified into three groups and a
series of one-way analysis of variance (ANOVA) tests be
used to determine whether later respondents were sys-
tematically different from earlier ones with respect to the
number of employees in the buyer organization. Such a
test assumes that later respondents serve as a proxy for
non-respondents. In addition, a x2 test that measures the
difference between the expected and observed number of
respondents over two-digit SIC codes was conducted to
detect whether there were significant differences across
the sampled industry groups. Tables 4 and 5 present the
results of these tests, which suggested that there was no
significant non-response bias.
The industry representation of respondent compa-
nies, as shown in Table 6, indicated that they
represented a wide variation in sales revenue. Over
half of the responding companies spend less than $ 50
million on their annual procurement, while half of them
have less than 10 employees (including management,
purchasing agents/buyers, lawyers, and support staff) in
the procurement department.
4.3. Measurement validation
To assess the measurement properties of the scales
used for top management support, IT sophistication, and
Table 4
ANOVA test for differences between early and late respondents
Respondent group Significance level for
differences in number
of employees
Group 1 (early respondents) 0.44
vs. group 3 (late respondents)
Group 1 vs. group 2 0.74
(middle group)
Group 2 vs. late 0.74
respondents
 A. Rai et al. / Information & Management 43 (2006) 336–349 341

Table 5
x2 Test for differences in observed and expected responses
SIC code Industry group Observed (O) Expected (E) (O E)2/E
35 Industrial machinery and equipment 28 27 0.10
36 Electronic equipment 72 85 1.89
50 Wholesale trade–durable goods 46 34 0.42
73 Business services 20 22 0.13
x2 = 6.36, critical value = 7.81.

the three EPI infrastructure constructs, established for these statistical tests. Table 7 presents the correlation
guidelines for scale validation [1,2,4,46] were used to matrix of constructs, and the values on the diagonal
assess their unidimensionality, reliability, and convergent represent the square root of the average variance
and discriminant validity. LISREL and SPSS were used extracted (AVE) by each construct. This, for each
construct, was greater than the inter-construct correla-
Table 6 tion, providing evidence of discriminant and convergent
Profile of the responding companies
validity.
Frequency Percent Unidimensionality was assessed with the goodness
(a) Industry of fit index (GFI) in a confirmatory analysis [24]. As
Industrial machinery and equipment 28 16.9 shown in Table 8, the GFI indices for all constructs were
Electronic equipment 72 43.4 close to or higher than the recommended GFI level of
Wholesale trade–durable goods 46 111
0.90. As a widely used measure of internal consistency,
Business services 20 12.0
Cronbach’s a [17,36] showed that most of the constructs
Total 166 100.0 exhibited satisfactory reliability (>0.70) (Table 7).
(b) Sales revenue
Though the alpha value of EPI comprehensiveness was
Less than $ 10 million 27 16.3 lower than 0.70, it exceeded the threshold of 0.60
$ 10 million to $ 49.9 million 35 21.1 suggested for newly developed scales. Finally, as noted
$ 50 million to $ 99.9 million 12 7.2 in Table 9, there was a significant difference in model
$ 100 million to $ 499.9 million 38 22.9 fits obtained using confirmatory factor analysis when
$ 500 million to $ 999.9 million 14 8.4
$ 1 billion to $ 5 billion 17 10.2
pair-wise construct correlations were constrained to
Over $ 5 billion 21 12.7 unity and when they were allowed to correlate freely.
Missing 2 1.2 These results cumulatively provided evidence of good
Total 166 100.0 convergent and discriminant validity of the constructs.

(c) Annual procurement expense 5. Results

Less than $ 10 million 46 111
$ 10 million to $ 49.9 million 40 24.1
5.1. Cluster analysis of EPI assimilation stages
$ 50 million to $ 99.9 million 25 15.1
$ 100 million to $ 499.9 million 29 17.5
$ 500 million to $ 999.9 million 10 6.0 Cluster analysis was employed to analyze the data.
$ 1 billion to $ 5 billion 5 3.0 This statistical technique allowed us to identify
Over $ 5 billion 7 4.2 groupings of firms where variations in the assimilation
Missing 4 2.4
across the EPIs is minimal within the group but
Total 166 100 maximal across groups [3,31]. This process involved
deriving distinct and meaningful clusters from the
(d) Number of procurement employees
Less than 10 91 54.8
assimilation of the four EPIs.
10 to below 20 28 16.9 To identify the clusters, we followed a two-stage
20 to below 50 18 10.8 procedure recommended by Ketchen and Shook [26],
50 to below 100 9 5.4 and Merchant [33]. First, we inspected the Euclidean
100 to below 300 6 3.6 distances across the clusters in the dendrogram
300 to below 1000 8 4.8
1000 and above 3 1.8
produced by Ward’s hierarchical clustering method.
Missing 3 1.8 The results of this procedure suggested a four-cluster
solution. Second, in order to evaluate the robustness of
Total 166 100.0
this solution, we generated two-, three-, four-, and five-
342 A. Rai et al. / Information & Management 43 (2006) 336–349

Table 7
Correlation matrix of constructs
Mean S.D. TMS ITS EPI standards EPI standards EPI Procurement
comprehensiveness flexibility security productivity
Top management support (TMS) 3.22 1.65 0.90
IT sophistication (ITS) 2.06 0.91 0.40 0.82
EPI standards comprehensiveness 3.59 1.05 0.49 0.29 0.76
EPI standards flexibility 3.39 1.07 0.20 0.25 0.35 0.82
EPI security 2.87 0.95 0.17 0.10 0.32 0.20 0.85
Procurement productivity 13.6 21.7 0.01 0.06 0.01 0.13 0.15 1.00
Single-item measure computed for procurement productivity.

Table 8
Assessment of unidimensionality, reliability and convergent validity
Construct No. of Unidimensionality Reliability Convergent validity
scale items (GFI) (Cronbach’s a) (Bentler Bonnet D)
Top management support 4 1.00 0.93 1.00
IT sophistication 6 0.89 0.90 0.94
EPI infrastructure
EPI standards comprehensiveness 3 0.96a 0.64 0.94
EPI standards flexibility 3 0.96a 0.75 0.94
EPI security 6 0.90 0.92 0.95
a
A combined model was run for these two constructs.

cluster solutions by using the K-means clustering
algorithm. The assimilation means for each of the four
EPIs differed significantly across all clusters in the four-
cluster solution. For all other solutions, either the
discriminatory power was relatively weaker or the
clusters produced were less meaningful. To further
ensure the stability of the solution, we replicated the
two-stage clustering procedure with several sub-
samples randomly selected from the sample. The same
four-cluster pattern surfaced each time providing
support for the stability of this solution. We therefore
concluded that the four-cluster solution best captured
the patterns of assimilation of EPIs.
Table 10 shows the cluster centers obtained for each
of these four clusters when the K-means procedure was
used. The number of cases in each cluster ranged from
29 to 61, which minimized the possibility that a cluster
consisted only of outliers.
5.2. EPI usage associated with EPI assimilation
patterns
The assimilation characteristics of the four clusters
can be visualized in the form of a star chart (Fig. 1),
which reveals separate and distinct EPI assimilation
patterns in our data. Cluster 1, which we labeled ‘‘no

Table 9
Discriminant validity assessment
x2 (fixed correlation) d.f. x2 (free correlation) d.f. x2 Difference
TMS vs. ITS 668.3 35 102.5 34 565.8a
TMS vs. EPI standards comprehensiveness 46.5 14 16.0 13 30.5a
TMS vs. EPI standards flexibility 155.8 14 22.3 13 133.5a
TMS vs. EPI security 737.9 35 84.6 34 653.4a
ITS vs. EPI standards comprehensiveness 120.5 27 71.06 26 49.5a
ITS vs. EPI standards flexibility 204.8 27 77.9 26 127.0a
ITS vs. EPI security 833.3 54 151.8 53 681.5a
EPI standards comprehensiveness vs. EPI standards flexibility 46.9 9 17.5 8 29.45a
EPI standards comprehensiveness vs. EPI security 127.1 27 83.0 26 44.1a
EPI standards flexibility vs. EPI security 210.8 27 79.3 26 131.5a
a
Significant difference at p = 0.05 (x2 value = 3.84).
 A. Rai et al. / Information & Management 43 (2006) 336–349 343

Table 10
Cluster centers for the assimilation level of EPI (feasible range from 1 to 7)
Name of cluster Number Electronic reverse Electronic catalog Electronic order Electronic payment
of cases auction management fulfillment and settlement
Cluster 1 No deployment 61 1.79 2.34 1.79 1.20
Cluster 2 Focused niche deployment 31 1.84 2.81 1.81 5.23
Cluster 3 Asymmetric deployment 43 1.30 4.88 5.42 3.95
Cluster 4 Broad-based deployment 29 5.34 5.59 5.21 5.41

deployment’’, was comprised mainly of companies that
were aware of the existence of EPIs, had the intention to
deploy one or more of them in the near future, but had
not yet done so. Cluster 2, ‘‘focused niche deploy-
ment’’, consisted of companies that had only imple-
mented an electronic payment and settlement systems.
Companies in cluster 3, ‘‘asymmetric deployment’’, had
already made initial trials on all EPIs other than online
reverse auctions. Cluster 4, ‘‘broad-based deployment’’,
was made up of companies that used all four EPIs in a
considerable part of their procurement activities.
5.3. EPI assimilation patterns and procurement
productivity
To answer the remaining research questions, two
measures of EPI usage and factors that may enable EPI
assimilation were computed for all the clusters. Levene’s
test was applied to see which kind of t-test was suitable
for an across-cluster mean comparison. The results
indicated that a t-test assuming equal variance was
suitable for the mean value comparison of procurement
productivity and the three constructs for EPI infra-
structure. The others were compared using a t-test
assuming unequal variance. Statistical significance of the
differences between the mean values of each of the
measures across the clusters is presented in Table 11.
An examination of the mean values of EPI usage
measures across clusters revealed that firms with higher
levels of reported assimilation tended to conduct more
procurement transactions and interact with more supp-
liers through EPI (Table 11). This provided additional
evidence that subjective assessment of assimilation of
each EPI triangulated well with the self-reported
measures of usage for each EPI. For example, Cluster
4 (broad-based deployment) had the highest value across
the seven measures for usage pattern except for one
(percent of transaction conducted through electronic

Fig. 1. EPI assimilation star chart.

344 A. Rai et al. / Information & Management 43 (2006) 336–349

Table 11
Group mean analysis
No Focused Asymmetric Broad-based Change in cluster mean
deployment niche deployment deployment
1 vs. 2 1 vs. 3 1 vs. 4 2 vs. 3 2 vs. 4 3 vs. 4
(1) deployment (2) (3) (4)
Procurement productivity 9.66 17.3 12.1 21.7 7.65** 2.44 12.03 5.21 4.38 9.60*
EPI usage pattern
Number of ERA 0.91 0.61 0.31 166.1 0.30 0.60* 165.2 0.30 165.5* 165.8*
% of transactions 1.18 1.10 1.95 2.31 0.08 0.77** 1.13 0.86 ***
1.21 ***
0.36
on ECM
% of suppliers on ECM 1.10 1.03 1.70 2.00 0.07 0.60** 0.90 0.67*** 0.97*** 0.30
% of transactions 1.10 1.10 2.23 2.03 0.00 1.13** 0.94 1.14*** 0.94*** 0.20
on EOF
% of suppliers on EOF 1.07 1.03 2.05 2.07 0.03 0.98** 1.00 1.01*** 1.04*** 0.02
***
% of transactions 1.02 1.94 1.63 2.55 0.92 0.61** 1.54 0.31* 0.62** 0.92***
on EPS
% of suppliers on EPS 1.03 1.71 1.65 2.48 0.68*** 0.62** 1.45 0.06 0.77*** 0.83***
* ** ***
Top management support 3.14 3.58 3.96 4.94 0.44 0.82 1.80 0.38 1.36 0.98***
IT sophistication 4.72 4.75 5.15 5.24 0.03 0.43** 0.52 0.40** 0.49*** 0.09
EPI infrastructure
EPI standards 2.98 3.19 3.80 3.94 0.21 0.82** 0.96 0.61*** 0.75*** 0.14
comprehensiveness
EPI standards 3.50 3.23 3.93 3.86 0.27 0.43** 0.36 0.70*** 0.63*** 0.07
flexibility
EPI security 4.12 3.77 4.21 4.33 0.35* 0.09 0.21 0.44** 0.56** 0.12
Top management support, IT sophistication, and EPI infrastructure were reverse coded.
*
Significant at a = 0.1.
**
Siginificant at a = 0.05.
***
Siginificant at a = 0.01.

catalog). Fig. 2 shows the mean value of procurement graphically depict the patterns of association of these
productivity across the four EPI assimilation clusters. factors across the four clusters.

5.4. Differences in top management support, IT 6. Discussion and implications

sophistication, and EPI infrastructure
Table 11 summarized also the mean values for and
the differences across the four clusters for the factors
that may have influenced EPI assimilation. Figs. 3–5
Our results indicated that firms seeking to enhance
their procurement productivity could do so by focusing
on EPI assimilation. Also, the broad-based deploy-
ment cluster had the highest average procurement

Fig. 2. Comparison of procurement productivity across clusters. Fig. 3. Comparison top management support (TMS) across clusters.
 A. Rai et al. / Information & Management 43 (2006) 336–349
Fig. 4. Comparison of IT sophistication across clusters.
productivity and was significantly higher than that for
both the no deployment and the asymmetric deployment
groups. This meant that firms realized benefits from two
sources: (a) economies of scale when they put more
transactions online, and (b) effective management of the
complementarity between catalog management, order
fulfillment, payment and settlement, and reverse
auctions through the assimilation of EPI in each of
them. Additionally, focused niche deployment of
electronic payment and settlement systems could bring
significantly higher increases in productivity than no
deployment. Given the large volume of financial
transactions that are associated with the purchasing
process, this is an area where a focused application of
EPI can yield significant returns.
Our results on productivity gains realized by the
broad-scale deployment of a partially complementary
set of EPIs was consistent with past research which
concluded that: (a) maximum gains in systems quality
performance accrued by collectively using a partially
complementary set of TQM practices [43] and (b)
maximum gains in IT project management performance
Fig. 5. Comparison of EPI infrastructure across clusters.
345
were realized by collectively deploying a partially
complementary set of risk management practices [53].
By developing commitment from their top manage-
ment, firms can facilitate the assimilation of EPIs. Our
results offered insights on the extent of top management
support needed to transition across the distinct patterns
of EPI assimilation. Asymmetric deployment of EPIs
needs considerably higher top management support
than for the no deployment group. To implement all the
EPIs and use them intensively requires even more top
management support. It is quite interesting that focused
niche deployment of electronic payment and settlement
systems only needs marginally more support from top
management than no deployment. This pattern is
consistent with findings from a recent meta-analysis
study, which concluded that greater levels of top
management support are required for IT innovations
targeted at tasks with high interdependence [49].
Our results suggested that asymmetric and broad-
based deployment of EPI needed significantly more IT
knowledge than either focused niche deployment or no
deployment. Also, security of the EPI infrastructure was
found to be a key concern for companies. Surprisingly,
firms with a focused niche deployment have a lower
level of security than firms with no deployment.
Firms that plan to adopt a range of EPIs need to be
concerned about the flexibility and comprehensiveness
of their EPI standards. Our results indicated that
asymmetric and broader deployment was associated
with higher requirement for infrastructure flexibility
and comprehensiveness than either the no deployment
cluster or the focused niche deployment cluster.
Based on our results, we have developed the model
as shown in Fig. 6 to show the relationship between the
constructs. First, it identifies specific patterns of
assimilation that leverage complementarities across a
related set of EPIs for productivity gains. Second, it
346 A. Rai et al. / Information & Management 43 (2006) 336–349

Fig. 6. Proposed model.

reinforces the importance of top management support
and IT knowledge, constructs. Finally, it identifies three
specific properties of the EPI infrastructure that
facilitate the deployment of EPIs.
7. Conclusion
The value of electronic procurement innovations has
been touted in the business world, but little research has
been performed to investigate the benefit of these
innovations. In our study, we explored the relationship
between EPI assimilation patterns and procurement
performance. We found empirical evidence that EPI
usage patterns that increased digital interaction with
suppliers and increased digitalization of core procure-
ment transactions lead to higher procurement produc-
tivity. Further exploration of the factors revealed that
top management support, IT sophistication, and EPI
infrastructure capability were, as might be expected,
needed for EPI assimilation. Establishing a secure
digital infrastructure may be a pre-condition to the
assimilation of EPIs. Developing flexible and compre-
hensive standards for digital interaction with suppliers
apparently promotes higher levels of deployment of
catalog management, order management and fulfill-
ment, and reverse auctions, while tight standards that
adhere to institutional regulatory requirements facilitate
the deployment of electronic payment and settlement.

Appendix A. Questionnaire items used for study constructs

All items solicited responses on a seven-point Likert scale with 1 = strongly agree, 2 = agree, 3 = slightly agree,
4 = neutral, 5 = slightly disagree, 6 = disagree, and 7 = strongly disagree.
1. Top management support
Senior management in your firm actively participates in . . .
Articulating a vision for your organizational use of e-procurement systems
Formulating a strategy for the organizational use of e-procurement systems
Establishing goals and standards to monitor e-procurement systems
Deploying information technology in your organization

2. IT sophistication
In my company, information technology (IT) is important for the fulfillment of the following objectives
Operational costs reduction
Productivity improvements
Improved access to information
Improved quality of decision-making
Improved competitiveness
Improved service to customers

3. EPI security
I feel comfortable . . .
With the safeguards that electronic procurement systems provide to conduct transactions
That legal structures adequately protect me from problems regarding electronic procurement systems
 A. Rai et al. / Information & Management 43 (2006) 336–349 347

Appendix A (Continued)
That technological structures adequately protect me from problems regarding electronic procurement systems
That encryption and other technological advances of electronic procurement systems make it safe for me to do business on the Internet
In general, electronic procurement systems . . .
Are now a robust environment in which to transact business
Provide a safe environment in which to transact business

4. EPI flexibility
The electronic procurement standards in your organization typically . . .
Restrict how purchasers use the system
May be circumvented when business conditions suggest such actions
Are flexible in how IT can be used

5. EPI comprehensiveness
The electronic procurement standards in your organization typically . . .
Provide your procurement group with a range of options suitable for different purchase decisions
Address the full spectrum of relevant standards issues for interaction with suppliers
Your industry standards for procurement are more or less comprehensive in comparison to other industries

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Arun Rai is the Harkins professor in the
Center for Process Innovation and Depart-
ment of Computer Information Systems at
Georgia State University. His research
focuses on supply networks and process
innovations that are digitally enabled, and
the adoption, diffusion and impacts of
information technology. He has published
over 55 articles in leading scholarly jour-
nals, such as Decision Sciences, European
Journal of Operations Research, IEEE Transactions on Engineering
Management, Information Systems Research, Journal of Management
Information Systems, and MIS Quarterly. He has served, or serves, on
the editorial boards for Decision Sciences, IEEE Transactions on
Engineering Management, Information Systems Research, MIS Quar-
terly, Journal of Strategic Information Systems and others. His
research has been sponsored by leading corporations and agencies,
including A.T. Kearney, Bozell Worldwide, Daimler-Chrysler, Gart-
ner, IBM, UPS, SAP and the Advanced Practices Council of the
Society for Information Management.
Xinlin Tang is a PhD candidate in the
Center for Process Innovation (CEPRIN)
in the J. Mack Robinson College of Busi-
ness at Georgia State University. Her
research interests include digitally enabled
business network, inter-organizational rela-
tionships, and process innovation, and busi-
ness impacts of information technology.
Her research has been published in the
proceedings of the International Confer-
ence of Information Systems (ICIS).
 A. Rai et al. / Information & Management 43 (2006) 336–349
Paul Brown is an assistant professor of
supply chain management at Clark Atlanta
University, Atlanta, Georgia. He obtained
his PhD from Georgia State University. His
research interests are in service supply
management, risk management, and elec-
tronic procurement. He has published in
Journal of Project Management, Institute
of Supply Management Research Sympo-
sium, and DSI National Conference. He
helped begin a new major in supply chain management at CAU
and is a member of DSI and Institute of Supply Management.
Mark Keil is the Board of Advisors pro-
fessor of Computer Information Systems
349
(CIS) in the J. Mack Robinson College of Business at Georgia State
University. His research focuses on software project management,
with particular emphasis on understanding and preventing software
project escalation. His research is also aimed at providing better tools
for assessing software project risk and removing barriers to software
use. Keil’s research has been published in MIS Quarterly, Sloan
Management Review, Communications of the ACM, Journal of Man-
agement Information Systems, IEEE Transactions on Engineering
Management, Information Systems Journal, Decision Support Sys-
tems, Information & Management, and many other journals. He
currently serves on the editorial boards of IEEE Transactions on
Engineering Management, Decision Sciences, and the Journal of
Management Information Systems. He has also served as an Associate
Editor for MIS Quarterly, and as co-editor of The DATA BASE for
Advances in Information Systems.