Impact of IT Capability on the Performance of Port Operation
Ziping Wang, Dong-Qing Yao, Xiaohang Yue, John J. Liu
Production and Operations Management · 2018 · Volume 27 · Issue 11
Abstract
Based on the resource-based view (RBV) and the transaction cost economics (TCE) theories, we study the impact of IT capability on the performance of port supply chain using an IT-enabled transaction cost frontier model where the IT capability is modeled as a unique production input and as an endogenous transaction attribute as well. By examining the optimal levels of IT capability for different port systems from the viewpoint of production cost and transaction cost, we find theoretical evidence to explain why a port system with a horizontal competitive governance mode is less successful at integrating a port IT system in practice. Moreover, we find that the optimal IT capability of an individual port operator is lower than the IT capability in an integrated heterogeneous system. We further investigate how to improve IT capability to the desired system level through different forms of an incentive system that includes a subsidy offered by the port authority to coordinate the entire port system. The fixed subsidy is found to be the most cost-effective and the easiest to implement. In addition, considering that information about effort cost for IT capability can be private under a market or hybrid governance mode, we study the performance of a direct revelation mechanism when revealing the port operator's private information and true cost to the port authority.
Keywords
IT capability, port governance mode, transaction cost economics, heterogeneous supply chain, IT-enabled transaction cost frontier model
Enable JavaScript for citation tools and additional paper interactions.