Role of EDI Implementation in the Increase of Performance of a Small Medium Company in China - Research Proposal Example

Role of EDI implementation in the increase of performance of a Small Medium Company – the case of China Background Electronic Data Interchange (EDI) is a methodology for transferring data through the Internet; the specific methodology is used by businesses of various sizes when having to exchange data with their business partners. In accordance with the definition given by Schneider (2009) Electronic Data Interchange is ‘a computer – to – computer transfer of business information between two businesses that uses a standard format of some kind’ (Schneider, 2009, p.239). It is made clear that EDI can be quite important for the development of business activities – offering to the businesses the chance of exchanging important data with their business partners; in this way, valuable time for the completion of a series of transactions is saved. An important advantage of EDI is the fact that firms of all sizes can use it. In small firms EDI can be particularly valuable especially because of the limited number of the workforce; in small firms EDI can help to reduce the time and the increase the quality of their daily transactions. However, the specific scheme requires the use of advanced technology – the cost of which can be high. In countries like China, EDI could be difficult to be introduced in small firms – mostly because of its cost. Therefore, it would be necessary that the government fund the relevant schemes – either totally or just partially. The benefits that EDI could offer to the small firms – either in the short or the long term - in China could justify the necessity of such investment. 2. Research Question Current study focuses on the examination of the following question: How Electronic Data Interchange can help firms of all sizes in China to increase their performance? In answering the above question the following issues need to be taken into consideration: it is necessary for the relevant process to be carefully planned and monitored in order to avoid major failures. Moreover, for the small medium firms of China, EDI would be an important tool for stabilizing their performance; however, the potential of these firms to respond to the needs of such plan would be further explored. 3. Aims and Objectives The study’s aims and objectives can be summarized as follows: 1. To identify and present the main aspects of EDI as a strategic tool for the improvement of organizational performance 2. To identify and critically analyze the strengths/ weaknesses of EDI and its requirements – in terms of technology but also in terms of organizational environment/ strategic framework 3. To identify the operational forms and needs of small medium firms in China – ensuring that EDI could help these firms to improve their performance 4. To examine the level of technology used in small medium firms in China – checking whether the implement of EDI in these firms could be completed successfully 5. To identify and explain the obstacles that the implementation of EDI in small medium firms in China would face 6. To examine the role of the state in regard to the promotion of such schemes to small and medium firms. 4. Significance of the study – Literature Review Electronic Data Interchange is widely used by firms worldwide; in China, the specific practice is not well developed – at least for the time. Current paper is expected to highlight key issues in regard to the modes of use of EDI by Chinese firms; moreover, the strengths and the weaknesses of EDI as used by Chinese firms will be highlighted so that solutions can be suggested for the improvement of EDI’s performance in the specific country. The above issues are of particular importance if taking into consideration the fact that firms in China do not extensively use EDI; the potentials that this method offers for businesses in all sectors could help towards the increase of performance of firms of various types in the Chinese market. Firms that wish to adopt EDI need to be appropriately prepared; in order for the specific methodology to be effectively developed it is necessary that the organization in which it is implemented has the technology required for the successful implementation of the relevant systems – through which the business transactions will be developed. Most firms worldwide have already the technology required for EDI – referring to the information systems used in daily business-to-business (B2B) transactions; by introducing EDI as a method for transferring data a firm becomes ‘EDI compatible’ (Schneider, 2008, p.239). In accordance with Sim (2000) the importance of EDI for businesses worldwide has been increased since ‘the elimination of barriers in international trade’ (Sim, 2000, p.141); firms that wish to remain competitive need EDI in order to improve their presence in the global market – a strategic initiative that can lead to the radical increase or the stabilization of organizational performance (referring to periods of strong financial pressures on economies worldwide, for instance the years 2008 onwards). However, the performance of EDI in businesses worldwide is not standardized; the investment made by firms on their technology is likely to influence the performance of EDI within organizations in different industrial sectors. In any case, EDI does not have high demands – referring to the cost of its operation; for this reason, firms of various sizes would easily adopt EDI. In the context of EDI a series of benefits result for the business that decides to introduce the specific methodology of data exchange: a) the time required for the process of orders/ applications is minimized; in fact, it is noted that requests sent through EDI can be processed within a few minutes (Chesher et al., 2003, p.35), b) the potential risk of ‘misleading the request is almost eliminating’ (Chesher et al., 2003, p.35). However, it could be noted that the advantages of EDI for businesses engaged in such schemes have not been totally understood and appreciated; in a relevant research developed in Britain it was revealed that just the 30% of manufacturers have introduced online payment options, which shows a trend for avoiding complex online activities, including EDI (Zappala et al., 2006, p.68). The significant advantage of EDI towards the traditional systems of communication is the lack of need for processing the information exchanged; more specifically, in all other modes of communication technology – such as fax and e-mail – the development of the actions suggested in the message sent requires the human intervention, i.e. the receipt of the message by someone and the processing of this message making sure that the instructions included will be followed; however, with EDI there is no such need; the whole process is automated; action required is developed by the system automatically since the receipt of the message by the system, i.e. in EDI there is no human intervention required for the completion of the task ordered by the message sent using EDI (Curtis, 2008, p.153). Regarding this issue it is noted by Bussler et al. (2006) that compatibility in EDI can be a major problem; in many cases, the information transmitted cannot be ‘read’ by the system of the recipient – mostly commonly because of ‘the data eterogeneity’ (Bussler et al., 2006, p.34); in such cases, the advantage of the lack of human intervention in the process is lost; in fact, in order for these problems to be effectively resolved it is required that the system is appropriately programmed – by a high skilled professional; only in this way, similar problems in the future can be avoided. Chesher et al. (2003) highlight the constraints caused because of the compatibility of data exchanged in the context of EDI; in the above study it is noted that despite the fact that EDI was initially introduced in order to help towards the improvement of communication among businesses, in practice, its value has been doubted because of ‘the complexity of agreeing electronic document formats’ (Chesher et al, 2003, p.34). Additional problems could also exist in regard to the implementation of EDI in modern organizations: a) the volume of papers stored in order to be used in the context of EDI is extremely high; failures in saving these documents for use by EDI – when required – are difficult to be totally avoided, b) when managing a transaction through EDI it is necessary to access the files related to the specific task; in large organizations this means that the central system will have to process a high number of requests simultaneously; the performance of the organization’s system under this pressure should be examined and evaluated in advance (Gelinas et al., 2009, p.81). The potential value of EDI in small and medium Chinese firms could be evaluated by referring primarily to the social and economic conditions of the specific country. In accordance with Kraemer (2006, p.514) the rate of development of China in terms of e-commerce has been extremely slow; it is noted that until recently there was no integrated system of ATM’s across the country – with no such infrastructure the introduction of EDI in Chinese small and medium firms would be of no point. A similar issue is highlighted in the study of Segovia et al. (2002) where it is noted that the successful operation of EDI requires appropriate software/ hardware but also telecommunications network that can support the specific technology (Segovia et al., 2002, p.15). 5. Research Methodology The research methodology used in the study will be of two different forms: a) the literature published on the issues under examination will be reviewed and critically discussed. The literature reviewed for this study will be identified using the following criteria: a1) only recent literature will be involved in the research; reference is made to literature published the last 5 years, i.e. from 2005 onwards; however, it is possible that literature published earlier than 2005 is used but just in case it is considered as the only way in order to retrieve information on one of the study’s issues; this practice will be used if there are no recent academic studies available, a2) the literature reviewed in the context of this study will be academic; non-academic studies will be avoided; in this way, this policy is necessary in order to ensure the credibility of the study, a3) the types of the literature employed in this study will be vary, including books, journals and periodicals; material from websites of governmental and non-governmental organizations will be also included in the study – at the level that this material is considerable as valuable for understanding key aspects of the study’s issues (for instance, statistics and figures published by governmental organizations in regard to the level of EDI use among firms of various size, or percentage of small firms that have developed an EDI scheme), b) empirical research; the empirical research employed in this study will have two forms: b1) qualitative research/ case studies analysis and b2) quantitative research / survey. The above forms of empirical research could be analyzed as follows: b1) the case study analysis will be developed through the presentation and the analysis of cases of firms – preferably small firms – which have introduced EDI schemes; the performance of EDI in practice will help to understand the expected performance of these schemes in small firms in China; efforts will be made in order to identify small firms in China that have already introduced an EDI scheme; however, if this is not possible, then the performance of EDI in small firms of other countries will be examined; the findings of the case study analysis will be further analyzed using the literature but also the findings of the survey which will be conducted for this study, as explained below, b2) the second type of empirical research developed for this study is the survey; the employees in small firms in China will be asked to complete a questionnaire related to the study’s issues; the questionnaire will include 12 questions followed by a series of suggested answers; participants may choose among the answer that most reflect their view on the issues under discussion. The questionnaire will be distributed through the Internet and will be returned through the same way; a period of 10 days will be set as a deadline for the return of the questionnaire – since time is required afterwards for the analysis and the discussion of findings. At this point, the following issues need to be highlighted: b2/1) questionnaire will be aligned with the ethics of academic research; this means that participants will be informed in advance for the use of the questionnaire and for their rights; since in the questionnaire there will be no personal details of the participants (only general demographic details, such as gender, position in the organization and professional experience) there will be no issue of security of personal data, b2/2) it may be difficult to access the e-mail of employees in small firms in China; in this way, employees in large firms in China will be alternatively asked to participate in the survey; in this case the following changes will be made on the structure of the research: the questions of the questionnaire will be appropriately changed and a second questionnaire will be sent to employees of small firms in another country, either USA or UK – in order to have the view of employees in firms of this size in regard to the potential effectiveness of EDI schemes in small firms. The phases of the development of the research – and of the study in general – are analytically presented in the Gantt chart – see the Appendix. References Bussler, C., Shan, M. (2006) Technologies for e-services: 6th international workshop, TES 2005, Trondheim, Norway, September 2-3, 2005: revised selected papers. Birkhäuser Chesher, M., Kaura, R., Linton, P. (2003) Electronic business & commerce. Springer Curtis, G., Cobham, D. (2008) Business Information Systems: Analysis, Design and Practice. Pearson Education Gelinas, U., Dull, R. (2009) Accounting Information Systems. Cengage Learning Harvie, C., Lee, B. (2002) The role of SMEs in national economies in East Asia. Edward Elgar Publishing, 2002 Kraemer, K. (2006) Global e-commerce: impacts of national environment and policy. Cambridge University Press Schneider, G. (2008) Electronic Commerce. Cengage Learning Segovia, J., Szczepaniak, P. (2002) E-commerce and intelligent methods. Springer Shim, J. (2000) The international handbook of electronic commerce. Lessons Professional Publishing Kraemer, K. (2006) Global e-commerce: impacts of national environment and policy. Cambridge University Press Appendix Gantt Chart – Phases of the Study Week/ Task 1 2 3 4 5 6 Questionnaires are developed and sent Review of the Literature Case studies analysis Categorizing of completed questionnaires Analysis and discussion of results Conclusion and Recommendations section/ overview of the study Read More