Customer Information Technology Capability and Suppliers’ Commitments

This study investigates whether and how customer firms’ information technology capability (ITC) influences their suppliers to make supplier commitments (SCs). Motivated by resource dependence theory, we propose that customers’ ITC increases SCs because ITC improves information sharing between customers and suppliers. Using a sample of supplier-customer pairs, we find that customers with ITC attract a higher level of SCs in the subsequent year than customers with no ITC. Such sustainable effects are stronger for customers with systematic ITC than for customers with occasional ITC. We document that suppliers are more likely to make SCs in competitive and munificent industries where customer ITC matters more to increase information sharing. This study demonstrates both academic and practical implications of superior customer ITC that encourages suppliers to undertake collaborative investments.