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As emphasized by the President of China Mr. HU Jingtao in the G20 summit in Toronto, Canada, the manufacturing industry in China recognizes the increasing importance of interorganisational collaboration and increasingly engages in globalized partnerships with their business partners to survive. Being competitive in a globalized environment requires a holistic perspective on the proactive integration and synergy from all business partners’ activities (Zheng, 2006). Many organisations have made huge investments in electronic collaboration (e-collaboration) to link intraorganisational and intraorganisational networks and develop a variety of collaboration infrastructure to improve productivity and efficiency.
Collaboration refers to the engagement of two or more organisations in partnership for the purpose of making commitments and joint effort to achieve benefits to organisations (Wang & Archer, 2004). An e-enabled collaboration coming from e-business innovation gradually becomes an attractive phenomenon (Simatupang & Sridharan, 2004; Zheng, 2006; Trienekens, 2008; Verdechoa, Alfarob, & Rodriguez, 2009; Al-Hakim, Johnson-Morgan & Chau, 2014). E-business facilitated business interactions require sound organisational capacities in managing wide value-chain wide interorganisational collaboration and relationships (Riemer et al., 2009). In this study, we refer to the level of wireless technology used to manage and expedite information sharing and commercial transactions between partners as ‘e-business diffusion’.
Moreover, a sustained collaboration is embraced when trading partners have an atmosphere of trust and a trustful flow of information (Dong, 2009). A trusting interorganisational collaboration relationship would result in greater willingness to establish knowledge-sharing, alliances and long-term stability with each other (e.g. Matopoulos et al. 2007; Lin, 2008). Consequently, taking advantage of a high level of trust, the adoption of collaboration via e-business diffusion is expected to grow as it fosters business performance — not only for larger enterprises, but also for SMEs.
Collaboration considerably facilitates inter-organisational sharing of knowledge and information and subsequently improves business performance (Wang & Archer, 2004; Zedtwitz & Gassmann, 2002). Lack of organisational capacity is detrimental and inevitably leads to reduce the ability the organisations to quickly and effectively fill the collaboration requirements and improve the business iiIIperformance (Callioni & Billington, 2001). The impact of collaboration on business performance cannot be accomplished in isolation from organisational capacity (karsha, Escotob, Beasleyc, & Holdenb, 2006; McAdam, McConvery, & Armstrong, 2004).
While collaboration has been explored by previous studies as demonstrated in Table 1, there is no study that particularly concentrates on the interaction between trust, e-business diffusion, organisational capacity and collaboration and how such interaction affects business performance. This study looks at manufacturers’ perceptions of trust and organisational capacities towards their partners so that a comparison can be made in order to establish their influence on the effectiveness of collaboration and e-enabled collaboration adoption and in cultivating stronger business performance. This study seeks to fill this gap in the literature and attempts to answer the following research question: what’s the interaction between collaboration, trust, organisational capacity and e-business diffusion in affecting business performance?