The routinization of Web-based supplier diversity initiatives.

Young, Dale ; Dyer, John N.

ABSTRACT

The Web facilitates the initiation and development of relationships between firms in a supply chain. This study of Web-based supply chain links examines supplier diversity initiatives on the Web sites of the Fortune 500. It develops a measure of supplier diversity routinization based on innovation diffusion and routinization research. The study finds that few (15.6%) Fortune 500 firms use their public Web site to publicize supplier diversity. Current users of Web-based supplier diversity are categorized by diffusion theory as innovators and early adopters. The sites of the largest firms are most likely to mention supplier diversity. However, among all sites that mention supplier diversity, the degree of routinization--the number of different categories of supplier diversity comments--is relatively low and does not vary by firm size or industry. Thus, Web-based supplier diversity is marked by low levels of adoption and routinization.

INTRODUCTION

Links between trading partners are becoming Web enabled. For example, electronic data interchange (EDI), which reduces processing errors, lowers operating costs, and shortens replenishment cycles between trading partners (Young, Carr, & Rainer, 2000), is moving to the Web (Gilbert, 2003). Firms realize significant time and cost savings as electronic relationships are Web enabled by e-procurement (Cohen, 2002). The Web is a rapidly growing channel for business-to-business (B2B) commerce, forecasted to reach $1 trillion in the U.S. in 2004 (Berkowitz, 2003). Forrester Research finds Web-based e-procurement growing rapidly among the Fortune 500 for both direct (e.g., manufacturing related) and indirect (e.g., supply related) goods (Tedeschi, 2004). Given the dramatic growth occurring in B2B e-commerce, and in related support systems, Web-based supplier communications should be studied.

SUPPLIER DIVERSITY

Firms are Web enabling supplier communications and procurement efforts, including supplier diversity programs which develop trading partner relationships with small, women-owned, and minority businesses. Supplier diversity is an important component of corporate diversity programs that address diverse constituencies in a global marketplace (Wentling & Palma-Rivas, 2000). The business case for supplier diversity is not based on altruistic motives alone, but on the belief that a firm's supplier base should be as diverse as its customer base (Purchasing, 1998), and because it is simply good for business (Armstrong, 2004; Daniels, 2004). Web-based supplier diversity should be researched because of its competitive impact, the potential the Web has for reaching diverse supplier prospects, and because it is largely unstudied but represents a critical subset of B2B relationships.

The study reported here focuses on how large firms use public Web sites to communicate with and attract diverse suppliers. Diverse suppliers include small or disadvantaged firms headed by minorities, women, or disabled veterans. Using the Web to communicate with diverse firms is justified because the gender and racial mix of Web users in the U.S. is close to the race and gender composition of the overall population (Thompson, 2000a, 2000b). In addition, nearly half of the U.S.'s largest minority-owned firms have a Web site (Hernandez, 2002). Purchasing from diverse suppliers helps make a firm's supplier base as diverse as the different types of customers it deals with (Reese, 2001) because an effective way to link to minority customers is to give business to minority suppliers (Armstrong, 2004).

The minority segment of the U.S. population, and its buying power, is growing rapidly (Reese, 2001), minorities make-up 27% of the U.S. population (MBDA), and much of the U.S. labor force growth is among minorities (Milken, 2000). The number of small-to-medium sized enterprises in the U.S. is growing quickly (Fields, 2001). The number of minority-owned firms is growing faster than non-minority firms and sales per employee grow faster at minority firms than at the Fortune 500 (Milken, 2000). Blacks represent 66% of minority business enterprises, Asian-Americans 21%, and Hispanics 11% (Davis, 2004). Clearly the minority population in the U.S., as mirrored by minority and women-owned small business, is a growing and influential aspect of the economy. Supplier diversity programs are, therefore, important because they enable large firms to engage in commerce with a rapidly growing segment of the population, and partnering with minority-owned enterprises is one way to learn about minority consumers (Reese, 2001). However, minority firms get only 3.5% of corporate purchasing (Hernandez, 2002; Reese, 2001); women-owned firms receive less than 3% of Fortune 500 purchases (div2000.com) and less than 2.5% of Pentagon contracts (Fields, 2001). In addition, although they have Web links themselves, small-to-medium sized businesses cannot be certain that their suppliers will support e-procurement (Tedeschi, 2004).

Supplier diversity is important because it is a bottom-line business issue, not simply a social issue (Walkup, 1999). There are several reasons for supplier diversity (Young, 2001). Supplier diversity enables the firm to be a more interesting place to shop, and helps the firm understand and attract diverse customers. These programs provide competitive advantage by supporting continuous improvement of products and processes. It is a way for firms to invest in and help the communities they operate in, to express concern for the public good, and it's the right thing to do. U.S. firms that sell to the federal government must demonstrate a diverse supplier base (Nolan, 1999).

Procurement is becoming electronic (Hernandez, 2002; Reese, 2001). E-procurement negatively affects the competitiveness of minority-owned firms due to contract bundling, which increases average contract size, and because of the technical expertise required (Fields, 2001; Hernandez, 2002; Reese, 2001; Tedeschi, 2004). It impacts the retention of minority businesses that have supplier relations with buying firms, but to attract diverse suppliers buying firms must develop outreach programs that may include electronic channels such as public Web sites.

This study examines supplier diversity on Fortune 500 public Web sites and measures the routinization of those initiatives. The theoretical backing is diffusion theory and innovation routinization. This paper reviews information systems (IS) research based on diffusion theory, measures Web-based supplier diversity, and discusses its current usage. The differentiating characteristics of this paper are applying innovation routinization to a Web-based IS, and integrating diversity into an IS study.

SUPPORTING RESEARCH

This study is supported by three streams of research: electronic supply chain links, corporate supplier diversity programs, and innovation diffusion theory. The first area studies the role of the Web in connecting trading partners. Diversity studies examine one aspect of supply chains--the need for a diverse base of suppliers. Innovation diffusion provides the theoretical backing and measurement variables for this study.

ELECTRONIC SUPPLY CHAIN LINKS

B2B commerce is Web-enabled by public sites and private extranets. Firms use public Web sites for trading partner communication (Young & Benamati, 2000). Some industries have rapidly Web-enabled supply chain links (Carbone, 2000), others have moved slowly (CSC, 2000), and the Web is replacing EDI for some B2B transactions (Baron, Shaw, & Bailey, 2000). Establishing B2B links involves business relationships and the costs of managing electronic communications (Young, Carr, & Rainer, 2000). However, electronic B2B links are often driven by the large, buying firm in the supply chain (Tedeschi, 2004).Benefits of Web-enabled B2B commerce include real-time business processes (Fingar, 2000), improved inventory management (CSC, 2000), eliminating proprietary software and VANs for EDI (Carbone, 2000; Gilbert, 2003), transaction cost reductions (Brunelli, 2000), and service improvements (Lancioni, Smith, & Oliva, 2000).

SUPPLIER DIVERSITY STUDIES

Diversity is defined in terms of race, gender, ethnicity, age, national origin, disability, and other characteristics; more generally it means all the ways people differ (Wentling & Palma-Rivas, 2000). The National Minority Supplier Development Council (www.nmsdcus.org), Women's Business Enterprise National Council (www.wbenc.org), and Small Business Administration (www.sba.gov) define a minority and women-owned business enterprise (MWBE) as at least 51% owned, controlled, and operated by African, Hispanic, Asian, or Native Americans, or non-minority women. The agencies maintain a database of certified firms and provide certification so businesses can prove they are minority owned. Certification involves screening, interviews, capability studies, examination of financial statements, and site visits.

Supplier diversity programs feature special-function organizational units, programs for MWBE outreach and assistance, expectations of down-stream trading partners regarding MWBE efforts, clearly defined metrics, and benchmarking to identify best practices (Morgan, 2002). Supplier diversity is promoted by a program office with a director and other personnel (Carter, Auskalnis, & Kechum, 1999) to assist prospects with application and certification. They post lists of products/services that are purchased, host open houses, and participate in industry forums and trade fairs. Some firms mentor MWBEs to meet contract requirements. U.S. DOD contractors participate in the agency's mentor-protege program, and firms with larger Federal contracts are required to develop minority supplier programs (Armstrong, 2004). Others assist MWBEs as second-tier suppliers with contacts to primary vendors; some have second-tier MWBE reporting requirements written into large supplier contracts. Success measures include the percentage of total procurement spend with MWBEs and the number of minority vendors in the purchasing database (Carter, Auskalnis, & Ketchum, 1999).

Supplier diversity has received scant mention in prior workplace diversity studies, and prior literature reviews of minority supplier research find that few academic studies address the topic (Carter, Auskalnis, & Ketchum, 1999; Krause, Ragatz, and Hughley, 1999). One study among Fortune 500 diversity managers briefly mentioned minority suppliers, but did not mention the Web for supplier communication (Wentling & Palma-Rivas, 2000). Fine (1996) emphasized the importance of multi-cultural organizations for a multi-cultural world, but her study focused on issues other than supply chain and trading partners.

Some themes emerge from academic minority supplier studies. Minority supplier programs are most successful when: buyers assist suppliers with bidding procedures, and buying-firms participate in trade fairs, develop performance metrics and minority supplier spending targets (Dollinger, Enz, & Daily, 1991). Top management support and setting goals for minority supplier programs are important (Carter, Auskalnis, & Ketchum, 1999). Supplier development--improving the performance or capabilities of a supplier--is performed by large firms and includes certification, supplier site visits, and awards (Krause, 1997). Minority suppliers must be able to compete in the areas of quality, timely delivery, and competitive price (Krause, Ragatz, & Hughley, 1999) without set asides, price preferences, or late delivery (Carter, Auskalnis, and Ketchum, 1999). Minorities face supply base reductions by buyers (Krause, Ragatz, & Hughley, 1999). Bundling and preferred supplier programs increase the importance of second-tiering where the primary supplier generates much of the minority opportunity (Morgan, 2002; Munk, 2003; Weaver, Stovell, & Romney, 2003).

INNOVATION DIFFUSION IN IS RESEARCH

Innovation diffusion theory tracks the spread of a new idea or practice within a single firm or across an industry. It explains the adoption and implementation of innovations, ideas or practices new to an adopting organization (Rogers, 1995), or are the first/early usage by an organization (Nord & Tucker, 1987). Adoption proceeds through stages, including evaluation and implementation (Zaltman, et al., 1973), and has been applied in various disciplines for following an innovation through those stages (Rogers, 1995). The implementation stage is composed of sub-stages, including routinization, which is the process by which the innovation becomes part of the normal activity and accepted routine of an organization (Cooper & Zmud, 1990) and is not viewed as something new or unusual (Yin, 1979).

Diffusion theory is rooted in various research disciplines, including rural sociology, geography, medical sociology, cultural anthropology, and industrial economics (Gatignon & Robertson, 1985). The theory has been used for some time to support the adoption of innovations, such as information technology (see below), that are discrete and tangible. In addition, in recent years innovation diffusion has been applied to the study of social issues such as living practices prior to marriage (Nazio & Blossfeld, 2003), quitting smoking (Redmond, 1996), policy innovations among state governments (Mintrom & Vergari, 1998), and the use of county administrators (Apperson & Wikstrom, 1997). Innovation diffusion also supports the study of trans-border data privacy laws, which links a technology (i.e., e-commerce) and the social concerns of privacy (Rudraswamy & Vance, 2001). The topic of this paper, supplier diversity content on corporate Web sites, combines these two areas of study--tangible innovations and social issues--in that it examines a specific technology (i.e., Web content), which has both social and business implications, as described earlier in this literature review.

Diffusion studies examine aspects of innovation adoption, including attributes of the innovation (e.g., relative advantage, complexity, observability), characteristics of the adopting organization (e.g., size, centralization), and the rate of adoption (Hage & Aiken, 1970; Rogers, 1995; Zaltman, et al. 1973). The rate of adoption is the speed with which a group adopts an innovation (Rogers, 1995). The rate of adoption is of interest in the study being reported here because it notes the presence or absence of an innovation, supplier diversity content on a Web site, across a large and influential population of adopters--500 corporations. Organizational size is positively related to innovativeness, and is a surrogate for total resources in the firm (Nord & Tucker, 1987; Nystrom & Starbuck, 1981; Rogers, 1995). Adoption follows a bell-shaped curve with the earliest adopters the most innovative. Innovators are the first 2.5%, early adopters the next 13.5%; the early (34%) and late (34%) majority follow. The last 16% are laggards (Rogers, 1995).

Diffusion theory supports information systems (IS) research. Cross-industry IS studies, the focus of this paper, applying diffusion theory include Ramamurthy & Premkumar, 1995, Lai, 1997, Grover, 1993, and Grover & Goslar, 1993. Single firm/industry IS diffusion studies include Dos Santos and Peffers (1998), George et al. (1992), and Premkumar et al. (1997). Other IS diffusion studies include windows technology (Karahanna, et al. 1999), telework (Ruppel & Howard, 1998), automatic teller machines (Dos Santos & Peffers, 1998), telephone networks (Flynn & Preston, 1999), and productivity tools (Grover et al., 1998). IS studies examining the degree of routinization or extent of IT implementation include: Lai (1997)--ISDN, Premkumar, et al. (1994)--EDI, Zmud & Apple (1992)--scanners, and Cooper & Zmud (1990)--MRP.

A few studies link innovation diffusion and the Web. Liao, et al. (1999) applied the theory to virtual banking and Lee (1998) to Internet-based financial transactions. Likewise, few studies examine the impact of the Web on supply chain relationships. Lancioni, et al. (2000) note that using the Internet for managing supply chains is new and few studies have been done. Baron, et al. (2000) describe the impact of the Web on procurement and supplier interaction; a retail technology study found that large retailers have been slow to use the Web to interact with trading partners (CSC, 2000).

In summary, innovation diffusion provides theoretical support for IS adoption, implementation, and routinization. However, few studies have examined the role of the Web in supply chain collaboration, or have related innovation diffusion to Web-based ISs, and no study to date has applied these concepts to Web-based diversity initiatives.

RESEARCH QUESTIONS

The lack of research into routinization of Web-based supply chain links argues for a study to answer questions regarding the extent of adoption of Web-based supplier diversity, and the supplier diversity content on those sites. That content, in turn, provides items to measure the routinization of Web-based supplier diversity. Therefore, this study answers the following questions:

RQ1: What is the percentage of corporate Web sites with supplier diversity content?

RQ2: What is the content of corporate Web-based supplier diversity initiatives?

RQ3: What is the degree of routinization of Web-based supplier diversity initiatives?

RQ4: Does the routinization of Web-based supplier diversity vary by firm size?

RQ5: Does the routinization of Web-based supplier diversity vary by industry?

The first two questions are descriptive (i.e., "how many" and "what"). Fortune 500 sites with supplier diversity content were counted (RQ1), and the supplier diversity content on those sites was categorized (RQ2). The "Methodology" section explains the measure for supplier diversity routinization (RQ3). Categorizing diversity by firm size (RQ4) and industry (RQ5) identifies supply chains that are early adopters of Web-based links.

METHODOLOGY

The public Web site of every Fortune 500 firm was examined. These sites are a valuable resource for studying supplier diversity because of the size of the firms, their public exposure and responsiveness to diverse constituencies, and the potential for them to have well-established diversity programs exclusive of the Web. These firms have the resources to develop diversity initiatives and the channel influence to sustain them. The Web is a component of corporate diversity, and is a recent innovation in initiating and maintaining relationships with various constituencies. A form (Appendix) was developed, tested, and modified to catalog Web content relating to supplier diversity. Items on the form were influenced by previous supply chain and diversity studies, by site visits to the 50 largest firms on the list, and by the researchers' experience. The form went through several modifications during development to insure complete content coverage.

Whenever available, the site's search engine was used to identify key terms during the site visits: supplier, vendor, procurement, diversity, and minority or women-owned or small business. In the absence of a search engine a page-by-page search was conducted. The acronym on the sites for diverse suppliers was "MWBE"--minority and women-owned business enterprises; some include disabled veterans and small or disadvantaged businesses as MWBEs.

The data collection and analysis process followed the qualitative methodology of Strauss (1987) for examining textual data. During each site visit all the Web pages relating to supplier diversity were printed. Those pages were content analyzed by identifying supplier diversity items. Occurrences of supplier diversity routinization items, which are explained in the next section, were coded on the printed pages. The number of each variable across all sites were entered on a tabulation sheet and totaled to provide a routinization score. This scoring process matched procedures in previous IS routinization studies. Data collection was based on the 2000 Fortune 500 list.

The data are a census because the Fortune 500 is a population, eliminating parametric inferential procedures related to test of equality of location and variability measures. Population tests move from statistical inference--based on sample results--to practical significance, based on comparative and associative population measures. This analysis includes counts, statistical summaries, nonparametric inference, and association analysis to measure practical significance.

MEASURING WEB-BASED IT ROUTINIZATION

After adopting an information technology (IT) innovation, firms begin installation and maintenance. Processes may be changed because of the new system, individuals accept and use the technology, it becomes routinized, and the firm measures increased effectiveness because of IT infusion (Cooper & Zmud, 1990). Innovations are routinized by budgets, formal personnel classifications, training, rules and procedures, and maintenance operations (Yin, 1979). These categories are variables used in studies of innovation routinization.

Yin's (1979) seminal work measured the degree of routinization by a count of the number of budget and other cycles for each innovation studied, including computer systems. Zmud & Apple (1992) measured the degree of routinization of electronic scanners by adapting the variables of Yin and totaling the number of appearances of each variable. Grover & Goslar (1993) measured the extent of implementation of telecommunication technologies on a scale. Premkumar, et al. (1994) used a scale to measure the extent of EDI integration. Thus, scales or counts are common measures of innovation routinization in IS studies. This study measures routinization by employing a count of routinization items on Web pages.

MEASURING SUPPLIER DIVERSITY ROUTINIZATION

This study adapts four categories of variables from Yin (1979)--budgets, personnel, training, and rules/procedures--to determine the routinization of Web-based supplier diversity. These are the same four routinization variables used in the Zmud & Apple (1992) IS study.

 For budgets this study identifies two items--spending on diversity
 initiatives and multiple budget cycles represented by a start date
 for the diversity program.

 Personnel classifications include a title for the diversity program
 manager, and any additional supplier diversity job classifications
 or titles.

 Training introduces an innovation to an organization and it shows
 commitment for the innovation. Items for expressed commitment to
 supplier diversity are: references on the Web site to the importance
 of supplier diversity, and statements about how personnel treat
 potential diverse suppliers.

 Four items are used for rules and procedures: requiring supplier
 certification by an outside agency, specifying the use of access
 technologies such as EDI, describing procedures by personnel for
 evaluating diverse suppliers, and expectations regarding quality,
 financial stability, or geographic coverage.

Content validity is the extent to which a measure mirrors a domain of knowledge (Carmines & Zeller, 1979). There are two ways to insure the validity or completeness of the content in this study. First, variables (e.g., budgets, personnel) are patterned after studies of innovation diffusion and IS routinization. Second, the items on the form were based on careful selection and testing of content from studies in e-commerce, innovation diffusion, innovation routinization, and supplier diversity.

FINDINGS

Public Web sites are common, but mentioning supplier diversity on them is not. All but five of the firms had a public Web site, but only 38/495 (7.7%) use the site to describe a supplier diversity program. Another 24 (4.8%) ask that diverse supplier prospects "call us" and do not describe the program. Fifteen mention supplier diversity without contact information. Thus, 77 sites (15.6%) have supplier diversity content, which is similar to the percentage (14.6%) of minority firms in the U.S. (MBDA). Supplier diversity content appears in two locations. It is listed with corporate-wide supplier comments (e.g., procurement practices), or with the firm's diversity statement that discusses the importance of diversity among customers, employees, and suppliers.

SUPPLIER DIVERSITY CONTENT

Web-based supplier diversity content (Table 1) includes: application forms, technology requirements such as bar coding, requests for financial statements, definitions for minority businesses, and certification instructions. Some sites have multiple pages for this content; others state that supplier diversity is important and request the prospective supplier mail a letter of introduction or phone for more information.

ROUTINIZATION ITEMS

The most frequent supplier diversity routinization items (Table 2) are statements about the importance of supplier diversity (item 3a) and certification requirements (item 4a). Over half of the sites with MWBE content list a formal title and/or name for the supplier diversity officer. "Outreach participation" (item 3b) means the firm describes its attendance at forums or small business job fairs. "Operational requirements" (item 4b) include specification of access technologies (e.g., EDI), quality standards such as ISO 9000, and product label requirements by retailers.

DEGREE OF ROUTINIZATION

Routinization was measured following Yin and prior IS studies. Table 3 summarizes the routinization scores. A Chi-square test (p < .005) shows the routinization scores are not normally distributed. Sites with one to three routinization items have a low degree of routinization; 30/77 (39.0%) are rated low. Six (7.8%) have a high degree of routinization and 41 (53.2%) are rated moderate. The mean routinization score is 4.32 (median = 4), indicating the sites contain four of the ten items. This relatively low score suggests that descriptions of Web-based supplier diversity are sparse.

VARIATION BY COMPANY SIZE

Table 4 compares mean, median, mode, standard deviations, and correlations for ranking categories versus overall routinization scores. The distribution of mean, median, and mode is similar, and routinization scores change little, across ranking categories. The mean routinization score is 4.32, and the mean for ranking 1-250 is 4.3.

The Kruskal-Wallis (KW) procedure (Neter et al., 1985), which is similar to ANOVA but with relaxed distribution assumptions, yields a p-value > 0.90, implying no statistically significant difference between median routinization scores. (The procedure was applied to 76 randomly selected firms to simulate a sample for inferential interpretation and the p-value is the most conservative result from all possible samples.) Score variability measured by standard deviation is similar across categories. The Siegel-Tukey (ST) test (Gibbons, 1985) yields a p-value > 0.20 to test the equality of variance between firms ranked 1-50 versus 300-500. (The 300-500 range generates sufficient data for the test.) There is no statistically significant difference in routinization score variability between the highest and lowest ranking categories.

Firm size does not affect the degree of supplier diversity routinization. (The revenue of the smallest firm exceeded $3 billion.) The correlation between ranking and routinization score is -0.02 (Table 4). The correlation between the six categories and routinization scores are low (0.03 to 0.38) indicating no significant relationship between ranking and routinization score. The percentage of firms in each ranking category (percent a in Table 4) reveals that the larger the firm, the greater the likelihood its site has supplier diversity content. The degree of routinization relative to the number of firms in each category (percent b in Table 4) supports this assertion (e.g., 40% of the top 50 firms, 32% of the next 50 firms, and so on, exhibit routinization). The Chi-square test rejects the null hypothesis of identical distributions of percents with p-values of 0.0460 and 0.0004, respectively.

The percentage of diversity items and firms in each category match (Table 5), supporting that routinization does not vary by firm size. For example, in category 1-200 216/333 (64.9%) of the items occur among those 50/77 (64.9%) firms. A Chi-square test of the association between ranking categories and routinization items (p = 0.996) does not reject the hypothesis of independence.

Large-firm sites have a disproportionate number of low routinization scores (Table 6). Firms 1-100 are 53.3% of low routinization sites and 1-200 are 76.7%. For both the percentage of low scores is higher than the study average (39.0%), and the percentage of moderate scores is lower (53.2%). More large firm sites than the study average have supplier diversity content, but the number of items is limited compared to smaller firms. There are nearly 2.5 times as many sites with supplier diversity content than the expected value (15.4) among 1-100 (46.8% of the 77 firms), but there is less than a third of the level expected among 401-500 (5.2% of the firms).

VARIATION BY INDUSTRY

The 77 firms are in 29 different industries, including: gas and electric utilities (9 firms), general merchandisers (6), computers and office equipment (6), telecommunications (5), and aerospace (5). The highest-count industry (gas and electric utilities) is 12% of the sites. The mix of industries shows that diversity routinization does not vary by industry (a Chi-square test, .005 level, shows no variance from a normal distribution).

ANSWERING THE RESEARCH QUESTIONS

Only 15.6% of Fortune 500 Web sites have supplier diversity content, answering Question 1. Table 1 answers Question 2 by listing the supplier diversity content on these sites. There is a moderate degree of routinization of Web-based supplier diversity content (Question 3). The degree of Web-based supplier diversity routinization does not vary by company size (Question 4) or industry (Question 5).

DISCUSSION

The public Web sites of large corporations are barely utilized for promoting supplier diversity, although this is one aspect of trading partner and supply chain interaction for which the Web is well suited. Building a diverse supplier base may be important to many of these firms, but this study finds that the Web is not a heavily used component of corporate supplier diversity initiatives.

The largest Fortune 500 corporations are most likely to have Web-based statements about supplier diversity, but firm size is not related to the degree of routinization because the sites of the biggest firms in the study exhibited no more supplier diversity routinization than the smallest firms. There is a lack of breadth in supplier diversity items (i.e., a disproportionate number of low routinization scores) among the largest firms in this study. Has Web-based supplier diversity been overlooked by Web site planners, or are there other Web site content issues that are being given greater strategic priority within the larger firms?

Much of the Web-based supplier diversity content is these large firms publishing their expectations, or requirements, for issues such as certification, financial stability or operations, and describing MWBE categories. From Table 1 we learn that these large firms demand certification, require applicants to submit proof of financial stability, and require evidence of technical and operational capabilities. These firms do not relax demands for competitive prices, and timely and consistent delivery, simply to attract diverse suppliers. Less of that Web site content deals with "transactions" such as electronic application forms. Given the early stage of adoption for Web-based supplier diversity communications, this emphasis on publishing over transactions is expected because content publishing is easier to accomplish.

The most frequently mentioned supplier diversity item (88.3%) among firms with supplier diversity communication on their Web sites is the importance of these efforts; they often use a letter from the company chairman or president as an introduction to the supplier diversity segment of the site. The letters show commitment from the top for these programs. The second most frequently mentioned item is certification (62.3%). Diverse suppliers cannot self-certify; they must go through the certification processes of recognized federal or private agencies, which can be rigorous and may be a hurdle for some small suppliers.

On-line applications and personnel contacts appear on more than 50% of the sites that mention supplier diversity. However, nearly half of the sites omit a contact name and request direct inquiries to an impersonal "supplier diversity office." Less than a third mention budgets or program start dates for supplier diversity initiatives. Thus the majority of firms with supplier diversity content use their public Web sites to say supplier diversity is important and direct the prospect to an agency for certification. The sites may provide a contact name and application form to begin the interaction process with the buying firm. Corporate Web sites are largely a means of expressing a commitment and initiating a review process. The Web is an innovative channel for accomplishing the initial screening of a prospective supplier and currently serves an informational purpose in relationships with supply chain members.

Rogers (1995) determined that innovators--the earliest users, and early adopters--the next group to begin using an innovation, make up approximately 16% of the total population of users for an innovation. These individuals or organizations serve as role models for later adopters. The 15.6% of Fortune 500 Web sites with some mention of supplier diversity are innovators and early adopters and may serve as "best practices" examples for firms that become later adopters.

CHARACTERISTICS OF HIGH ROUTINIZATION FIRMS

The top five percent of these firms in terms of Web-based supplier diversity routinization, the two "9's" and two "10's" (Table 3), are arguably a best practices benchmark by which other Web-based supplier diversity efforts can be measured. The two "10's" are Sprint (Fortune rank 81) and U.S. West (Fortune rank 134). Both are in the telecommunications industry. The two "9's" are PepsiCo (Fortune rank 76; beverages) and TRW (Fortune rank 103; motor vehicles and parts). This discussion focuses on Sprint and U.S. West.

The supplier diversity segment of Sprint's public Web site opens with a letter from the CEO about the importance of a "world class supplier base" and the role of women and minority businesses in that supplier base. They cite year-to-year increases in diversity spending as a reflection of "Sprint's company wide commitment to facilitate participation of these businesses in the purchasing process." The site provides an overview of the supplier diversity department (including names, phone numbers and e-mail addresses), its supplier database, and purchasing process. There is a list of commodities purchased. It provides a checklist for prospective suppliers, including a note about certification and an application form to be completed and submitted on-line.

U.S. West publishes a Web brochure describing its minority and women business enterprise program that includes a commitment statement from both the Chairman and President. There is a photo of the diversity program staff, a detailed statement of program accomplishments from the supplier diversity program director, and a case study of small and minority businesses that have been successful as U.S. West suppliers. The supplier diversity materials feature press releases, diversity awards, and statements from procurement officers and the vice president of supplier diversity. They provide phone numbers and addresses to certifying agencies and other diversity resources, and definitions for the categories of minority and women-owned businesses. Best practices for Web-based supplier diversity include expressed commitment, clear measures of success, contact information, and explanation of application procedures.

KEY FINDINGS

This study of Web-based supplier diversity content on Fortune 500 Web sites finds that:

 few firms use the Web to describe supplier diversity programs,

 firms exhibit a low degree of routinization for Web-based supplier
 diversity,

 commitment letters, certification requirements, and
 electronic application forms are the most common Web-based supplier
 diversity content on corporate Web sites,

 the degree of routinization of Web-based supplier diversity
 does not vary by firm size or industry,

 the larger the firm, the lower the number of
 different types of supplier diversity comments on its site,

 the larger the firm, the more likely its Web site will contain
 some supplier diversity content as predicted by innovation
 diffusion theory,

 the current users of Web-based supplier diversity
 initiatives are innovators and early adopters as described by
 innovation diffusion theory, and

 these early adopters provide a best-practice example for
 other firms that wish to encourage supplier diversity
 through a public Web site.

Corporate Web sites are in an early stage of adopting supplier diversity communication.

IMPLICATIONS

An implication for practitioners is that a corporate Web site can be used to identify prospective MWBE suppliers. Publishing Web-based materials relating to operational and financial requirements, and demanding external certification, assist in screening MWBE prospects. A few firms have begun this identifying and screening process using their Web site. For researchers, this study provides a measure of Web-based content on corporate sites. This exploratory study is a starting point for examining the role of a public Web site in corporate diversity initiatives. Follow-up studies should examine the effectiveness of the Web for identifying and screening minority supplier candidates in relation to the quantity and quality of those candidates.

LIMITATIONS

A limitation of this study is that it is a point-in-time snapshot of how a group of firms are using the Web. Public Web sites change over time and so supplier diversity content may change, especially since the sites are in the early stages of supplier diversity routinization. A second limitation is the population itself; the Fortune 500 are large and not representative of every firm. However, they are likely to have the resources to support a public Web site and are also likely to have existing programs that support supplier diversity. Small-to-medium sized firms may respond differently to supplier diversity issues than the large firms that are the focus of this study. Despite these limitations, this study provides a unique view of the Web-based supply chain links that are emerging today.

CONTRIBUTION

The primary contribution of this study is to examine electronic supply chain relationships by measuring the routinization of Web-based supplier diversity initiatives. The study has both business and social implications, in addition to its role in examining an emerging usage of corporate public Web sites. A secondary contribution is to review the Web-based supplier diversity content of every Fortune 500 firm.

This study has value to practitioners such as IS managers and developers of corporate Web sites. Firms with well-established supplier diversity programs should be using the Web as a means of publicizing these programs, but most Fortune 500 firms are not utilizing a public Web site for this purpose. The drop-off in usage of the most elementary Web site application--content publishing--becomes more pronounced among the smaller (though still multi-billion dollar) firms on the list. The routinization measure developed in this study reveals that few Fortune 500 firms are highly routinized in using the Web to promote supplier diversity initiatives, and do not exhibit much breadth in this aspect of supply chain relationships. Given that supplier diversity is a bottom-line business issue, as discussed in the practitioner studies cited earlier, not addressing Web-based supplier diversity means that these firms are ignoring one avenue for increasing their contact with diverse customers. Thus, there are business implications for Web-based content aimed at diverse suppliers.

This study has value to researchers as well. The study applies innovation diffusion theory in a way that spans a discrete innovation (i.e., Fortune 500 Web site content relating to supply chain interactions) and a social issue (i.e., supplier diversity). As described earlier, innovation diffusion theory has been successfully applied in both areas in a large variety of previous academic studies. The study reported in this paper is one of the few that combines both a social issue and a discrete technology innovation into a single study. This study extends prior work in the area of innovation routinization, as it moves beyond the work of researchers such as Yin (i.e., discrete administrative innovations, including computer systems), and Zmud and Apple (i.e., scanning technology used in the grocery industry), by extending routinization to a Web-based technology innovation. Finally, given the low level of adoption for the innovation being studied, this study examines the innovators, or very earliest adopters of Web-based supplier diversity content.

APPENDIX: DATA COLLECTION FORM

Fortune 500--Small, Minority, Women-owned, Disabled Veteran (MWBE) Suppliers

Co. Name: -- URL: -- Fortune Rank: -- Industry: -- SIC: --

Extensiveness of Diversity Supplier Section: --none/brief, --"call us", -- extensive; -- mention MWBE commitment, no formal site info.

Contact Name(s) YES NO E-mail link YES NO Phone #s YES NO Address YES NO Liaison Officer Title: -- MWBE Program/Office/Task Force YES NO Letter from Chairman/President/CEO/COO r/e Supplier Diversity YES NO -- definition of MW business Other: --

Certification Programs: Required; Listed: -- NMSDC -- WBENC -- SBA -- DOD Provide External Links for Certification to: -- Electronic Application: On-line Form, Adobe -- describe formal proposal process Application Procedures: -- D& B # -- financials -- sales -- insurance certification EDI; Bar Code; UPC; Quality conformance; price; geographic coverage; --

Describe Supplier Development Programs: List Reasons for Supplier Diversity Initiatives: Other Supplier Diversity Issues:

-- program goals; -- how to submit samples; -- list MWBE awards; -- success measures

Search: minority or women-owned or small business; diversity; supplier or vendor; procurement; no site search -- no site index --

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Table 1
Web-based Supplier Diversity items (n = 77)

Supplier Diversity Item # %

MWBE certification 48 62.3
E-application form 41 53.2
Submission of financials 34 44.2
List MWBE categories 33 42.9
Supplier diversity budget information 25 32.5
URLs for certifying agencies 22 28.6
Diversity letter from corporate officer 21 27.3
Evidence of technical/operational capabilities 20 26.0
Awards/case studies 18 23.4
Use of second-tier suppliers 16 20.8

Chi-square test comparing observed values to a normal distribution
was significant at the .005 level. Computed chi-square value was
37.12 (table value at .005 level, 9 degrees of freedom = 23.59).

Table 2
Supplier Diversity Routinization Items (n = 77)
Category and Items # %

1. Budgets

1a. Total dollars or % of procurement spent on 25 32.5
supplier diversity

1b. Multiple budget cycles, list supplier 25 32.5
diversity program start date

2. Personnel

2a. Title for supplier diversity program manager, 39 50.6
or listed contact name

2b. Multiple job classifications for supplier 15 19.5
diversity personnel

3. Expressed Commitment to Supplier Diversity

3a. Corporate diversity statement, officer letter 68 88.3
about its importance

3b. Describe treatment of diverse suppliers, 35 45.5
outreach participation

4. Rules and Procedures

4a. Require certification 48 62.3

4b. Operational requirements 20 26

4c. Formal evaluation procedures for diverse 17 22.1
suppliers

4d. On-line application forms 41 53.2

Chi-square test comparing observed values to a normal distribution
was significant at the .005 level. Computed chi-square value was
72.98 (table value at .005 level, 9 degrees of freedom = 23.59).

Table 3: Degree of Supplier Diversity Routinization (n = 77)

Count of routinization items 1 2 3 4 5

# of firms with each 7 7 16 15 11
 routinization score
Category total & percentage 30 (39.0%) 41 (53.2%)
Degree of Routinization: Low Moderate

Count of routinization items 6 7 8 9 10

# of firms with each 10 5 2 2 2
 routinization score
Category total & percentage 41 (53.2%) 6 (7.8%)
Degree of Routinization: Moderate High

Table 4: Sites with Supplier Diversity Content by Firm Size (n = 77)

 Fortune 500 Rank Category

 All 1-50 51-100 101-200

Count 77 20 16 14
Percent a 100.0 26.0 21.0 18.0
Percent b 15.4 40.0 32.0 14.0
Mean 4.3 4.4 4.4 4.1
Median 4.0 5.0 4.0 3.5
Mode 3.0 7.0 2.0 3.0
Std Deviation 2.1 2.3 2.5 2.6
Correlation -0.02 -0.03 0.38 -0.23

 Fortune 500 Rank Category

 201-300 301-400 401-500

Count 12 11 4
Percent a 16.0 14.0 5.0
Percent b 12.0 11.0 4.0
Mean 4.7 4.0 4.3
Median 4.0 4.0 4.5
Mode 4.0 4.0 5.0
Std Deviation 1.9 1.3 1.0
Correlation 0.22 0.13 0.08

a is the % of 77 routinization scores

b is the % of 77 routinization scores relative to number of firms
in the rank category.

Table 5: Number of Supplier Diversity Items by Firm Size (n = 77)
Diversity Item (see Table 2 for Item descriptions)

Fortune Rank # Firms 1a 1b 2a 2b 3a

1-100 36 13 15 19 9 33
101-200 14 8 4 5 2 10
201-300 12 2 3 6 2 11
301-400 11 2 3 6 1 10
401-500 4 0 0 3 1 4
Total: 77 25 25 39 15 68

Fortune Rank 3b 4a 4b 4c 4d Total

1-100 10 21 11 9 19 159
101-200 6 8 5 3 6 57
201-300 11 9 1 3 8 56
301-400 5 7 2 2 6 44
401-500 3 3 1 0 2 17
Total: 35 48 20 17 41 333

Table 6: Routinization Scores by Firm Size (n = 77)

 Degree of Routinization

Fortune Moderate
Ranking Low (# / %) # / %) High (# / %) Total

1-100 16 / 44.4 17 / 47.2 3 / 08.3 36
101-200 7 / 50.0 5 / 35.7 2 / 14.3 14
201-300 2 / 16.7 9 / 75.0 1 / 08.3 12
301-400 4 / 36.4 7 / 63.6 0 11
401-500 1 / 25.0 3 / 75.0 0 4
Total: 30 / 39.0 41 / 53.2 6 / 7.8 77

Chi-square test comparing observed values to a normal distribution
was significant at the .005 level. Computed chi-square value was 38.13
(table value at .005 level, 4 degrees of freedom = 14.86).