Definition:

By Zaheer and Venkatraman (1994), electronic integration is the specific form of vertical quasi-integration achieved through the deployment of dedicated computers and communication systems between relevant actors in the adjacent stages of value-chain. The degree of electronic integration is conceptualized as "the level of an independent agency's dedication to an insurance carrier whoseproprietary IOS serves as the primary infrastructure for the conduct of the business". The authors thus distinguish between (a) the system initiator - who deploys a proprietary IOS to expand the scope of hierarchical control and (b) the target firm - which exercises a choice between accepting or rejecting the IOS.

Vertical integration is generally regarded to as a condition in which a firm "encompasses two single output production processes in which either (1) the entire output of the "upstream" process is employed as part or all of the quantity of one intermediate input into the "downstream" process, or (2) the entire quantity of one intermediate input into the "downstream" process is obtained from part or all of the output of the "upstream" process, following the classic work in vertical integration such as Perry (1989).

By Kambil and Short (1994), Electronic integration (EI) is the strategic choice made by firms to transform the firm's business scope or business network by using information technology to reengineer key business processes and relationships.

By Venkatraman and Kambil (1991), Electronic Integration refers to the strategic choice of firms to exploit the functionalities for developing interorganizational relationships for specific business goals. It is concerned with a set of business decisions (including selection for partners for interconnection, adoption of common or proprietary EDI standards for information exchange, etc.) that leverage the new technological environment to obtain firm-specific advantages in a marketplace. Electronic integration, thus, is embedded within the system characteristics of IOS and technical EDI standards, but has a distinct business orientation.

A similar concept, IT-enabled virtual integration, is defined by Clemons and Row (1989) as "the strategic network of McKesson and its customers achieve amnay of the benefits of lage chains without ownership", which is quite consistent with that of electronic integration by Zaheer and Venkatraman (1994).

According to Kambil and Short (1994), prior research on electronic integration can be organized into a classificatory framework that varies by level of organizational analysis and reference frame for the research. The level-of-analysis dimension identifies the basic organizational unit chosen in the study of an IT-based integration strategy. These include the focal firm, the dyad, and the business network. The reference frame identifies how the work was theoretically, empirically or otherwise approached. The four reference frames are theories, conceptual frameworks, case research, and variance studies.

Highly related theories include Galbraith (1973, 1977), Bensaou and Venkatramen (1995), Organizational and Inter-Organizational Design Framework: A key function of organizations is the processing of information in order to coordinate the execution of a task. Interorganizational tasks require effective sharing of information within and between organizations. The more complex the task, the greater the problem of coordination. The problem of coordination is a problem of information: how to communicate information between decision makers involved in the performance of interdependent subtasks.

Zaheer and Venkatraman (1994) specifically studied the determinants of electronic integration, which include business process asset specificity, trust, reciprocal investment, with business size being the control variable.

The latest research by Christiaanse and Venkatraman (2002) has found that the deployment of a dedicated, dominant interorganizational system leads to higher level of electronic integration. In addition, their newly-developed "expertise exploitation capabilities" construct has a strong positive effect on electronic integration.