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Electronic Data Interchange (EDI) – Definition

Electronic data interchange (EDI) Definition

Electronic data interchange (EDI) is an electronic transmission system which allows transferring data according to predefined message standards from one system to another system without any intermediary.

A Little More on What is Electronic Date Interchange

Electronic data interchange is an exchange of message between two peers or trading partners. EDI enables users to exchange data without any intermediary between the two. It reduces the cost and time for businesses, as they can now exchange data and corporate documents with each other without any human intervention.

EDI refers to standards that are not specified for transmission but rather the standards are set and specified by trading partners. There are four major EDI standards are as follows:

  • The UN/EDIFACT Standard: UN/EDIFACT is the international standard and recommended by UN.
  • The US Standard ANSI ASC X12 (X12):It is the most important standard used in North America
  • The TRADACOM Standard: This standard is often used by retail industry in United Kingdom (UK)
  • The ODETTE Standard: This standard is used by European automobile industry.

Uses for EDI

Electronic data interchange (EDI) has many uses and applications which allow businessmen to save time and money. EDI facilitates smooth functions and speedy exchanges of data between business to business or peer to peer. Some applications are illustrated as following:

  • Electronic data interchange (EDI) facilitates healthcare provider and insurers to exchange information easily and in timely manner
  • EDI can be used in traveling and hotel booking etc.
  • It is applicable to education. Students and university administration may exchange information through electronic data interchange.
  • It is also useful in supply chain management
  • EDI ensure efficient administration
  • Electronic data interchange is used for tax reporting purpose

The Electronic data interchange (EDI) standards do not depend on any pre-specified standards for transmitting data and information. Both sender and receiver may choose any methodology and agreed upon them to exchange data.

References for Electronic Data Interchange

Academic Research on Electronic Data Interchange (EDI)

Implementation of electronic data interchange: an innovation diffusion perspective, Premkumar, G., Ramamurthy, K., & Nilakanta, S. (1994). Journal of Management Information Systems11(2), 157-186. This article explores the relationship that exists between several innovation features (complexity, two forms of compatibility, costs, relative advantage, and communicability) and several features of diffusion (adaptation, internal diffusion, external diffusion, and implementation success) of Electronic data interchange (EDI) in firms. The data used for the research were gathered in a field survey of 201 firms that applied EDI. The results showed that relative advantage, costs, and technical compatibility were responsible for most of the predictions of adaptation while duration and relative advantage were the major predictors of internal diffusion.

Electronic data interchange and small organizations: Adoption and impact of technology, Iacovou, C. L., Benbasat, I., & Dexter, A. S. (1995). MIS quarterly, 465-485. High penetration levels are very important for the success of Electronic data interchange (EDI), this fact has recently been accepted by many EDI researchers. However, that kind of penetration is blocked by the refusal of some small firms to become EDI capable. After studying the problem, the authors highlighted three major factors that determine the adoption of EDI practices by small companies. These are: (1) organizational readiness, (2) external pressures to adopt and, (3) perceived benefits. These factors are fully discussed in the article.

The role of intermediating institutions in the diffusion of electronic data interchange (EDI): How industry associations intervened in Denmark, Finland, and Hong Kong, Lyytinen, J. D. K. (2001). The Information Society17(3), 195-210. Intermediating institutions are nonprofit private industry associations. They direct and organize the actions of a group of would-be adopters. This paper explores a particular type of intermediary institution and how they improved the integration process of EDI in Hong Kong, Denmark, and Finland. The authors identify six organizational measures that can be used to advance the EDI integration.

Electronic data interchange: characteristics of users and nonusers, Banerjee, S., & Golhar, D. Y. (1994). Information & Management26(2), 65-74. The exchange of information between a company and its client is very important for the growth of the business. Electronic Data Interchange (EDI) is a new innovation in communication technology that aids the transfer of information. This goal of this article is to highlight important problems of EDI from both the users’ and the nonusers’ perspective. To do that, the authors studied the good and bad effects of choosing EDI.

Business value of information technology: a study of electronic data interchange, Mukhopadhyay, T., Kekre, S., & Kalathur, S. (1995). MIS quarterly, 137-156. There is great disagreement about the effect of information technology on a firm’s performance. Some scholars discovered both good and bad side-effects, while others were unable to find any. This article concentrates on Electronic Data Interchange (EDI) technology. A careful analysis was carried out on the performance data gathered in the past 10 years from assembly centers of Chrysler Corporation.

Power and trust: Critical factors in the adoption and use of electronic data interchange, Hart, P., & Saunders, C. (1997). Organization science8(1), 23-42. This article examines the influence of trust and power in the acceptance and use of Electronic Data Interchange (EDI). the power mentioned here can be used in different ways. Some firms may use the power to force their partners to accept EDI making the less powerful trading partners vulnerable. The function of trust and power is important in understanding how electronic media promote alliances between firms to promote shared goals.

Partner congruence in electronic data interchange (EDI)enabled relationships, Angeles, R., & Nath, R. (2001). Journal of Business Logistics22(2), 109-127. This article creates congruence factors for a customer – distributor Electronic Data Interchange (EDI) partnerships. The data used for the study was gathered from 64 customer – distributor pair of firms with the use of a questionnaire. On analysis of 31 items, 6 congruence factors were recognized: top‐level strategic commitment, trading partner flexibility, joint partnering for EDI, readiness for high‐level EDI implementation, EDI infrastructure, and partner communication.

Networks of collaboration or conflict? Electronic data interchange and power in the supply chain, Webster, J. (1995). Journal of Strategic Information Systems4(1), 31-42. This article worries about the manner in which the use and format of inter-organizational information systems reveal the calculated interests of strong corporate actors and the efforts of those actors to dominate the marketplace. It also discusses on the visions created within the sociology of technology, which includes the fact that innovation isn’t just a technical-rational way of solving the problem but also involves the political and economic way of expressing interests and developing alliances and fighting over outcomes.

Adoption of electronic data interchange: the role of buyer-supplier relationships, Iskandar, B. Y., Kurokawa, S., & LeBlanc, L. J. (2001). IEEE Transactions on Engineering Management48(4), 505-517. This article explores the incorporation and implementation of electronic data interchange (EDI) by the U.S automobile industry contractors. The article develops various hypotheses from the writer’s survey and interviews with automobile industry managers, and tests these hypotheses with data from 1st and 2nd-grade automobile contractors in the U.S. The five points discovered in the course of their study was discussed in full in the article.

The impact of electronic data interchange (EDI) on SMEs: Summary of eight British case studies, Chen, J. C., & Williams, B. C. (1998). Journal of Small Business Management36(4), 68. The main goal of this paper is to report directly the effect of using EDI by sampling a small group of firms in the UK from an independent perspective. A questionnaire was used to make contact with the SMEs using EDI and to collect background information on the firm. The questionnaire was divided into seven sections. Out of the 76 questionnaires sent out, only 63 companies completed theirs. Only 8 of the 63 were willing to participate in a follow-up study.

The use of electronic data interchange for supply chain coordination in the food industry, Hill, C. A., & Scudder, G. D. (2002). Journal of Operations Management20(4), 375-387. This study concentrates on the role of electronic data interchange (EDI), a valuable type of IT used for the transfer of inter-organizational information in the supply chain. The study uses data obtained from a survey carried out in the food industry to test the use of EDI by contractors and customers. The results of the study confirm EDI as an instrument for improving the efficiency of supply chain integration rather than an instrument for its facilitation.

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