Growing globalization and environmental uncertainty have increased the challenges managers face in delivering services or products to the customer. Integration of information systems across partnering organizations has become the backbone of supply chainmanagement, as amalgamation facilitates the sharing of information required to enhance organizational flexibility and responsiveness while minimizing risk and inventory costs. Using data fromthe Australian retailing sectors, this study investigates themediating role of inter-organizational information system (IOIS) integration on the relationships between inter-organizational compatibility and supply chain capabilities. The results indicate that inter-organizational compatibility of technical, strategic, and cultural interorganizational dimensions facilitate IOIS integration and supply chain capabilities. To maximize benefits for allchain members, IOI integration needs to be embedded in the strategies and goals of partnering organizations.Business-to-business and industrialmarketing managers need to be aware that IOIS integration processes require support of top managers of the partnering organizations and should be embedded in the organizations' strategic goals