Electronic Data Interchange(EDI) has the potential to improve business operations by expediting the exchange of business documents. It will also provide substantive operational and strategic benefits to the trading firms. However, the successful implementation of EDI systems requires the mutual trust and cooperation between the trading firms. The extent of EDI diffusion and performance depends on inter-organizational, intra-organizational, as well as innovation factors. Researches based on the sociopolitical process framework in the use of IT, organizational theory, resource dependence theory, and innovation diffusion theory have identified 3 inter-organizational variables(transaction climate, dependence, external IS expert support) and 4 intra-organizational variables(strategic IS planning, infrastructure, top management support, education/training,), and 3 innovation variables(compatibility, relative advantage, cost) that affect EDI diffusion. In this study, a multi-dimensional measure on EDI diffusion has been developed to capture the external and internal integration. Then, the influence of these 10 variables on the extent to which the EDI adopting firms pursue diffusion has been examined. Whether more diffusion leads to superior performance has also been studied. International trade managers from 107 firms in the trade industry participated in a field survey. The results based on a structural equation model(SEM), developed using AMOS, provide quite a strong support for the hypothesized relations. Both education/training and IT infrastructure influenced external and internal diffusion of EDI systems. Internal diffusion of EDI enables the adopting firms to improve operational and strategic performance, whereas external diffusion contributes only to operational performance.