The contribution of transaction cost theory and other network-oriented techniques to digital markets

Abstract

The purpose of this paper is to examine the relationship between information and communication technology (ICT) and the development of organizational forms, showing in particular how ICT is able to promote new forms of cooperation among enterprises. The research question is to understand the role played by ICT in the development of an electronic marketplace (EMP), from an organizational standpoint. A further objective is to highlight the new type of relationships being established between the participants in the EMP. Such phenomenon therefore will be analyzed and its implications and limitations studied using as a reference the transaction cost theory (TCT) and other network-oriented techniques, such as social network analysis (SNA). In the analysis of the limitations of the TCT, we will show how the ''Theory of strategic networks'' can contribute to expand our understanding of new phenomena that characterize some industrial sectors. This paper, therefore, will illustrate the theory of strategic networks and the various levels of cooperation among enterprises. A good example of a strategic network is the EMP (e-marketplace), whose effect at an interorganizational level will be analyzed in this paper. Finally, a real example of e-marketplace-i.e., TileSquare, the virtual market for ceramic tiles-is being introduced. This is a particularly meaningful case, as it exemplifies all theoretical concepts previously expressed. On the one hand, in fact, it is a valid example of ICT application to the relationships between enterprises and economic actors, and on the other hand, it proves how evolution of technologies plays a massive role in view of the potential openness to strategic forms of network on the part of Italian districts-in this case, the ceramic district of Sassuolo. TileSquare, a neutral market-maker compared to other actors involved in the market, started out as a tool at the service of manufacturers to ease transactions. In fact, it developed most of all as an aid tool for retailers, for the purpose of sharing information and cooperation rather than executing transactions. The new role played by the portal is thus emphasized, which is seen as an electronic intermediary providing services that did not exist before. Moreover, the portal enables a growing number of participants in the value chain to improve mutual collaboration processes.

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