The Impact of Information Technology on the Organization of Economic Activity: The “Move to the Middle” Hypothesis

Clemons, Eric K.; Reddi, Sashidhar P.; Row, Michael C.

doi:10.1080/07421222.1993.11517998

Cited by 787 publications

(550 citation statements)

References 24 publications

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“…Although the degree of asset specificity is included in transaction cost economics, some IOS research has employed alternative theories that shift the focus away from proprietary investments in technology and toward dimensions like social and procedural interdependence, which are not addressed in transaction cost economics (Wareham, 2003). For example, Clemons, Reddi, and Row (1993) counter the electronic markets hypothesis with a "moveto-the-middle" hypothesis, which draws upon variables outside of a transaction cost framework to…”

Section: Figure 3 Relationships Investigated In Ios and Governancementioning

confidence: 99%

Theoretical Foundations of Empirical Research on Interorganizational Systems: Assessing Past Contributions and Guiding Future Directions

Robey¹,

Im²,

Wareham³

2008

JAIS

170

196

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This paper guides the theoretical development of future research on interorganizational systems (IOS). We first assess past IOS research by reviewing and summarizing the findings of 51 empirical studies of IOS published in 11 IS journals between 1990 and 2003. This literature addresses three primary issues: (1) factors influencing organizational decisions to adopt IOS; (2) the impact of IOS on governance over economic transactions; and (3) the organizational consequences of IOS adoption. From our assessment of the findings and theoretical approaches taken in past research, we offer three recommendations for future research. First, the theoretical foundations of IOS research during this period are diverse, representing 17 different yet complementary theories. We recommend that researchers continue to diversify their theoretical approaches in order to address new research challenges. Second, we recommend that IOS researchers move beyond mere descriptions of IOS artifacts by engaging with IOS artifacts on theoretical grounds. Third, we identify and describe new theoretical directions for future IOS research in each of the main issue areas.

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Section: Figure 3 Relationships Investigated In Ios and Governancementioning

confidence: 99%

Theoretical Foundations of Empirical Research on Interorganizational Systems: Assessing Past Contributions and Guiding Future Directions

Robey¹,

Im²,

Wareham³

2008

JAIS

170

196

View full text Add to dashboard Cite

show abstract

“…The organizational and industry impact of IOS : This literature has examines the impact of IOS on firm size and scope (Gurbaxani and Whang, 1991), on the number of suppliers and extent of outsourcing (Clemons, Reddi and Row, 1993;Bakos and Brynjolfsson, 1993), on firm size (Brynjolfsson, Malone, Gurbaxani and Kambil, 1994), and on JIT (Just In Time) practices (Srinivasan, Kekre and Mukhopadhyay, 1994). Prior work has also studied how network effects affect IOS adoption and impact (Riggins, Kriebel and Mukhopadhyay, 1994;Wang and Seidmann, 1995;Bhargava and Choudhary, 2004), and the impact of specific technologies like voice mail on inter-organizational effectiveness (Lind and Zmud, 1995).…”

Section: Introductionmentioning

confidence: 99%

Electronic Markets, Search Costs and Firm Boundaries

Shankar

Sundararajan

2005

SSRN Journal

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Abstract. We study how electronic markets that facilitate broader inter-firm transactions affect the vertical scope of emerging IT-enabled extended enterprises. We do so by modeling firms in a three-tier value chain who are each connected to a common electronic market that facilitates direct business transactions across tiers, and that lowers the search costs associated with finding an appropriate trading partner for each of them. The extent to which search costs are reduced depends on the complexity of B2B search, and the nature of the supporting technologies that the electronic market facilitates. Variation in search costs affect firms across the value chain in three key ways: by a change in the transaction costs of interaction between firms; by a change in the contracting costs associated with outsourcing owing to changes in the costs of moral hazard for delegated search, and by a change in the price dispersion of upstream input commodities. We capture each of these effects in a new model that integrates search theory into the principal-agent framework, and establish that the optimal outsourcing contract has a simple "all or nothing" performance-based structure under fairly general assumptions. We then apply this model to contrast the effect that different information technologies have on the relative B2B search costs of different firms in the value chain, contrasting the predicted changes of proportionate, constant and convergent changes in search costs. When integrated with a detailed analysis of the nature of B2B search, these results predicts that when B2B search is information-intensive, electronic markets will facilitate an increase in outsourcing, market-based transactions and a reduction in the vertical scope of extended enterprises. In contrast, when B2B search is primarily communication-intensive, electronic markets will lead to tighter integration and an increase in the vertical scope of the extended enterprise. Our research suggest that the nature of the information technologies and of the business activities supported by an electronic market are crucial determinants of the organizational and industry changes they induce, and our results have important implications for a variety of industries in which both technological and agency issues will influence the eventual success of global IT-facilitated extended enterprise initiatives. 0 We thank

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“…to "more outsourcing, but from a reduced set of stable partnerships" [ClemonsReddiRow'93] if non-contractible issues (e.g. quality and trust) play an important role.…”

Section: Coordination In a Business Networkmentioning

confidence: 99%