The Theory of the Lemon Markets in IS Research

Devos, Jan; Landeghem, Hendrik Van; Deschoolmeester, Dirk

doi:10.1007/978-1-4419-6108-2_11

Cited by 13 publications

(9 citation statements)

References 55 publications

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“…Although trust has a reciprocal nature, it is the agent who has to work hardest on trust-building mechanisms in order to maintain or to increase the level of trust. Devos et al found that there is always incentive for adverse selection and moral hazard as long as the SME-principal is not willing to pay the costs required to avoid the asymmetry of information (Devos et al, 2010). The market where SMEs buy IT is attractive for small independent software vendors (ISV) acting as business partners of top-notch ERP suppliers and IS/IT suppliers.…”

Section: Discussionmentioning

confidence: 99%

Rethinking IT governance for SMEs

Devos

Landeghem

Deschoolmeester

2012

Industrial Management &Amp; Data Systems

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Purpose -The purpose of this paper is to critically rethink the concepts and the theoretical foundations of IT governance in small and medium-sized enterprises (SMEs).Design/methodology/approach -The paper is based on multiple case studies. Eight cases of outsourced information system projects where failures occurred were selected. An outsourced information system failure (OISF) is suggested as a failure of governance of the IT in a SME environment. A structure for stating propositions derived from two competing theories is proposed (Agency Theory and Theory of Trust). Findings -The results reveal that trust is slightly more important than control issues like output-based contracts and structured controls in the governance of IT in SMEs.Practical implications -The world of SMEs is significantly different from that of large companies, and therefore, the concept of IT governance in SMEs needs reconsideration. For researchers and practitioners, it would be more meaningful to focus on actual, working SMEs instead of on a version of their activities derived from those of large companies.Originality/value -The paper offers two contributions. First, it elaborates the limited research on IT in SMEs and second, it brings theoretical foundations for their IT governance. The value of IT governance in SMEs is explained.Keywords: small and medium-sized enterprise (SME), IS failures, IT governance, Agency Theory, trust, case study Paper type: Research paper RETHINKING IT GOVERNANCE FOR SMES IntroductionSmall and medium-sized enterprises (SMEs) play a significant role as engines of economic and social development all over the world. Many scholars argue that a small and medium-sized enterprise cannot be seen through the lens of a large firm (Ballantine et al., 1998). Therefore, the limited theories explaining IT (Information Technology) governance in large organizations cannot be linearly extrapolated to SMEs, since we are dealing with a completely different economic, cultural and managerial environment. Notwithstanding the efforts to develop guidelines for governing IT in SMEs, such as the Cobit QuickStart method, the results of applying these frameworks in SMEs are rather disappointing (IT Governance Institute, 2007). Scholars and practitioners are too grounded in their way of thinking, and maintain a simple vision of a SME as a scale model of a large firm (Raymond, 1985). There is also a lack of genuine SME-centred theories that can lead to general inferences about how SMEs should govern their IT. Riemenschneider et al. stated that, "...organizational theories and practices, such as bureaucratic structure and organizational behaviour applicable to large organizations, may not be valid in small ones" (Riemenschneider et al., 2003: 269). SMEs seldom have a dedicated IT staff or a well-defined and formal IS (Information Systems) function (Adam and O'Doherty, 2000). Due to their small scale, and hence a lack of in house IT skills, SMEs depend more on IT vendors than large companies (Thong, 2001;Thong et al., 1997). Howev...

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Section: Discussionmentioning

confidence: 99%

Rethinking IT governance for SMEs

Devos

Landeghem

Deschoolmeester

2012

Industrial Management &Amp; Data Systems

Self Cite

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“…Given the harmful effects of molecular deception, it is necessary to reduce information asymmetry, in order to promote cooperation between gene players, in the normal functioning of the genome. For instance, in the theory of incomplete contracts, a topic linked with the economics of information, reduction in information asymmetry reduces the likelihood of deception between parties, which consequently promotes trust (Devos et al, 2012) and so cooperation (Lorenz, 1999). Given this framework, one may suggest a form of “molecular trust” that is promoted when the information asymmetry between two gene players is reduced (effectively increasing transparency), with the effect of promoting utility (fitness) for both players, since deception is less likely to occur.…”

Section: Genesis Of Bio-molecular Interactionsmentioning

confidence: 99%

On the Origin of Biomolecular Networks

et al. 2019

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Biomolecular networks have already found great utility in characterizing complex biological systems arising from pairwise interactions amongst biomolecules. Here, we explore the important and hitherto neglected role of information asymmetry in the genesis and evolution of such pairwise biomolecular interactions. Information asymmetry between sender and receiver genes is identified as a key feature distinguishing early biochemical reactions from abiotic chemistry, and a driver of network topology as biomolecular systems become more complex. In this context, we review how graph theoretical approaches can be applied not only for a better understanding of various proximate (mechanistic) relations, but also, ultimate (evolutionary) structures encoded in such networks from among all types of variations they induce. Among many possible variations, we emphasize particularly the essential role of gene duplication in terms of signaling game theory , whereby sender and receiver gene players accrue benefit from gene duplication, leading to a preferential attachment mode of network growth. The study of the resulting dynamics suggests many mathematical/computational problems, the majority of which are intractable yet yield to efficient approximation algorithms, when studied through an algebraic graph theoretic lens. We relegate for future work the role of other possible generalizations, additionally involving horizontal gene transfer, sexual recombination, endo-symbiosis, etc., which enrich the underlying graph theory even further.

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“…While most LMT research has been undertaken in the used car market [14], it has been applied to the study of other markets. Examples include the area of information systems [15] where e-markets, e-commerce, and e-auctions have been studied [16][17][18]. Given that it has been used in the realm of information systems before, LMT was considered a good fit for our study.…”

Section: Theoretical Lensmentioning

confidence: 99%

Managing expectations of BIM product quality: a ‘lemon market’ theory view

Merschbrock¹,

Nordahl-Rolfsen²

2015

WIT Transactions on the Built Environment

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There is an increasing uptake of Building Information Modelling (BIM) in the architecture, engineering, and construction industry. At the same time, it is evident that many firms struggle to work based on the new technology and that only few highly IT-literate firms succeed in reaping BIM's benefits. Thus, for many firms, BIM systems adoption ends in disillusion as to what can be achieved by using the technology. What complicates matters is that BIM's are only found dysfunctional after having been in organizational use. Thus, BIM's value for an organization is hard to distinguish before purchase. This article proposes, based on Akerlof's (1970) theory of the "lemon market", a conceptual model explicating factors affecting buyers' initial quality expectations in BIM software purchase. Our findings are derived from data on a construction project executed by a Norwegian timber-frame construction company having heavily invested in computer numerical controlled (CNC) production machinery and BIM systems. This work is important to manage organizational expectations related to the initial adoption of BIM. Moreover, it highlights that construction firms' trust in vendors claimed product quality, IT-literacy, and experience matter when purchasing BIM software. Taken together, our results suggest that quality uncertainty related to BIM purchase can lead companies into financial turmoil. Especially small and medium sized contractors appear to be exposed to information asymmetry when purchasing BIM software.

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The Theory of the Lemon Markets in IS Research

Cited by 13 publications

References 55 publications

Rethinking IT governance for SMEs

Rethinking IT governance for SMEs

On the Origin of Biomolecular Networks

Managing expectations of BIM product quality: a ‘lemon market’ theory view

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