Relative Importance, Specific Investment and Ownership in Interorganizational Systems

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dc.contributor.authorNault, Barrie R
dc.contributor.authorHan, Kunsoo
dc.contributor.authorKauffman, Robert J.
dc.date.accessioned2016-01-04T18:39:18Z
dc.date.available2016-01-04T18:39:18Z
dc.date.issued2008-09
dc.descriptionAuthor's post-print on any open access repository after 12 months after publication. Must link to publisher version http://www.ucalgary.ca.ezproxy.lib.ucalgary.ca/bnault/files/bnault/itm_sep_2008.pdfen_US
dc.description.abstractImplementation and maintenance of interorganizational systems (IOS) require investments by all the participating firms. Compared with intraorganizational sys- tems, however, there are additional uncertainties and risks. This is because the benefits of IOS investment depend not only on a firm’s own decisions, but also on those of its business partners. Without appropriate levels of investment by all the firms participating in an IOS, they cannot reap the full benefits. Drawing upon the literature in institutional economics, we examine IOS ownership as a means to induce value-maximizing noncontractible investments. We model the impact of two factors derived from the theory of incomplete contracts and transaction cost economics: relative importance of investments and specificity of investments. We apply the model to a vendor-managed inventory system (VMI) in a supply chain setting. We show that when the specificity of investments is high, this is a more critical determinant of optimal ownership structure than the relative importance of investments. As technologies used in IOS become increasingly redeployable and reusable, and less specific, the relative importance of investments becomes a dominant factor. We also show that the bargaining mechanism—or the agreed upon approach to splitting the incremental payoffs—that is used affects the relationship between these factors in determining the optimal ownership structure of an IOS.en_US
dc.description.refereedYesen_US
dc.identifier.citationHan, K., Kauffman, R.J., and Nault, B.R., "Relative Importance, Specific Investment and Ownership in Interorganizational Systems", Information Technology and Management, 9, 3 (September 2008), 181-200.en_US
dc.identifier.doi10.1007
dc.identifier.doihttp://dx.doi.org/10.11575/PRISM/33944
dc.identifier.urihttp://hdl.handle.net/1880/51034
dc.language.isoenen_US
dc.publisherSpringeren_US
dc.publisher.corporateUniversity of Calgaryen_US
dc.publisher.departmentManagement Information Systemsen_US
dc.publisher.facultyHaskayne School of Businessen_US
dc.publisher.institutionUniversity of Calgaryen_US
dc.publisher.urlhttp://link.springer.com/en_US
dc.subjectEconomic Theoryen_US
dc.subjectIncomplete contractsen_US
dc.subjectInterorganizational information systemsen_US
dc.subjectInvestment specificityen_US
dc.subjectInformation systemsen_US
dc.subjectIT investmentsen_US
dc.subjectOwnershipen_US
dc.subjectProperty rightsen_US
dc.subjectRelative importanceen_US
dc.subjectSupply chain managmenten_US
dc.titleRelative Importance, Specific Investment and Ownership in Interorganizational Systemsen_US
dc.typejournal article
thesis.degree.disciplineManagement Information Systemsen_US
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