Title: Joining supply and demand conditions of IT enabled change: toward an economic theory of inter-firm modularisation

Authors: Judith Gebauer; Joseph T. Mahoney

Addresses: Department of Information Systems and Operations Management, Cameron School of Business, University of North Carolina Wilmington, Wilmington, NC 28403-5920, USA ' Department of Business Administration, College of Business, University of Illinois at Urbana-Champaign, Champaign, IL 61820, USA

Abstract: This paper examines emergent information systems and technologies and explains under what supply and demand conditions inter-firm modularisation of information-based products and services and subsequent vertical de-integration of organisations is more likely. Research in organisational economics identifies transactional attributes such as coordination costs, asset specificity, and the economic non-separability problem to help explain and predict vertical de-integration. We extend this perspective by considering the modularisation of information-based products and services that is noticeable to the customer to develop a framework that joins the four cornerstones of (a) transaction-related efforts; (b) commitment-related contractual risks; (c) measurement-related contractual risks; and (d) modularisation-related impacts on value.

Keywords: information systems; information technology; modularisation; vertical de-integration; contractual risk; information-based products; information-based services; transaction cost economics; coordination; asset specificity; non-separability problem; consumer economics.

DOI: 10.1504/IJSCM.2014.060259

International Journal of Strategic Change Management, 2014 Vol.5 No.2, pp.140 - 163

Published online: 23 Oct 2014 *

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