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"Joining Supply and Demand Conditions of IT Enabled Change: Toward an Economic Theory of Inter-Firm Modulation"

Judith Gebauer and Joseph T. Mahoney


First Author :

Judith Gebauer
Information Systems and Operations Management
University of North Carolina at Wilmington, Cameron School of Business
601 South College Road
Wilmington, NC 28403-5920

Second Author :

Joseph T. Mahoney
Business Administration
University of Illinois at Urbana-Champaign, College of Business
1206 S. Sixth Street
140C Wohlers Hall
Champaign, IL 61820


Abstract :
This paper examines emergent information systems and technologies and explains under what supply and demand conditions inter-firm modularization of information-based products and services and subsequent vertical de-integration of organizations is more likely. Research in organiza-tional 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 modularization of information-based products and services that is noticeable to the customer to develop a framework that joins the four cornerstones of (1) transaction-related efforts; (2) commitment-related contractual risks; (3) measurement-related contractual risks; and (4) modularization-related impacts on value.
Manuscript Received : 2013
Manuscript Published : 2013
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