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

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  • Gebauer, Judith

    (University of NC, Wilmington)

  • Mahoney, Joseph T.

    (University of IL)

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 organizational 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.

Suggested Citation

  • Gebauer, Judith & Mahoney, Joseph T., 2013. "Joining Supply and Demand Conditions of IT Enabled Change: Toward an Economic Theory of Inter-firm Modulation," Working Papers 13-0100, University of Illinois at Urbana-Champaign, College of Business.
    • Handle: RePEc:ecl:illbus:13-0100
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