B2B Relationships in Modern Times: Implications of Relation-Specific Information Systems on Governance Forms

Information technology (IT) enables businesses to integrate information systems across entities without altering the firms’ legal boundaries. New forms of inter-firm dependence and governance mechanisms may arise, due to the explicit investments made in technology and systems for collaboration purposes. There is an important distinction between general and customized investments in inter-organizational information systems (IOS), because the specificity level in IT exhibits certain characteristics that accentuate both the risk and value of inter-firm trade. Several research calls were made to validate governance theories on IOS. Based on a literature review, this paper provides a synthesis and integration of transaction cost economics (TCE) and IOS literature regarding governance forms. The paper discusses why the specificity level of IOS plays a central role in modern collaboration between firms, and how vertical electronic coordination (VEC) represents a mechanism for electronic governance forms and presents an agenda for future research.