Towards Asymmetric Information for the G2B Inter-Organizational Networks

With the emergence of innovative (networked) organization forms such as enhanced supply chain collaboration and modern forms of public-private partnerships (PPP), effective and efficient collaboration among network participants becomes crucial but often difficult to achieve. One of the leading factors which cause such defective collaboration is the asymmetric information issue among the network participants. Two identifiable problems resulted by the asymmetric information are the moral hazard and adverse selection problems. Former studies mainly positioned asymmetric information problems within the context of traditional business environment; in this paper we suggest that similar problems may also occur in the Government to Business (G2B) context. We discuss these issues via a collaborative pilot case study (hereafter, Beer Living Lab) between the Dutch Tax and Customs Administration (DutchTCA) and a Dutch beer company (Beer Co.). The paper reveals that both moral hazard and adverse selection problems may occur during the G2B interactions and tamper the relationships between the two. In addressing these problems, we propose an advanced information technology (IT) solution, drawing upon an effective and efficient information sharing schema that can on the one hand minimize the moral hazard by enhancing supply chain management for the business and on the other hand preventing tax fraud for the government. Further we argue that the application of the advanced IT may serve as a strong signaling and screening tool for overcoming the adverse selection problem during the PPP forming and result in a win-win situation. The insights learned should benefit those involved in various inter-organizational business networks, partnership as well as supply chain management settings.