The development of an augmented constrained-efficiency framework for the adoption of electronic interorganizational governance

Business-to-business electronic commerce provides new mechanisms for interorganizational exchange governance. This study contributes to the research of the adoption of interorganizational exchange governance by developing an augmented constrained-efficiency framework that summarizes the salient factors influencing organizational selection and adoption of electronic exchange governance. Drawing upon the literature on organizational and interorganizational governance design and adoption, the augmented constrained-efficiency framework posits that organizational selection and adoption of electronic interorganizational exchange governance are an efficiency pursuing process and also constrained by some critical forces. Internally, the constraints include organizational decision makers’ bounded rationality and organizational resources and capabilities. Externally, an organization’s institutional environments, its dependency relationship, contractual arrangements and relational norms developed with its business partners through physical transactions are important constraining forces. To demonstrate the usefulness of the augmented constrained-efficiency framework, the paper applies it to the analysis of two important modes of electronic interorganizational exchange governance, namely electronic hierarchy and electronic marketplace. By doing so, the paper sets foundations for future theory development and empirical study.