Effects of Interorganizational Systems: Issues Affecting Coordination Cost

Abstract

It is believed that the adoption of Interorganizational systems (IOS) can enable organization to use the information processing capabilities to reduce interorganizational coordination costs and improve performance. However, the past researches have shown mixed results about the impact of IOS on coordination costs. While drawing on transaction cost analysis and resource-dependence theory, this paper suggests that analyzing the relationship between IOS use and coordination costs should consider different levels of asset specificity and interdependence of participating organizations. This article presents an analyzing method and suggests that, when asset specificity or interdependence is high, IOS use can reduce coordination costs for monitoring or cooperative purpose. While under a condition of low asset specificity or low interdependence, the association between IOS use and coordination costs reducing is negative.