Inter-organizational Information Systems and Trust: A Study of Pharmaceutical Outsourcing

Abstract

The abilities of increasingly sophisticated inter-organizational information management technologies to monitor vendors’ work processes have led many organizations to overcome the fears traditionally associated with non-hierarchical exchange arrangements for sensitive and complex functions like research and development. In this paper, we explore how the properties of information technology influence the conditions for trust building in the outsourcing of R&D. The paper draws on affordance theory to analyze how the IS creates conditions for rational-economic trust and social trust. We perform an interview-based study of the role of laboratory management systems in pharmaceutical drug development outsourced by Western big pharma to contract research organizations in India. Empirical findings show how the IS reduces the need for rational-economic trust by affording real-time and retrospective monitoring as well as by largely eliminating the threat of appropriation by affording modularization of work. The findings also show attempts to circumvent the monitoring elements of the IS, illustrating the limits of the information system. This creates space for social trust and the findings show how the IS affords social trust building by structuring interaction and promoting transparency.