REMOVING TRANSACTION COSTS WITH INTERORGANIZATIONAL INFORMATION-SYSTEMS

Inter-organizational information systems are nowadays one of the themes most often discussed among both information technology practitioners and researchers. These systems take many forms and have many design options, together with a host of different consequences, which are often difficult to understand. New tools for understanding and managing these systems are needed. The concept of transaction costs - costs associated with conducting business transactions, either out-of-pocket or opportunity costs - is harnessed to aid understanding of inter-organizational information systems. Such systems are a primary tool for lowering transaction costs. One particular issue is more deeply discussed. The dilemma facing most practitioners seems to be whether to construct their own systems or to participate in cooperative networks. On the one hand, cooperative networks provide ready-to-run advanced services, on the other it is difficult to gain competitive advantage based on the technology itself by participating in cooperative networks, as these networks are technically equal for all actors. It is not possible to compete on the basis of the technological infrastructure, and competition turns to other areas such as price. The problem situation is made still worse by the high investments required in either case. It is suggested that by examining the transactions to be handled by the systems and their costs, it is possible to obtain guidelines on whether a company should construct its own system or whether it should participate in a cooperative network.