Islamoglu, Mehmet

mehmet.islamoglu@emu.edu.tr

Transaction Cost Applications in Information Systems: explicating institutions' influences on governance

(2000)

Advances in information technology have brought about significant reductions in measurement costs. This has created incentives for organisations to realign their transactions with more market-oriented governance structures so as to adapt to the changing trade-offs between measurement, enforcement, and asset specificity costs.

Williamson's theory on governance of contractual relations, one of the leading analytic tools deployed for this purpose, remains, as noted by Williamson himself, in need of significant refinements regarding the effects on governance structures' comparative transaction cost efficacies of institutions on the one hand, and the behavioural attributes of individuals on the other. The institutional shortcomings of Williamson's theory have severely limited the generalisability of case studies on IT-enabled realignments, thereby undermining the extent to which such studies can inform IT-enabled realignment attempts elsewhere.

This research presents an institutional approach which, by overcoming some of the institutional shortcomings of Williamson's theory, extends the generalisability of IT-enabled realignment case studies, thereby increasing the extent to which such studies can provide lessons for other IT-enabled realignment initiatives.

The utility of the approach is tested in two case studies. The first case study focuses on the alignment with more market-like, local pay structures of nurses' employment contracts within the institutional environment of the British National Health Service. The second case study focuses on the sales and employment transactions of Ozkose, a leading Turkish bakery equipment manufacturer, within the institutional environment of Turkey.

Supervisor: Jonathan Liebenau, PhD

Mehmet Islamoglu is currently Assistant Professor of Operations Management and Management Information Systems at Eastern Mediterranean University in northern Cyprus.

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