IEEE TRANSACTIONS ON ENGINEERING MANAGEMENT, VOL. 50, NO. 3, AUGUST 2003 337 Information Assets in Interorganizational Governance: Exploring the Property Rights Perspective Jonathan D. Wareham Abstract—Empirical research in interorganizational gover- nance has been motivated primarily by transaction cost economics (TCE) and its focus on proprietary electronic linkages, asset specific investments, and consequent holdup problems. Where many early interorganizational systems were characterized by nonredeployable assets, recent instances are distinguished by open standards and a higher degree of redeployable technology. Hence, interorganizational research has reached out to alternative theories that embrace social and procedural interdependence in addition to technological links. The principal theoretical alternative to TCE that addresses social interdependence is social networking theory. Where both TCE and networking have relative merits as explanatory frameworks, they are antithetical in their purest forms and most often mutually exclusive in application. However, both perspectives confront analytical boundaries that may be overcome through answers and dimensions provided by the other. Hence, a synthesis between these competing theoretical viewpoints is sought. The property rights perspective of informa- tion, one that retains TCE’s predictive ability and networking’s contextual focus, is introduced and critically evaluated as an alternative framework that may enable such a synthesis. A positive case study is analyzed which explores the theory’s utility in illuminating interorganizational systems with disaggre- gate physical and information assets, technical, procedural, and social interdependence. The case concludes with a critical evalu- ation of the perspective’s merits as a positive explanatory frame- work of interorganizational governance, finding that the predic- tive utility is greatest where information is inalienable and oppor- tunism is high. Index Terms—Information sharing, interorganizational systems (IOS), networking theory, property rights, transaction cost eco- nomics (TCE). I. INTRODUCTION T HE USE of information technology to facilitate busi- ness-to-business (B2B) commerce has attracted signif- icant attention from both practitioners and academics due to its potential to affect the manner in which business is conducted. Interorganizational relationships can take many forms, from open spot exchanges run over TCP/IP protocols, to electronic hierarchies and virtual communities, to exclusive dyadic trading relationships run through proprietary linkages. However, one important difference among the various forms of B2B relationships is the level of procedural integration between Manuscript received August 24, 2001; revised January 15, 2003. Review of this manuscript was arranged by Department Editor V. Sambamurthy. The author is with the Department of Computer Information Sys- tems, Georgia State University, Atlanta, GA 30302-4015 USA (e-mail: wareham@acm.org). Digital Object Identifier 10.1109/TEM.2003.817291 the trading partners. Spot market transactions are by their very nature discrete, often nonrecurring transactions that require very limited integration between buyer and seller. In contrast, systematic sourcing relationships governed by long-term contracts and recurring transactions often require greater levels of procedural integration between transacting organizations. Interorganizational systems have been defined as “the integration of business processes of two or more independent organizations through the exploitation of the capabilities of computers and communication technology” [69, pp. 377–378]. However, Venkatraman [64] contends that interorganizational systems are not synonymous with the presence of some kind of transacting technology alone, but rather constitute a function of both technology linkages as well as business process interdependence. Nevertheless, most empirical work in interorganizational systems has tended to apply dichotomous measures of the presence, versus nonpresence of electronic data interchange (EDI) or electronic interfaces as an operationaliza- tion of interorganizational integration. Examples of this include binary measures of the existence of some kind of electronic interface within the insurance sector [69], the percentage of transactions directed through proprietary, electronic channels [78], dichotomous measures of electronic transactions within Japanese and American suppliers [10], or levels of file-to-file connections and application-to-application exchanges [53]. Given that the presence of EDI or other electronic transacting has assumed the posture of the key focal variable in interor- ganizational systems research, the predominant theoretical paradigm underlying these studies has been transaction cost economics (TCE) [20], [71], [72], a functional theory pre- dicting equilibrium states under interdependence, uncertainty, asset specificity, and opportunism. A focal variable in TCE of interest to interorganizational researchers is asset specificity, the degree to which an asset’s value is limited outside of the defined relationship. This is due to the fact that many early cases in interorganizational systems were implementations of proprietary EDI systems with relatively high degrees of lock-in. The resulting lock-in made one, or both partners, subject to a possible “hold-up,” which was well suited to a game theoretic analysis focusing on strategic interdependence, uncertainty, and self-seeking conduct [4]. Where investments in computer hardware, telecommunica- tions infrastructure and training certainly represent up-front in- vestments, applications are increasingly becoming more open and amenable to redeployment in other environments at minimal cost, if not conceived for multiple deployments from design. 0018-9391/03$17.00 © 2003 IEEE